Globalization &
Organization Design
Motivations for Global
Expansion
Economic, technological, and competitive
forces have combined to push companies
from a domestic to a global focus
Motivations for Global Expansion:
Economies of Scale
Economies of Scope
Low-Cost Production Factors
STAGES OF INTERNATIONAL EVOLUTION OF
ORGANIZATIONS
Stages of International Evolution of
Organizations
Domestic: Predominantly domestically oriented (typically functional or
divisional), but managers are developing initial international involvement
(through export department), often to increase market potential.
International (Multidomestic): Exports are taken seriously and that the
company deals with the competitive issues of each country separately.
Multinational: Marketing and production facilities in many countries,
worldwide access to capital, and has more than one-third of its sales outside
the home country. (E.g. Sony of Japan, Coca-Cola of USA, Aditya Birla
Group)
Global: Transcends any single country and does not identify with a single
home country, stateless corporations, org structure international matrix or
transnational model. (E.g. Nestle, Unilever)
Global Expansion Through International
Strategic Alliance
1. Licensing – allowing another firm to market your brands.
(E.g. Saks’s licensed stores in Riyadh)
2. Joint Ventures – separate entity of two or more firms. (E.g.
Starbucks Coffee: A Tata Alliance)
3. Consortia – groups of independent companies. (E.g.
Keiretsu-Japan, Chaebol-Korea).
Fitting Organization Structure to
International Advantages
International Division
Global Product Structure
Global Geographic Structure
Global Matrix Structure
Global Matrix Structure
The Global Organizational
Challenge
Challenges of Global Organizations
• Complexity Response
• Differentiation • Global teams
• Need for coordination • HQ planning
• Knowledge transfer and • Expanded Coordination
innovation roles
• Functional managers
• Country managers
• Network coordinators
Challenges
The Transnational Model
Useful for Large multinational companies Features
with subsidiaries in many
countries • Assets and resources are dispersed into
highly specialized units – with
Focus on both global and local interdependent relationships
aspects + innovation, learning • Flexible structures + flexible centralization
and efficiency
• Subsidiary managers initiate strategy and
innovations that can become strategy for the
Focus on interdependence
whole organization
between units (not
independence or complete • Coordination through corporate culture,
dependence)
management style
Design Elements
1. Managers must design organizations for complex international
coordination
2. Organizations’ international strategies and structures evolve
3. There are diverse options for specific international strategies
4. There are a variety of challenges for global organizations
5. Diverse national and cultural values influence an organization’s
approach
6. Companies operating globally require broad coordination
Summary
Key Takeaways
Conclusion
SAMPLE FOOTER TEXT 16
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