Kmb hr05 (IHRM) Global Organization Structure- unit 4
- 1. Global Organization Structures DR. POOJA TIWARI ABES, EC AKTU , LUCKNOW DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 2. Global Organization Structures Global organizations in the 21st century must compete with a much wider array of companies than their domestic counterparts do, and have therefore evolved several strategies to become as efficient and cost-effective as possible. The choice of organizational structure reflects where decisions are made, how work gets completed, and ultimately how quickly and cheaply the firm’s products can be made. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 3. Global organization structure Rise in a company’s overseas operations necessitates integration of its activities across the world and building up a worldwide organizational structure. While conceptualizing organizational structure, the internationalizing firm often has to resolve the following conflicting issues: i. Extent or type of control exerted by the parent company headquarters over subsidiaries ii. Extent of autonomy in making key decisions to be provided by the parent company headquarters to subsidiaries (centralization vs. decentralization) DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 4. Global functional division structure: It aims to focus the attention of key functions of a firm, wherein each functional department or division is responsible for its activities around the world. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 5. Cont… The major advantages of global functional division structure include: i. Greater emphasis on functional expertise ii. Relatively lean managerial staff iii. High level of centralized control iv. Higher international orientation of all functional managers The disadvantages of such divisional structure include: i. Difficulty in cross-functional coordination ii. Challenge in managing multiple product lines due to separation of operations and marketing in different departments iii. Since only the chief executive officer is responsible for profits, such a structure is favoured only when centralized coordination and control of various activities is required DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 6. Global product structure Under global product structure, the corporate product division, is given worldwide responsibility for the product growth. The heads of product divisions do receive internal functional support associated with the product from all other divisions, such as operations, finance, marketing, and human resources. They also enjoy considerable autonomy with authority to take important decisions and operate as profit centres. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 7. Cont… The global product structure is effective in managing diversified product lines. Such a structure is extremely effective in carrying out product modifications so as to meet rapidly changing customer needs in diverse markets. It enables close coordination between the technological and marketing aspects of various markets in view of the differences in product life cycles in these markets, for instance, in case of consumer electronics, such as TV, music players, etc. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 8. Global geographic structure Under the global geographic structure, a firm’s global operations are organized on the basis of geographic regions. It is generally used by companies with mature businesses and narrow product lines. It allows the independent heads of various geographical subsidiaries to focus on the local market requirements, monitor environmental changes, and respond quickly and effectively. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 9. Cont… The corporate headquarter is responsible for transferring excess resources from one country to another, as and when required. The corporate human resource division also coordinates and provides synergy to achieve company’s overall strategic goals between various subsidiaries based in different countries. Such structure is effective when the product lines are not too diverse and resources can be shared. Under such organizational structure, subsidiaries in each country are deeply embedded with nationalistic biases that prohibit them from cooperating among each other. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 10. Global matrix structure: It is an integrated organizational structure, which super-imposes on each other more than one dimension. The global matrix structure might consist of product divisions intersecting with various geographical areas or functional divisions. Unlike functional, geographical, or product division structures, the matrix structure shares joint control over firm’s various functional activities. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 11. Cont… Such an integrated organizational structure facilitates greater interaction and flow of information throughout the organization. Since the matrix structure has an in-built concept of interaction between intersecting perspectives, it tends to balance the MNE’s prospective, taking cross-functional aspects into consideration. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 12. Transnational network structure Such a globally integrated structure represents the ultimate form of an earth-spanning organization, which eliminates the meaning of two or three matrix dimensions. It encompasses elements of function, product, and geographic designs while relying upon a network arrangement to link worldwide subsidiaries. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 13. Cont… The conceptual framework of a trans-national network structure primarily consists of three components: Disperse sub-units: These are subsidiaries located anywhere in the world where they can benefit the organization either to take advantage of low-factor costs or provide information on new technologies or market trends Specialized operations: These are the activities carried out by sub-units focusing upon particular product lines, research areas, and marketing areas design to tap specialized expertise or other resources in the company’s worldwide subsidiaries. Inter-dependent relationships: It is used to share information and resources throughout the dispersed and specialized subsidiaries. DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW
- 14. Thank You DR. POOJA TIWARI, ABES EC, AKTU LUCKNOW