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Designing Organizations for Global Success

This chapter explores four stages of international evolution and matches organizational structures to international advantage, highlighting the challenges of global coordination and control. Various coordination approaches are compared, including centralized coordination, decentralized approaches, and the transnational model of organizations.

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Designing Organizations for Global Success

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  1. Chapter Six Designing Organizations for the International Environment

  2. Four Stages of International Evolution Sources: Based on Nancy J. Adler, International Dimensions of Organizational Behavior (Boston: PWS-KENT, 1991), 7-8; and Theodore T. Herbert, “Strategy and Multinational Organization Structure: An Interorganizational Relationships Perspective,” Academy of Management Review 9 (1984): 259-71.

  3. Matching Organizational Structure to International Advantage

  4. Domestic Hybrid Structure with International Division CEO Human Resources Corporate Finance Research & Development Scientific Products Division Medical Products Division International Division Electrical Products Division Europe (Sales) Brazil (Subsidiary) Mid East (Sales) Staff (Legal, Licensing)

  5. Partial Global Product Structure Used by Eaton Corporation Chairman Law & Corporate Relations Engineering President Finance & Administration International Regional Coordinators Global Industrial Group Global Instruments Product Group Global Materials Handling Group Global Truck Components Group Global Automotive Components Group Source: Based on New Directions in Multinational Corporate Organization (New York: Business International Corp., 1981).

  6. Global Matrix Structure International Executive Committee Country Managers Germany Norway Argentina/ Brazil Spain/ Portugal Business Areas Power Transformers Transportation Industry Local Companies

  7. Building Global Capabilities • The Global Organizational Challenge Increased Complexity and Differentiation Need for Integration Knowledge Transfer • Global Coordination Mechanisms Global Teams Headquarters Planning Expanded Coordination Roles

  8. Cultural Differences in Coordination and Control • National Value Systems Power Distance Uncertainty Avoidance • Three National Approaches to Coordination and Control Centralized Coordination in Japanese Companies European Firms’ Decentralized Approach The United States: Coordination and Control through Formalization

  9. Transnational Model of Organizations • Assets and resources are dispersed worldwide into highly specialized operations that are linked together through interdependent relationships. • Structures are flexible and ever-changing. • Subsidiary managers initiate strategies and innovations that become strategy for the corporation as a whole. • Unification and coordination are achieved primarily through corporate culture, shared visions and values, and management style rather than through formal structures and systems

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