Exam 6: Designing Organizations for the International Environment

Discuss the global geographical structure.

Compare and contrast the global product division structure and global matrix structure.

The most advanced and competitive use of global teams involves simultaneous contributions in three strategic areas. List these three areas.

Select any organization with which you are familiar-your college or university, the car dealership down the road, an organization where you work, etc. Analyze the global forces that influence the organization you selected. How should the organization respond to those global forces in order to gain international competitive advantage?

CHART 6.1 -Refer to Chart 6.1. Which structure is shown?

Which factor motivates companies to expand internationally and is related to labour and raw materials?

The global product structure works best when pressure for decision-making balances the interests of both product standardization and geographical localization, and when coordination to share resources is important.

High uncertainty avoidance means that people accept inequality in power among institutions, organizations, and people.

What are the international strategic alliances that companies can choose from to expand globally? Discuss and give an example of each.

Case 6.0 It was reported in the Wall Street Journal that Ford Motor Co. was reorganizing to place its functions such as product development, sales, and engine/transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford's development of models such as its Mondeo (Europe) and Contour (U.S.), which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford's geographical strengths throughout the world. The company had been organized geographically into three relatively independent divisions-Ford North America, Ford of Europe, and Ford Asia/Pacific. The new products cited above, Mondeo and Contour, sapped $6 billion in development costs because of expensive coordination time between the sometimes-conflicting European and North American divisions. Elimination of duplication was a goal of the new structure. Simultaneously a new "program team facility" was being constructed so that all of Ford's new product development would be by teams. The new coupe Mustang was born from an experimental cross-functional team that designed the product in less than three years compared to Ford's normal four-to-five-year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about 30% lower than budgets for comparable projects. SOURCE: Summarized from "Ford to Realign with a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pp. A3-A4. -Refer to Case 6.0. What sort of structure was Ford using before the proposed change?

When should a company begin using an international division? What problems are likely to be solved by adopting this structure? As the company progresses in its international development, what problems will likely not be solved by this structure?

In the third stage (multinational stage) of international development, a company typically shifts its interest from domestic activity to exporting.

The transnational model reflects the ultimate in both organizational complexity, with many diverse units, and organizational coordination, with mechanisms for integrating the varied parts.

With a global geographical structure, each division's manager is responsible for planning, organizing, and controlling all functions for the production and distribution of its products for any market around the world.

Why are global companies sometimes described as stateless corporations?

Chart 6.2 -Refer to Chart 6.2. How would you relate the structure diagrammed in organizational chart 6.2 to a global geographic structure?

Functional managers coordinate across functions, whereas country managers coordinate among countries.

Hybrid structures are typical in highly volatile environments.

Discuss the national value systems.

Case 6.0 It was reported in the Wall Street Journal that Ford Motor Co. was reorganizing to place its functions such as product development, sales, and engine/transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford's development of models such as its Mondeo (Europe) and Contour (U.S.), which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford's geographical strengths throughout the world. The company had been organized geographically into three relatively independent divisions-Ford North America, Ford of Europe, and Ford Asia/Pacific. The new products cited above, Mondeo and Contour, sapped $6 billion in development costs because of expensive coordination time between the sometimes-conflicting European and North American divisions. Elimination of duplication was a goal of the new structure. Simultaneously a new "program team facility" was being constructed so that all of Ford's new product development would be by teams. The new coupe Mustang was born from an experimental cross-functional team that designed the product in less than three years compared to Ford's normal four-to-five-year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about 30% lower than budgets for comparable projects. SOURCE: Summarized from "Ford to Realign with a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pp. A3-A4. -Refer to Case 6.0. Describe how Ford's proposed structural changes are different from the usual progression through the stages resulting from international development. Describe how Ford's proposed structural changes parallel the new designs for domestic and global advantage.