Adobe Systems Organizational Structure of MNEs and Control Systems International Management Adobe Systems Sylva Žáková Talpová 2 Lecture Learning Goals ̶Understand the importance of appropriate organizational structures to effective strategy implementation ̶Become familiar with the types of organizational designs suitable for the level and scope of internationalization of the firm ̶Be able to recognize why and when organizational restructuring is needed Adobe Systems Sylva Žáková Talpová 3 Opening Profile 1: Samsung Samsung SH700 In 1993, they launched the original SH700 model, an “ultra-light” mobile phone that was definitely a step in the right direction for lighter and more convenient to carry mobile phones in the future ̶ Samsung SH700 Top 5 90s Mobile Phones Adobe Systems Sylva Žáková Talpová 4 Opening Profile 1: Samsung ̶Badly hit by the global economic downturn in 2009 ̶Implemented a radical reorganization ̶Consolidating business operations into two operating divisions ̶Replaced the heads of five of its eight overseas operations ̶ ̶ Adobe Systems Sylva Žáková Talpová 5 Opening Profile 2: ACO ̶ACO – building drainage and many more ̶Changing structure from decentralised towards higher centralisation ̶Trend in MNEs? Adobe Systems Sylva Žáková Talpová 6 Opening Profile 3: Alcoa ̶Created smaller units ̶Linked geographically dispersed, but similar businesses (e.g., Brazil and Australia) ̶ ̶ ̶ Adobe Systems Sylva Žáková Talpová 7 Organizational Change and Design Needed When: Adobe Systems Sylva Žáková Talpová 8 Organizational Structure ̶Must evolve to accommodate internationalization ̶Should be contingency based ̶Must “fit” with strategy ̶ ̶ ̶ Adobe Systems Sylva Žáková Talpová 9 Stopford-Wells model Adobe Systems Sylva Žáková Talpová 10 Basic structures of MNE ̶Domestic structure + ̶export department ̶foreign subsidiary ̶international division Integrated global structures ̶Global functional structure ̶Global area structure ̶Global product structure ̶ ̶ Adobe Systems Sylva Žáková Talpová 11 Domestic Structure Plus Export Dpt/Foreign Subsidiary/Int Division Adobe Systems Sylva Žáková Talpová 12 Domestic Structure Plus Export Dpt/Foreign Subsidiary/Int Division ̶Organized along functional, product, or geographic lines ̶ ̶ Adobe Systems Sylva Žáková Talpová 13 Global Functional Structure ̶Designed on the basis of the company’s functions ̶Allows for functional specialization and economies of scale ̶Usually single product companies ̶Used at the beginning of interntionalisation ̶No P&L for each product (impact on motivation) ̶Needs collaborative cultures ̶ Adobe Systems Sylva Žáková Talpová 14 Global Product (Divisional) Structure Adobe Systems Sylva Žáková Talpová 15 Global Product (Divisional) Structure ̶P&L statement for every division ̶Needs competitive cultures ̶Used by Microsoft – changed to functional ̶Heinz, previously using geographical structure, changed to global product structure ̶ ̶ Adobe Systems Sylva Žáková Talpová 16 Global Geographic (Area) Structure Adobe Systems Sylva Žáková Talpová 17 Matrix structure Adobe Systems Sylva Žáková Talpová 18 Stopford-Wells model Adobe Systems Sylva Žáková Talpová 19 Different approaches ̶One of the other approaches is that of organisational strategy ̶Bartlett-Ghoshall ̶ Adobe Systems Sylva Žáková Talpová 20 Bartlett-Ghoshall Výsledek obrázku pro bartlett ghoshal organisational characteristics Adobe Systems Sylva Žáková Talpová 21 International Výsledek obrázku pro bartlett ghoshal organisational characteristics Výsledek obrázku pro bartlett ghoshal organisational characteristics Adobe Systems Sylva Žáková Talpová 22 Multinational Výsledek obrázku pro bartlett ghoshal organisational characteristics Výsledek obrázku pro bartlett ghoshal organisational characteristics Adobe Systems Sylva Žáková Talpová 23 Global Výsledek obrázku pro bartlett ghoshal organisational characteristics Výsledek obrázku pro bartlett ghoshal organisational characteristics Adobe Systems Sylva Žáková Talpová 24 Transnational Attempts to combine: ̶The capabilities and resources of a MNC ̶The economies of scale of a global corporation ̶The local responsiveness of a domestic company ̶The ability to transfer technology efficiently typically of the international structure ̶ Výsledek obrázku pro bartlett ghoshal organisational characteristics Výsledek obrázku pro bartlett ghoshal organisational characteristics Adobe Systems Sylva Žáková Talpová 25 Organising challenges ̶Integration vs. differentiation ̶Globalisation vs. localisation ̶Centralisation vs. autonomy ̶ Adobe Systems Sylva Žáková Talpová 26 Centralisation vs. autonomy Adobe Systems Sylva Žáková Talpová 27 Globalisation vs. localisation Adobe Systems Sylva Žáková Talpová 28 Direct Coordinating Mechanism Control Systems for Global Operations Indirect Coordinating Mechanism ̶McDonald’s in Moscow ̶Problem: quality control ̶Solution: built processing plant in Moscow and provided managerial training ̶Other options: visits by head-office personnel and regular meetings ̶ ̶ ̶Examples: sales quotas, budgets, and financial tools and reports ̶Three financial statements ̶One for accounting standards in host country ̶One for the standards in the home country ̶One for consolidation ̶ ̶ Adobe Systems Thank you for attention!