International business Organizational Structures

Every international business firm has to face various issues related to organizational policies. These
organizational issues are to be addressed carefully in order to keep the business healthy and profitable.
Although there are numerous issues, both small and big, we will primarily concentrate only on the major
issues that need to be addressed.

Centralization vs. Decentralization

Centralization is the systematic and consistent reservation of authority at central points in the
organization. In centralization, the decision-making capability lies with a few selected employees. The
implications of centralization are

 Decision making power is reserved at the top level.

 Operating authority lies with the mid-level managers.

 Operation at lower level is directed by the top level.

Almost every important decision and operational activities at the lower level are taken by the top
management.

Decentralization is a systematic distribution of authority at all levels of management. In a decentralized

entity, major decisions are taken by the top management to build the policies concerning the entire
organization. Remaining authority is delegated to the mid- and lower-level managers.

Use of Subsidiary Board of Directors

International firms, especially the fully-owned ones, usually have a board of directors to oversee and
direct the top-level management. The major responsibilities of board-members are to −

 Advice, approve, and appraise local management.

 Help the management unit in providing response to local conditions.

 Assist the top management in strategic planning.

 Supervise the firm’s ethical issues.

Organizational Structures

Any international business organization, depending on its requirements and operations, would have an
organization structure to streamline all its processes. In this section, we will try to understand some of
the major types of organizational structures.
Initial Division Structures

Initial division structures are common in subsidiaries, export firms, and on-site
manufacturers. Subsidiaries that follow this kind of organization structure include firms where the main
export is expertise, for example, consultants and financial firms. Export firms include those having
technologically advanced products and manufacturing units. Companies having on-site manufacturing
operations follow this structure to cut down their costs.

International Division Structure

This structure is built to handle all international operations by a division created for control.
It is often adopted by firms that are still in the development stages of international business
operations.
Advantages
 International attitude gets the attention of top management
 United approach to international operations

Disadvantages
 Separates domestic managers from their international counterparts
 Difficulty in ideating and acting strategically and in allocating resources globally

Global Product Division

Global product divisions include domestic divisions that are allowed to take global
responsibility for product groups. These divisions operate as profit centers.
Advantages
 Helps manage product, technology, customer diversity
 Ability to cater to local needs
 Marketing, production, and finance gets a coordinated approach on a product-by-product,
global basis

Disadvantages
 Duplication of facilities and staff personnel within divisions
 Division manager gets attracted to geographic prospects and neglects long-term goals
 Division managers spending huge to tap local, not international markets

Global Area Division

Global area division structure is used for operations that are controlled on a geographic
rather than a product basis. Firms in mature businesses with select product lines use it.
Advantages
 International operations and domestic operations remain at the same level
 Global division managers manage business operations in selected geographic area
 Ability to reduce cost per unit and price competitively

Disadvantages
 Difficult to align product emphasis in a geographically oriented manner.
 New R&D efforts are often ignored, as sale in mature market is where the focus is.
Global Functional Division
This structure is to primarily organize global operations based on function; product
orientation is secondary for firms using global function division structure.
Advantages
 It emphasizes on functional leadership, centralized-control, and leaner managerial staff

 Favorable for firms that require a tight, centralized coordination and control over
integrated production mechanisms

 Helps those firms that need to transport products and raw materials between geographic
areas

Disadvantages
 Not suitable for all types of businesses. Applicable to only oil and mining firms

 Difficult to coordinate manufacturing and marketing processes

 Managing multiple product lines can be challenging, as production and marketing are not
integrated.
Mixed Matrix
This structure combines global product, area, and functional arrangements and it has a
cross-cutting committee structure.
Advantages
 Can be designed to meet individual needs
 Promotes an integrated strategic approach tailored to local needs and priorities

Disadvantages
 Complex structure, coordinating and getting everyone to work toward common goals
becomes difficult.

