Title: The organizational context
1- The organizational context
2Figure 2-1 Management demands of international
growth
3The 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
4Figure 2-2 Stages of internationalization
5Stages 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
6Figure 2-3 Export department
7Sales 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
8Figure 2-4 Sales subsidiary
9International 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
10Figure 2-5 International division
11Global 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
12Figure 2-6a Global product division
Figure 2-6b Global area division
13The 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
14Figure 2-7 The matrix
15Problems 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
16Control 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
17Figure 2-10 Control mechanisms
18Mode 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)
19Interfirm 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
20HR 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