Success and Structure

• 5 dimensions of successful international firm:

  1. visionary leadership
  2. strong organizational culture
  3. superior organizational processes
  4. appropriate organizational structure
  5. appropriate strategy
• leaders differ from managers in that managers focus on directing the firm's day to day operations
• the CEO of Unilever in the Netherlands is Paul Polman
• visionary leaders 4 major traits:

  1. international mindset
  2. willingness to commit resources
  3. strategic vision
  4. willingness to invest in human assets
• organizational culture: pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt
• organizational culture is sometimes referred to as corporate culture
• management at firms such as Canon and Hyundai seek to build a global organizational culture
• organizational processes: managerial routines, behaviors, and mechanisms that allow firm to function as intended
• General Electric has gained much competitive advantage by developing and improving value chain processes
• global team: members come from two or more national or cultural backgrounds
• two types of global teams:

  1. strategic global teams (identify or implement initiatives that enhance long term direction of firm in its global industry)
  2. operational global teams (focus on efficient and effective operation of business across the whole network)
• the most successful teams are flexible, responsive, and innovative
• technical project management: practical and tactical dimensions of team project
• cross cultural proficiency emphasizes efforts to minimize misunderstandings within the multicultural team environment
• stakeholder communication is critical to team success
• organizational structure: boxes and lines that specify links between people, functions, and processes that allow firm to carry out operations
• firms develop organizational structures to manage international relationships
• 2 organizational structures

  1. centralized (gives headquarters considerable authority and control over firm's activities worldwide)
  2. decentralized (substantial autonomy and decision making authority delegated to firm's subsidiaries around the world)
• centralized approaches are more related to global integration
• decentralized approaches are more related to local responsiveness
• decision making: centralized is more top down while decentralized is more bottom up
• "think globally, act locally" oversimplifies. rather, "think globally and locally and act appropriately"
• organizational structure can be seen as a tool that facilitates the implementation of strategy
• strategy comes first, then structure
• organizational structures tend to evolve over time
• when export sales reach a substantial proportion of total sales the firm will usually establish a separate export department
• export department approach is most closely associated with a home replication strategy
• as firm undertakes more advanced activities abroad, management will typically create an international division structure
• international division structure is associated with home replication strategy at first, then evolve to adopt a multi domestic or global strategy
• international division structure can lead to a domestic versus international power struggle
• geographic area structure is when management is decentralized to individual geographic regions whose managers are responsible for operations within their regions
• geographic area structure is associated with a multi domestic strategy
• firms that use geographic area structure are often in mature industries with narrow product lines
• geographic area structure example: Nestle
• product structure is when management of international operations is organized by major product lines
• product structure examples: Motorola and Apple
• the product division structure is highly centralized and typically associated with global strategy
• functional structure is when management of international operations is organized by functional activity
• functional structure examples: oil companies and cruise ship lines
• advantages of functional structure are small central staff and focused global strategy