 Too many independent groups in the structure

ORGANIZATIONAL ISSUES OF INTERNATIONAL BUSINESS: SBA
3.6.1 ORGANIZATIONAL STRUCTURE:
An organizational structure defines how activities such as task allocation,
coordination
and supervision are directed towards the achievement of organizational
aims. It can also be
considered as the viewing glass or perspective through which individuals see
their organization
and its environment.
Organizations are a variant of clustered entities.
An organization can be structured in many different ways, depending on
their objectives.
The structure of an organization will determine the modes in which it
operates and performs.
Organizational structure allows the expressed allocation of responsibilities
for different
functions and processes to different entities such as
the branch, department, workgroup and individual. It affects organizational
action in two big
ways. First, it provides the foundation on which standard operating
procedures and routines rest.
Second, it determines which individuals get to participate in which decision-
making processes,
and thus to what extent their views shape the organization’s actions
Designing organizational structure: It includes an analysis of the
following aspects;
1) External environment
2) Overall aims and purpose of the enterprise
3) Objectives
4) Activities
5) Decisions
6) Relationships
7) Organization structure
8) Job structure
9) Organization climate
10) Management style
11) Human resource
Types of organizational structure
1) International division’s structure:
Grouping each international business activity into its own division, puts
internationally
specialized personnel together to handle such diverse matters as export
documentation, foreignexchange
transactions and relations with foreign governments.
2) Functional division’s structure:
It emphasizes on specific functions such as manufacturing, marketing,
finance and so on. It is
more suitable where the products and customers are few and homogeneous.
3) Product division structure:
It is more common in international business and more suitable in case of a
multiple brand
system. In this case, there are different product divisions, in each division,
there are subdivisions.
4) Geographic (Area) division structure:
In case of area structure, organization is based on the geographic areas,
namely, Asia, Africa, and
Latin America and so on and the operation is divided accordingly.
5) Matrix division structure:
The global matrix structure is more complex when it combines all the three
aspects – product,
area, and function.
This is found in multi-product firms where one group of products needs area
structure of
organization, while the other group of products needs functional structure,
and for yet another
group, product structure is found more appropriate.
6) Mixed structure:
Most firms allow the hybrid design which best suits their purpose as dictated
by size, strategy,
and technology, environment and culture. This is the reason why the famous
saying “structure
follows strategy has emerged. Ex: Philips and Unilever
Controlling of international business
According to Child, “Control is essentially concerned with regulating the
activities within an
organization so that they are in accord with expectations established in
policies, plans and
practices.
Types/Methods of control systems:
1) Personal controls: It is control by personal contact with subordinates.
2) Bureaucratic controls: The control through a system of rules and
procedures that directs
the actions of sub-units.
3) Output controls: It involves setting goals for subsidiaries to achieve;
expressing these
goals in terms of relatively objective criteria such as profitability,
productivity, growth,
market share, and quality.
4) Cultural controls: It exists when employees “buy into” the norms and
value systems of
the firm.
Approaches to control:
1) Market approach
2) Rules approach
3) Corporate culture approach
Control mechanisms:
1) Reports
2) Visits to subsidiaries
3) Management performance evaluations
4) Cost and comparisons
5) Evaluative measurements
6) Information systems
Process of performance measurement
 Establish standards of performance
 Measure actual performance
 Analyze performance and compare it with standards
 Construct and implement an action plan
 Review and revise standards
Performance evaluation system
It can be defined as, “the periodic review of operations to ensure that the
objectives of the
enterprise are being accomplished”.
Various performance indicators:
1) Financial measures
a) Return on investment(ROI)
b) Budget as a success indicator
2) Non-financial measures.
Types of performance evaluation system
1) Budget programming
2) Management audit
3) PERT(Program evaluation review technique)
4) Management information system
3.6..2 ORGANIZATIONAL DESIGN:
1. Meaning
Organizational design is a step-by-step methodology which identifies
dysfunctional
aspects of work flow, procedures, structures and systems, realigns them to
fit current business
realities/goals and then develops plans to implement the new changes. The
process focuses on
improving both the technical and people side of the business.
For most companies, the design process leads to a more effective
organization design,
significantly improved results (profitability, customer service, internal
operations), and
