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The organizational context

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The organizational context * Figure 2-1: Management demands of international growth The path to global status Causes structural responses, due to: Strain imposed by ... – PowerPoint PPT presentation

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Title: The organizational context


1
  • The organizational context

2
Figure 2-1 Management demands of international
growth
3
The path to global status
  • Causes structural responses, due to
  • Strain imposed by growth and geographical spread
  • Need for improved coordination and control across
    business units
  • The constraints imposed by host-government
    regulations on ownership and equity
  • Evolution path common but not normative

4
Figure 2-2 Stages of internationalization
5
Stages of internationalization Exporting
  • Typically the initial stage of international
    operations
  • Usually handled by an intermediary (foreign agent
    or distributor)
  • Role of HR department unclear at this stage

6
Figure 2-3 Export department
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Sales subsidiary
  • Replacing foreign agents/distributors with own
    through sales or branch offices/subsidiaries
  • May be prompted by
  • Problems with foreign agents
  • More confidence in international activities
  • Desire for greater control
  • Give greater support to exporting activities
  • PCNs may be selected, leading to some HR
    involvement

8
Figure 2-4 Sales subsidiary
9
International division
  • Creation of a separate division in which all
    international activities are grouped
  • Resembles miniature replica of domestic
    organization
  • Subsidiary managers report to head of
    international division
  • Objectives regarding foreign activities may
    determine approach to staffing of key positions
  • Expatriate management role of corporate HR

10
Figure 2-5 International division
11
Global product/area division
  • Strain of sheer size may prompt structural change
    to either of these global approaches
  • Choice typically influenced by
  • The extent to which key decisions are to be made
    at the parent country headquarters or at the
    subsidiary units (centralization versus
    decentralization)
  • Type or form of control exerted by parent over
    subsidiary

12
Figure 2-6a Global product division
Figure 2-6b Global area division
13
The matrix
  • An attempt to integrate operations across more
    than one dimension
  • Violates Fayols principle of unity of command
  • Considered to bring into the management system a
    philosophy of matching the structure to the
    decision-making process

14
Figure 2-7 The matrix
15
Problems with the Matrix Bartlett and Ghoshal
  • Dual reporting
  • Proliferation of communication channels
  • Overlapping responsibilities
  • Barriers of distance, language, time and culture
  • Leads to conflict and confusion
  • Creates informational logjams
  • Produce turf battles and loss of accountability
  • Make it virtually impossible to resolve conflicts
    and clarify confusion

16
Control mechanisms
  • Globalization brings considerable challenges
    which are often under-estimated.
  • Every morning when I wake I think about the
    challenges of coordinating our operations in many
    different countries
  • Quote by Accor CEO

17
Figure 2-10 Control mechanisms
18
Mode of operation and HRM
  • Not just subsidiary operations
  • Firms may also adopt contractual modes
  • Licensing
  • Franchising
  • Management contracts
  • Projects
  • And/or cooperative modes (such as joint ventures)

19
Interfirm linkages
  • Alliance (strategic alliance, cooperative
    venture, collaborative venture or corporate
    linkage)
  • A form of business relationship that
  • Involves some measure on interfirm integration
  • Stops short of a full merger or acquisition

20
HR factors
  • HR issues and activities that affect the
    successful functioning of international joint
    ventures include
  • Assigning mangers to the joint venture
  • Evaluating their performance
  • Handling aspects pertaining to career path
  • Compensation benefits
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