Chapter Six

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
Research Development
Human Resources
Corporate Finance
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
Engineering
President
International
Law Corporate Relations
Finance Administration
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

10
Chapter Seven

• Manufacturing and Service Technologies

11
Core Transformation Process for a Manufacturing
Company
ENVIRONMENT
Organization
Core Technology
Raw Material Inputs
Product or Service Outputs
Core Work Processes
Materials Handling
Assembly
Milling
Inspection
12
Woodwards Classification Based on System of
Production

• Group I
• Small-batch and unit production
• Group II
• Large-batch and mass production
• Group III
• Continuous process production

13
Flexible Manufacturing Systems

• Computer-aided design
• (CAD)
• Computer-aided manufacturing
• (CAM)
• Integrated Information Network

14
Relationship of Flexible Manufacturing Technology
to Traditional Technologies
Flexible Manufacturing
NEW CHOICES
Customized
PRODUCT FLEXIBILITY
TRADITIONAL

CHOICES
Standardized
BATCH SIZE
Small
Unlimited
Source Based on Jack Meredith, The Strategic
Advantages of New Manufacturing Technologies For
Small Firms. Strategic Management Journal 8
(1987) 249-58 Paul Adler, Managing Flexible
Automation, California Management Review (Spring
1988) 34-56 and Otis Port, Custom-made Direct
from the Plant. Business Week/21st Century
Capitalism, 18 November 1994, 158-59.
15
Comparison of Organizational Characteristics
Associated with Mass Production andFlexible
Manufacturing Systems
Source Based on Patricia L. Nemetz and Louis W.
Fry, Flexible Manufacturing Organizations
Implications for Strategy Formulation and
Organization Design. Academy of Management
Review 13 (1988) 627-38 Paul S. Adler,
Managing Flexible Automation, California
Management Review (Spring 1988) 34-56 Jeremy
Main, Manufacturing the Right Way, Fortune, 21
May 1990, 54-64.
16
Comparison of Organizational Characteristics
Associated with Mass Production andFlexible
Manufacturing Systems (cont.)
Source Based on Patricia L. Nemetz and Louis W.
Fry, Flexible Manufacturing Organizations
Implications for Strategy Formulation and
Organization Design. Academy of Management
Review 13 (1988) 627-38 Paul S. Adler,
Managing Flexible Automation, California
Management Review (Spring 1988) 34-56 Jeremy
Main, Manufacturing the Right Way, Fortune, 21
May 1990, 54-64.
17
Comparison of Organizational Characteristics
Associated with Mass Production andFlexible
Manufacturing Systems (cont.)
Source Based on Patricia L. Nemetz and Louis W.
Fry, Flexible Manufacturing Organizations
Implications for Strategy Formulation and
Organization Design. Academy of Management
Review 13 (1988) 627-38 Paul S. Adler,
Managing Flexible Automation, California
Management Review (Spring 1988) 34-56 Jeremy
Main, Manufacturing the Right Way, Fortune, 21
May 1990, 54-64.
18
Differences Between Manufacturing and Service
Technologies
Sources Based on F. F. Reichheld and W. E.
Sasser, Jr., Zero Defections Quality Comes to
Services, Harvard Business Review 68
(September-October 1990) 105-11 and David E.
Bowen, Caren Siehl, and Benjamin Schneider, A
Framework for Analyzing Customer Service
Orientations in Manufacturing, Academy of
Management Review 14 (1989) 75-95.
19
Configuration and Structural Characteristics of
Service Organizations vs. Product Organizations
20
Departmental Technologies

• CRAFT
• Low analyzability
• Low variety
• Examples
• Performing arts
• Trades
• Fine goods manufacturing

• ROUTINE
• High analyzability
• Low variety
• Examples
• Sales
• Clerical
• Drafting
• Auditing

21
Departmental Technologies

• ENGINEERING
• High analyzability
• High variety
• Examples
• Legal
• Engineering
• Tax accounting
• General accounting

• NONROUTINE
• Low analyzability
• High variety
• Examples
• Strategic planning
• Social science research
• Applied research

22
Relationship of Department Technology to
Structural and Management Characteristics
23
Thompsons Classification of Interdependence and
Management Implications
Client
Client
Client
24
Primary Means to Achieve Coordination for
Different Levels of Task Interdependence in a
Manufacturing Firm
COORDINATION
INTERDEPENDENCE
High
Reciprocal (new product development)
Horizontal structure, cross-functional
teams Face-to-face communication, Unscheduled
meetings, Full-time integrators Scheduled
meetings, task forces Vertical
communication Plans Rules
Mutual Adjustment
Planning
Standardization
Low
Source Adapted from Andrew H. Van de Ven, Andre
Delbecq, and Richard Koenig, Determinants of
Communication Modes Within Organizations,
American Sociological Review 41 (1976) 330.
25
Relationships Among Interdependence and Other
Characteristics of Team Play
Source Based on William Passmore, Carol E.
Francis, and Jeffrey Halderman, Sociotechnical
Systems A North American Reflection On the
Empirical Studies of the 70s, Human Relations
35 (1982) 1179-1204.
26
Sociotechnical Systems Model
The Social System Individual and
team behaviors Organizational/team culture Manag
ement practices Leadership style Degree of
communication and openness Individual needs and
desires
The Technical System Type of production
technology (small batch, mass production, FMS,
etc.) Level of interdependence (pooled,
sequential, reciprocal) Physical work
setting Complexity of production process
(variety and analyzability) Nature of raw
materials Time pressure
Design for Joint Optimization Work roles,
tasks, workflow Goals and values Skills and
abilities
Sources Based on T. Cummings, Self-Regulating
Work Groups A Socio-Technical Synthesis,
Academy of Management Review 3 (1978) 625-34
Don Hellriegel, John W. Slocum, and Richard W.
Woodman, Organizational Behavior, 8th ed.
(Cincinnati, Ohio South-Western College
Publishing, 1998), 492 and Gregory B. Northcraft
and Margaret A. Neale, Organizational Behavior
A Management Challenge, 2nd ed. (Fort Worth,
Tex. The Dryden Press, 1994), 551.