employees who are empowered and committed to the business. The
hallmark of the design
process is a comprehensive and holistic approach to organizational
improvement that touches all
aspects of organizational life, so you can achieve:
 Excellent customer service
 Increased profitability
 Reduced operating costs
 Improved efficiency and cycle time
 A culture of committed and engaged employees
 A clear strategy for managing and growing your business
Five Approaches to Organizational Design
Managers must make choices about how to group people together to
perform their work.
Five common approaches - functional, divisional, matrix, team, and
networking help managers
determine departmental groupings (grouping of positions into departments).
The five structures
are basic organizational structures, which are then adapted to an
organization's needs. All five
approaches combine varying elements of mechanistic and organic
structures.
For example, the organizational design trend today incorporates a minimum
of
bureaucratic features and displays more features of the organic design with
a decentralized
authority structure, fewer rules and procedures, and so on.
Functional structure
The functional structure group’s positions into work units based on similar
activities,
skills, expertise, and resources (see Figure 1 for a functional organizational
chart). Production,
marketing, finance, and human resources are common groupings within a
functional structure.
Figure 1 The functional structure.
As the simplest approach, a functional structure features well‐defined
channels of
communication and authority/responsibility relationships. Not only can this
structure improve
productivity by minimizing duplication of personnel and equipment, but it
also makes employees
comfortable and simplifies training as well.
But the functional structure has many downsides that may make it
inappropriate for some
organizations. Here are a few examples:
 The functional structure can result in narrowed perspectives because of the
separateness
of different department work groups. Managers may have a hard time
relating to
marketing, for example, which is often in an entirely different grouping. As a
result,
anticipating or reacting to changing consumer needs may be difficult. In
addition, reduced
cooperation and communication may occur.
 Decisions and communication are slow to take place because of the many
layers of
hierarchy. Authority is more centralized.
 The functional structure gives managers experience in only one fields their
own.
Managers do not have the opportunity to see how all the firm's departments
work together
and understand their interrelationships and interdependence. In the long run,
this
specialization results in executives with narrow backgrounds and little
training handling
top management duties.
Divisional structure
Because managers in large companies may have difficulty keeping track of
all their
company's products and activities, specialized departments may develop.
These departments are
divided according to their organizational outputs. Examples include
departments created to
distinguish among production, customer service, and geographical
categories. This grouping of
departments is called divisional structure (see Figure 2). These departments
allow managers to
better focus their resources and results. Divisional structure also makes
performance easier to
monitor. As a result, this structure is flexible and responsive to change.
However, divisional structure does have its drawbacks. Because managers
are so
specialized, they may waste time duplicating each other's activities and
resources. In addition,
competition among divisions may develop due to limited resources.
Matrix structure
The matrix structure combines functional specialization with the focus of
divisional
structure. This structure uses permanent cross‐functional teams to integrate
functional expertise
with a divisional focus.
Employees in a matrix structure belong to at least two formal groups at the
same time a
functional group and a product, program, or project team. They also report to
two bosses one
within the functional group and the other within the team.
This structure not only increases employee motivation, but it also allows
technical and
general management training across functional areas as well. Potential
advantages include
 Better cooperation and problem solving.
 Increased flexibility.
 Better customer service.
 Better performance accountability.
 Improved strategic management.
Predictably, the matrix structure also has potential disadvantages. Here are
a few of this
structure's drawbacks:
 The two‐boss system is susceptible to power struggles, as functional
supervisors and team
leaders vie with one another to exercise authority.
 Members of the matrix may suffer task confusion when taking orders from
more than one
boss.
 Teams may develop strong team loyalties that cause a loss of focus on
larger organization
goals.
 Adding the team leaders, a crucial component, to a matrix structure can
result in increased
costs.
Team structure:
Team structure organizes separate functions into a group based on one
overall objective (see
Figure 4). These cross functional teams are composed of members from
different departments
who work together as needed to solve problems and explore opportunities.
The intent is to break
down functional barriers among departments and create a more effective
