MULTINATIONAL MANAGEMENT IN A CHANGING WORLD

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CHAPTER 15 COMPARATIVE STRATEGIC MANAGEMENT AND
ORGANIZATION DESIGN UNDERSTANDING COMPETITORS
AND COLLABORATORS
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ORGANIZATIONS ALIKE

• GLOBALIZATION AND CONVERGENCE

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CONVERGENCE

• The increasing similarity of management practices

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EXHIBIT 15.1 The Effects of Globalization on the
Convergence of Strategy and Structure
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WHY CONVERGENCE?

• Global customers and products
• Growing levels of industrialization and economic
  development
• Global competition and global trade

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Why convergence? (continued)

• Cross-border mergers, acquisitions, and alliances
• Cross-national mobility of managers
• Internationalization of business education

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WHY DO MANAGEMENT PRACTICES DIFFER?

• National context - includes national culture, the
  countrys available labor and other natural
  resources

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COMPARATIVE STRATEGY FORMULATION EXAMPLES FROM
AROUND THE WORLD

• US model used as basis for comparison
• represents the attempt of a rational decision
  making process

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THE US MODEL OF STRATEGY FORMULATION

• 1-Define the business and its mission
• 2- Define objectives
• 3- Assess the company's situation SWOT,
  competitors' actions
• 4- Craft strategy content

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DEFINING THE BUSINES AND ITS MISSION

• The mission statement tells the organizational
  members and outsiders what the company does and
  why it exists

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US MISSION STATEMENTS

• Often emphasize market issues closely related to
  key elements of success in their respective
  industries

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FRENCH AND BRITISH MISSION STATEMENTS

• British mission statements
• focus on strategic issues, emphasize shareholder
  returns
• French mission statements
• reflect a national context in a social democracy

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EX 15.3
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DEFINING OBJECTIVES

• National differences exist mostly in priorities
• financial or strategic

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EXHIBIT 15.4 FINANCIAL AND STRATEGIC OBJECTIVES
OF U.S., JAPANESE, AND BRITISH SUBSIDIARIES
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ASSESSING THE COMPANY'S SITUATION

• Management's assessment of the situation faced by
  their companies
• US managers favor techniques such as the SWOT and
  competitive analyses

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GERMAN AND BRITISH EXAMPLES

• Successful companies from both countries
  identified the same key success factors
• Differences the organizational characteristics
  that managers believe achieve the key success
  factors

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NATIONAL DIFFERENCES IN STRATEGY CONTENT
KEIRETSU

• Compete with a high ratio of products where the
  company can add value with knowledge
• Emphasize production to improve productivity
• Use the resources of networks

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COMPARATIVE ORGANIZATION DESIGN

• Multinational managers must deal with
  organizations from different societies
• Each society provides a unique national context
  for the design of organizations

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BASIC CONCEPTS IN COMPARATIVE ORGANIZATIONAL
DESIGN

• Vertical differentiation
• Horizontal differentiation
• Span of control
• Integration
• Standardization

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Basic concepts in comparative organizational
design, continued

• Formalization
• Mutual adjustment

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EXHIBIT 15.6 PREFERRED ORGANIZATIONAL HIERARCHIES
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CONTROL MECHANISMS

• Link the organization vertically
• Five broad types of control
• personal
• output
• bureaucratic
• decision making
• cultural

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NATIONAL CULTURE AND ORGANIZATIONS

• Hofstede power distance and uncertainty
  avoidance the most important
• influence basic problems of organizational
  design--differentiation and integration
• See Exhibit 15.7 next

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ADHOCRACY

• Low power distance low uncertainty avoidance
  adhocracy
• Fits cultures where people can tolerate ambiguity
  and have less need for formalized rules and
  regulations

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THE ADHOCRACY DESIGN

• Vertical and horizontal differentiation fewer
  levels and wider span of control
• Control mechanisms mutual adjustment
• Decision making Participative or consultative

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PROFESSIONAL BUREAUCRACY

• Small power distance high uncertainty avoidance
  norms professional bureaucracy

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THE PROFESSIONAL BUREAUCRACY DESIGN

• Vertical and horizontal differentiation moderate
  levels
• Control mechanisms standardization of skills.
• Decision making centralized decision making

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FULL BUREAUCRACY

• High power distance high uncertainty avoidance
  full bureaucracy
• Full bureaucracy is the most formalized of the
  Hofstede organization types

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FULL BUREAUCRACY DESIGN

• Vertical and horizontal differentiation Tall
  pyramids and narrow spans of control
• Control mechanisms Standardization and a high
  degree of formalized rules
• Decision making Highly centralized

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FAMILY BUREAUCRACY

• Occurs in countries with large power distance
  norms and low uncertainty avoidance norms.
• It most parallels an extended family with a
  dominant patriarch or father figure.

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FAMILY BUREAUCRACY DESIGN

• Vertical and horizontal differentiation small
  and low specialization
• Control and coordination mechanisms direct
  contact Decision making highly centralized
• See key relationships in Exhibit 15.9 next

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THE JAPANESE CONSENSUS BUREAUCRACY A SPECIAL
CASE?

• Should favor the full bureaucracy
• Unique style of group orientation consensus
  bureaucracy

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JAPANESE CONSENSUS BUREAUCRACY DESIGN

• Vertical differentiation little job
  specialization for individuals
• Control mechanisms favor cultural control over
  bureaucratic control
• Decision making consensual - see Exhibit 15.10
  next

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SOCIAL INSTITUTIONS ANDTHE KOREAN CHAEBOL
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DISTINCT ORGANIZATIONAL FEATURES

• Family-dominated and multi-industry conglomerates
• Extensive family control
• Paternalistic leadership
• Centralized planning - reports directly to the
  chairman
• Dominated much of Korean business

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INSTITUTIONAL CHANGE AND THE CHAEBOL

• Coercive isomorphism - government support
  fostered the growth of the Korean chaebol
• Close relationships with banks for financing
• Protection by the government

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Institutional change and the chaebol, continued

• Recent government policies
• reduced support
• breaking networks
• allowed to fail

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CONCLUSIONS

• Understanding different approaches to strategy
  and organization design
• helps to deal with international competitors
• helps a company become better collaborators
• facilitates local operations

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Conclusions, continued

• Pressures for convergence
• National cultural and social institutional lead
  to differences