relationship for solving
ongoing problems.
The team structure has many potential advantages, including the following:
 Intradepartmental barriers break down.
 Decision‐making and response times speed up.
 Employees are motivated.
 Levels of managers are eliminated.
 Administrative costs are lowered.
The disadvantages include:
 Conflicting loyalties among team members.
 Time‐management issues.
 Increased time spent in meetings.
Managers must be aware that how well team members work together often
depends on the
quality of interpersonal relations, group dynamics, and their team
management abilities.
Network structure
The network structure relies on other organizations to perform critical
functions on a contractual
basis (see Figure 5). In other words, managers can contract out specific work
to specialists.
This approach provides flexibility and reduces overhead because the size of
staff and operations
can be reduced. On the other hand, the network structure may result in
unpredictability of supply
and lack of control because managers are relying on contractual workers to
perform important
work.
3.6 CONTROLLING OF INTERNATIONAL BUSINESS
There are three main levels at which control can be implemented and
managed in an
international business. These three key levels of control are as follows:
1. Strategic
2. Organizational
3. Operational
Strategic Control:
Strategic control in intended both how well an international business
formulates strategy
and how well it goes about implementing it. Thus strategic control focuses on
how well the firm
defines and maintains its desired strategic alignment with its environment
and how effectively it
is setting and achieving its strategic goals.
Strategic control also play a major role in the decisions firms make about
foreign-market entry
and expansion and most critical aspect of strategic control is control of an
international firm’s
financial resources.
Organizational Control:
Organizational control focuses on the design of the organization itself. There
are many different
forms of organizational design an international firm can use. But selecting
and implementing a
particular design does not necessarily end the organization design process.
International firm generally use one or more of three types of organizational
control systems:
a. Responsibility Centre Control:
The most common type of organizational control system is a decentralized
one called
responsibility centre control. Using this system, a firm first identifies
fundamentals
responsibility centers within the organization. Strategic business units are
frequently
defined as responsibility centers, as are geographical regions or product
groups.
b. Generic Organizational Control:
A firm may prefer to use generic organizational across its entire organization;
that is, the
control systems used are the same for each unit or operation, and the locus
of authority
generally resides at the firm’s headquarters.
c. Planning Process Control:
A third type of organizational control, which could be used in combination
with either
responsibility center control or generic organizational control, focuses on the
strategic
planning process itself rather than on outcomes. Planning process control
calls for a firm
to concentrate its organizational control system on the actual mechanics and
processes its
uses to develop strategic plans.
Operations Control:
The third level of control in an international firm is operations control.
Operations control
focuses specifically on operating processes and systems within both the firm
and its subsidiaries
and operating units. Thus a firm needs an operation control system within
each business unit and
within each country or market in which it operates.
Establishing International Control Systems
Control systems in international business are established through four basic
steps:
1. Set Control standards for performance
2. Measure actual performance
3. Compare performance against standards
4. Respond to deviations
Set Control Standards for Performance
The first step in establishing an international control system is to define
relevant control
standards. A control standards in this context is a target, a desired level of
performance
component the firm is attempting control.
Control standards need to be objective and consistent with firm’s goals.
Suppose a firm is about
to open its first manufacturing facility in Thailand. It might set the following
three control
standards for the plant:
a. Productivity and quality in the new plant will exceed the levels in the
firm’s existing
plants.
b. After an initial break-in period, 90% of all key management positions in
the plant will be
filled by local managers.
c. The plant will obtain at least 89% of its resources from local suppliers.
Measure Actual Performance
The second step in creating an international control system is to develop a
valid measure of the
performance component being controlled. For the firm introducing a new
product in a foreign
market, performance is based on the actual number of units sold. For the
new plant in Thailand
used as an example earlier, performance would be assessed in terms of
productivity, quality, and
hiring and purchasing practices.
Compare Performance Against Standards
The next step in establishing an international control system is to compare
measured
performance against the original control standards. Again, when control
standards are
straightforward and objective and performance is relatively easy to asses,
this comparison is
easy. But when control standards and performance measures are less
concrete, comparing one
against the other is considerably more complicated.
Responding to Deviations
The final step in establishing an international control system is responding to
deviations
observed in step 3. Three different outcomes can result when comparing a
control standard and
actual performance:
a. The control standard has been met.
b. It has not been met.
c. It has been exceeded.
Depending on the circumstances, managers have many alternative
responses to these
outcomes. If a standard has not been met and the manager believes it is
because of performance
deficiencies on the part of employees accountable for the performance, the
manger may mandate
higher performance, increase incentives to perform at a higher level, or
discipline or even
terminate those employees.
Essential Controlling Techniques
Because of the complexities of both the international environment and
international firms
themselves, those firms rely on a wide variety of different control
techniques. We do not
describe them all here but introduce a few of the most important ones.
1. Accounting Systems:
Accounting is a comprehensive for collecting, analyzing, and communicating
data about
firm’s financial resources. Accounting procedures are heavily regulated and
must follow
prescribed methods dictated by national government. Because of these
regulations and
systems accounting process can be a good controlling techniques.
2. Procedures:
Firms also use various procedures to maintain effective control. Policies,
standard
operating procedures, rules, and regulations all help managers carry out the
control
function.
3. Performance Ratio:
International firms also use various performance rations to maintain control.
A
performance ratio is a numerical index of performance that the firm wants to
maintain. A
common performance ration used by many firms is inventory turnover.
Holding
excessive inventory is dysfunctional because the inventory ties up resources
that could
otherwise be used for different purposes and because the longer materials
sit in inventory,
the more prone they are to damage and loss.
Controlling Quality in International Business
Control also helps firms maintain and enhance the quality has become such
a significant
competitive issue in most industries that control strategies invariably have
quality as a central
focus.
Quality is a vital importance for several reasons:
1. Many firms today compete on the basis of quality.
2. Quality is important because it is directly linked with productivity.
3. Higher quality helps firms to develop and maintain customer loyalty.
Quality consist of eight dimensions:
1. Performance: comprises the product’s primary operating characteristics,
such as, an
automobile’s ability to transport its driver.
2. Features: include supplementary characteristics, such a power window
on an
automobile.
3. Reliability: refers to the dependability of a product, such as the
probability of an
automobile’s starting.
4. Conformance: is how well the product meets normal standards.
5. Durability: refers to the product’s expected lifespan.
6. Serviceability: refers to how fast and easily the product can be repaired.
7. Aesthetics: refers to how the product looks, feels, tastes, and/or smells.
8. Perceived quality: is the level of quality as seen by the customer.
Quality Improvement Tools
1. Statistical process control: is a family of mathematically-based tools
for monitoring and
controlling quality. Its basic purpose is to define the target level of quality,
specify an
acceptable range of deviation, and then ensure that product quality is hitting
the target.
2. Benchmarking: is the process of legally and ethically studying how other
firms do
something in high-quality way and then either imitating or improving on their
methods.
3. Total Quality Management (TQM): is an integrated effort to
systematically and
continuously improve the quality of an organization’s products and /or
services. The
components of TQM are – strategic commitment to quality, employee
involvement, highquality
materials, up-to-date technology, and effective process.
3.8 PERFORMANCE OF GLOBAL BUSINESS:
Global Business Performance is a flexible, web based solution that provides
the key
components to support global decision making. It offers the integration and
management of
multiple, cross-country data sources including POS, retailer direct,
syndicated and consumer
data. Global Business Performance identifies trends and opportunities and
delivers sales and
performance insights across regions, countries and categories, only days
after data is available.
Business Issue Addressed:
Sales & Channel Management
Key Features and Benefits:
 Data from many disparate sources can be harmonized and integrated to
give one
consistent, accurate and actionable view of a company's performance across
many
different markets.
 Sales, trends, performance, issues and opportunities can be identified
across multiple
countries, regions and categories a few days after the data is available,
rather than weeks
or months later.
 This approach ensures the fast identification of global sales, marketing and
supply chain
opportunities, and provides the ability to focus on the key issues, and
expand the solution
when and where required
3.9 PERFORMANCE EVALUATION SYSTEM:
The second evaluation challenge is that networks are unique organizations
that contrast to
a large degree with the corporate, governmental or civil society
organizational structures of their
members. To paraphrase systems thinker Russell
Source: [Link]
The organizational chart on the left is common for government, business or
civil society
organizations...typically the organizational forms of the members of a
network. The network’s
own organizational chart, however, is quite different, similar to what is
presented on the right.
The difference between a network and other organizational forms is more
than the structure of
relationships of power, money, information, co-operation and activities. The
nature of those
relationships is also unique in two important ways.
Democracy:
It is a necessity because network members are voluntary autonomous
organizations.
Hierarchical management and command and control simply do not work well
with these social
actors. Success depends on equity in the relations and exercise of power
within the network.
Leadership must stimulate and strengthen the active participation of all
members and effective
work in alliances. Democratic management and participation are the keys to
empowerment,
ownership and concerted, common action in a network.
Therefore, members’ participation in decision-making is the best guarantee
that the decision
will be implemented. Echoing the folks at the Canadian International
Development Research
Centre’s Evaluation Unit, the willingness of the members of a network to
monitor and interpret
success (along with planning, implementing and adjusting activities)
constitutes ownership in a
network.i
 Another unique difference of a network compared to other organizational
forms is the great
diversity amongst its members, of course within a unity of purpose. Part of
the genius of this
organizational form is that its members share common values and a
collective purpose but
have different visions and strategies on how to achieve change. The
organizational challenge
is to enable each one of these heterogeneous actors to make a creative and
constructive
Source: Rick Davies at [Link]
contribution. The evaluation task is to assess how well the actors are
interacting and
understand the fruits of their co-operation.
 Because networks are such unique organizational forms that demand
empowerment of the
enormously diverse actors within it, the task of evaluation is also unique.
Essentially, it is all
about participation. As Madeline Church and colleagues at the Development
Planning Unit,
University College London say:
 “Evaluation in the network context needs to pay attention to how the
network:
 fosters participation by its members,
 adds value to the work of its participants and
 Links participants and their work together across time and space in ways
that mobilise
greater forces for change.”ii
Network stakeholders expect project-type evaluations
The third challenge of evaluating the performance of networks is that
stakeholders
demand accountability and results seen from a program or project
perspective. Stakeholders want
to see quick progress and clear results for money and time invested in the
network project.
Consequently, donors especially exert project-minded, cost-benefit pressure.
The familiar project
planning, monitoring and evaluation approach runs along the linear, causal
chain:
Inputsactivitiesoutputsoutcomesimpact. They expect efficiency in the
inputsactivitiesoutputs sequence, and they want to know that this
sequence effectively leads
to outcomes and impact. Are we doing well? Was our hypothesis valid? Did
we do the right
thing in a worthwhile way?
These are valid, understandable questions but they are problematic for two
reasons. First, when a
network carries on projects, typically managed by the secretariat, that mode
of evaluation may be
appropriate. When, however, the evaluation focus is the operation of the
network as a whole,
project or program evaluation methodologies do not work. Why? Well, for
three reasons that
flow from the two challenges presented above.
1. Networks are in the category of organizational forms that Michael Quinn
Patton calls
“non-linear, dynamic social change agents”. iii They make interventions based
more on
values than hypotheses. Their activities take place in complex situations
without
predetermined, predictable, or controllable results. Even the “right” inputs-
activitiesoutputs
equation is often uncertain, because what works and does not work only
emerges
as the interactions of the network unfold.
2. In a network’s activities and results—and we are talking fundamentally
about fluid
relationships amongst members and significant social change—cause and
effect is rarely
known and frequently not knowable, and then usually in retrospect.
3. The time horizon of a network is long-term and especially uncertain. The
farther out the
time horizon, the more uncertainty increases. Opportunities and risks
proliferate, and with
more time, these variations magnify uncertainty.
 That is, sometimes the environment in which international networks
operate is so volatile that
project evaluation may not work even for short-term Secretariat projects.
The project
evaluation approach is even less appropriate for a program of projects or for
the network as a
whole.
Network evaluation requires hybrid, innovative approaches
 The fourth and last challenge I see for network evaluation is the other side
of the coin: How
can networks demonstrate results if standard evaluation methods are
inappropriate? The short
answer is that networks must innovate and create hybrid approaches that
meet their special
needs and circumstances. That, however, requires just as much professional
rigor as it does
vigor.
 Thus, a basic criterion is that evaluation in an international network must
conform to
professional standards. These four evaluation standards originally developed
by the
American Evaluation Associationiv are now being adapted around the world.
Of course, a
network may want to modify these or affirm others. An evaluation must meet
standards of:
 Utility - Serve the information needs of intended users.
 Feasibility - Ensure that an evaluation will be realistic and achievable in
the light of
the questions it seeks to answer and the available resources, be politically
sensitive and
sensible, and cost effective.
 Propriety - Make sure that evaluation is conducted legally, ethically, and
with due
regard for the welfare of those involved, as well as those affected by its
results.
 Accuracy - Utilize evidence generated through appropriate and solid
research
methods and quantitative and qualitative analytical tools. For example,
information
should be triangulated—derived from three or more sources.
A second criterion is that you craft the evaluation to be highly participatory,
or as
participatory as the stakeholders want it to be. This is not simply recognition
of the core,
democratic values of an international social change network. In my
experience, and that of other
network evaluators, broad, active participation by stakeholders greatly
enhances the validity and
cost/benefit of the evaluation. Perhaps most importantly, through their
participation, stakeholders
and especially the members develop the understanding and the commitment
to implement the
conclusions and results.
 Third, it has been found that the most useful definition of outcomes is
IDRC’s notion of
changes in the behaviour, relationships or activities of other social actors. v
By focusing on
two types of outcomes, international networks can resolve two of the biggest
dilemmas they
encounter in assessing their achievements: the dilemma of means and ends
and impact
measurement and attribution.
Networks are both a means and an end in them. The existence of a network
is of special value
because without it there would not be the interaction of its parts. I know that
this is an
unconventional criterion for results evaluation. A for-profit business can
rarely justify itself by
the number of employees it hires; its margin of profit and return on
investment is the principal
measurement of success. Sometimes the major achievement of a
government may be simply to
have finished its term of office, but usually its results are evaluated in terms
of the quantity and
nature of its contribution to the common good. An NGO does not exist to
exist; the NGO must
benefit other people.
Part A
Outline the stages in International strategic planning?
What is meant by strategic compulsions?
How would you show your understanding of standardization vs differentiation?
What conclusion can you draw on strategic options?
How would you categorize the problems of global portfolio management?
How would you explain the forms of international business?
Define global entry strategies
What is the main idea of the exporting?
How would you use manufacturing strategies without FDI?
Why do you think exporting is essential?
How would you explain the different forms of International Business
What is your opinion about licensing?
Define franchising
What are the main ideas of management contracts?
Part B
Describe the different forms of Global Entry Strategy.
Explain in detail about control techniques in international business
Explain in detail about the difference between standardization and differentiation strategies
with suitable examples.
Discuss in detail about Global Portfolio Management
Part C
Explain he organizational issues of international Business and how they can be solved
effectively.
“Organizational issues discuss several topics from every dimension while
setting up an
international business”. What are they?
“Control is necessary to achieve international objectives”. Elaborate this
statement by giving
aspects of international control process.
ETHICS IN INTERNATIONAL BUSINESS
Business Ethics:
Business ethics are principles of right or wrong governing the conduct of
business people.
The text says, “The accepted principles of right and wrong” But there are
many differences of
opinion among highly ethical business people.
Ethical Issues in International Business
 Many ethical issues and dilemmas are rooted in differences in political
systems, law,
economic development, and culture. Some key ethical issues in international
business
 Employment Practices
When work conditions in a host nation are clearly inferior to those in a
multinational’s
home nation, what standards should be applied? How much
divergence is acceptable?
Determinants of Ethical Behavior:
 Organization culture
 Personal ethics
 Decision making processes
 Leadership
 Unrealistic / realistic performance goals

Ethical Decision Making

Five things that an international business and its managers can do
to make sure ethical issues are considered
– Favor hiring and promoting people with a well-grounded sense of personal
ethics
– Build an organizational culture that places a high value on ethical behavior
– Make sure that leaders within the business not only articulate the rhetoric
of
ethical behavior, but also act in a manner that is consistent with that rhetoric
– Implement decision-making processes that require people to consider the
ethical
dimension of business decisions
– Develop moral courage
What is culture?
“A system of values and norms that are shared among a group of people and
that when taken
together constitute a design for living.”
Different components of culture:
 Values: Abstract ideas/assumptions about what a group believes to be
good, right and
desirable
 Norms: social rules and guidelines that prescribe appropriate behavior in
particular
situations
 Folkways: Routine conventions of everyday life.
o Little moral significance
o Generally, social conventions such as dress codes, social manners, and
neighborly
behavior
 Mores: Norms central to the functioning of society and its social life
o Greater significance than folkways
o Violation can bring serious retribution, Theft, adultery, incest and
cannibalism
Determinants of culture
Improving Global Business Ethics
Seven Moral Guidelines for MNCs
 Inflict no intentional or direct harm
 Produce more good than bad for the host country
 Contribute to host country’s development
 Respect the human rights of their employees
 Pay their fair share of taxes
 Respect local cultural beliefs that do not violate moral norms
 Cooperate with the government to develop and enforce background
institutions
The Role of Ethics in International Business
International business ethics has a number of open questions and dilemmas.
Today it is
characterized by the following elements: Every culture and nation has its
own values, history,
customs and traditions, thus it has developed own ethical values and
understanding of ethical
principles; There is no international ethical code of conduct, accepted and
followed by all the
countries; There is a lack of governments’ initiative to create ethical
cooperation framework and
thus to enhance ethical behavior in international business; It is hard to
outline those ethical
values which would be understandable, acceptable and important for
representatives of all the
continents simultaneously within different types of international cooperation
projects.
Following approach to international business ethics:
Every individual and every corporate body must outline its ethical values;
Every
individual and company should ensure understanding of ethical values and
belief in their
effectiveness and importance;
Employees of every organization must participate in creating a corporate
code of conduct,
which in this case definitely represents corporate culture, rather than only
personal views of a
company’s leader; Every individual and company must monitor compliance
with the outlined
values at all times.
All the ethical values must be divided in two categories – rigid and flexible.
Rigid are those
values which cannot be renounced under any circumstances (honesty,
integrity, professionalism),
and flexible ones, which are those moral principles which may be interpreted
in different ways in
different situations (will to understand other cultures’ values, remuneration
policies).
5.8 ETHICAL DECISIONS IN INTERNATIONAL BUSINESS:
Business Description (What):
Business decision-making tools yield more coherent and justifiable results
when used
with an understanding of the ethical, social and environmental aspects of the
decision-making
process. Using a case study approach, this subject is designed to look at
such non-financial
elements in decisions made within the international business context. Its
premise is that to
succeed in international business, both corporations and individuals need
broad decision-making
abilities. This applies in various situations in the international business
setting, including
business relations with governments, customers, employees and NGOs. This
subject considers
ethics in terms of Corporate Social Responsibility (CSR) in international
business.
The subject provides an experience-based environment where students work
on personal
application of knowledge. Responsibility for student learning is placed on the
students
themselves, allowing self-directed choices to be made while at the same
time supporting peer
learning. Student teams work with nominated industry partners on real-life
ethical challenges in
international business, as well as providing industry partners with fresh
analyses of future
challenges. The subject requires an environment where no pre-existing’
right' answers exist and
where the search for answers is built upon a continuous process rather than
any discrete event.
Objectives (Why):
 Equip students to deal with ethical questions arising in everyday
professional situations in
international business contexts, with international business partnerships
encouraging
students to improve their employability and gain unique access to real-life
corporate
decision making
 Support transference of learning from the classroom to the workplace
through student
interaction with business partners and focusing of assignments on applied
topics, the
learning journal in particular deepening students' generic ability to learn
from experience
 Help students synthesize their theoretical knowledge into a vision of the
ethical challenges
that may face business in the future, as well as providing tentative solutions
to foreseen
challenges.
There are mutual and synchronous benefits for all stakeholders,
including:
 For the company: a leadership opportunity for those organizations and
individuals
involved, bringing current CSR issues to curriculum content within a business
faculty. On
the other hand, partnered organizations have an opportunity to gain
academic
understanding of business ethics, the Gen Y perspective and to build an on-
campus
profile.
 For the students: by having actual companies involved students gain an
authentic
understanding of corporate responsibility and sustainability issues facing
business today.
The development of their ethical, professional and social understanding will
then translate
into individual employability.
 For the faculty: a leadership opportunity for business schools in the
Australian higher
education sector.
Practice (How):
 This subject has no formal lectures. Face-to-face teaching time is
organized as workshops
where teams, supported by the teaching staff, work through technical and
ethical questions
and challenges. Students are given an extensive reading list consisting of
core ethical texts
and their applications. They also have access to podcast lectures. Each team
has a
nominated industry partner with which it liaises throughout the unit.
 Class time is divided into weekly themes (2x3hr sessions each). In the first
session, ethical
theory taken from the readings is applied to universal questions in business
ethics. In the
second session each team applies its knowledge to the particular ethical
challenges faced
by their dedicated industry partner. At the start of the semester industry
partners provide
each team with an information pack containing key corporate facts and
figures, a CSR
report and links for further research. Students can ask questions of the
industry partner
half-way through the subject during a visit to their office/production facilities.
At the end
of the semester each team presents its findings to the industry partner and
engages in
dialogue about them. Presentations are held at the offices of the partner
company.
 Direct engagement by student teams with several business operating in an
international
context. Participating businesses in this subject were sourced through the
University's
Careers and Employer Relations Office
 Team assignments are the key learning tool. They are designed so that
students can work
through ethical questions in a structured and focused manner, benefiting
from the
experience and expertise of their team members. The questions set for
teams require all
team members to work cohesively and reach decisions in situations where
there is no one
right answer. In addition to the team assignment, students are assessed in
individual and
team quizzes, team presentations and an individual reflective journal and
report.
Industry Engagement:
 Direct engagement by student teams with several business operating in an
international context
 Participating businesses in this subject were sourced through the
University's
Careers and Employer Relations Office
Enablers:
 Continuity in unit of study 'ownership', facilitating the constitution,
development
and permanence of the teaching team
 Promotional and annual review decisions that reflect the role of learning
and
teaching activities (L&T), i.e. L&T career pathways encouraged and rewarded
Impediments: