Organizational Architecture in International Business

These flashcards cover key concepts related to organizational architecture in international business, focusing on definitions, strategies, and structures.

What is organizational architecture?

The totality of a firm’s organization, including formal structure, control systems, incentives, organizational culture, processes, and people.

What are the three conditions for superior enterprise profitability?

1. Different elements of organizational architecture must be internally consistent. 2. Architecture must fit the firm’s strategy. 3. Architecture and strategy must be consistent with competitive conditions.

What is the purpose of control systems in organizational architecture?

To measure performance of subunits and ensure that organizational objectives are met.

How does vertical differentiation affect decision-making?

It determines the centralization or decentralization of decision-making responsibilities within an organization.

What are the arguments for centralization in organizational structure?

Facilitates coordination, ensures consistency in decisions, allows top management to bring change, and avoids duplication of activities.

What is a localization strategy in international business?

A focus on local responsiveness, where operating decisions are decentralized to country subsidiaries.

What characterizes a transnational strategy?

Focus on achieving location and experience curve economies, local responsiveness, and global learning, with high need for coordination.

What are integrating mechanisms?

Tools and processes used to achieve coordination between subunits in an organization.

What are the types of control systems mentioned in the notes?

Personal controls, bureaucratic controls, output controls, cultural controls.

What does performance ambiguity refer to in international business?

The uncertainty about the causes of good or bad performance.

What role does organizational culture play in performance?

Culture encompasses the norms and values shared among employees, impacting work performance and behavior.

What is meant by 'organizational inertia' in the context of change?

The resistance to change caused by existing power dynamics, culture, or institutional constraints.

What are three stages of implementing organizational change?

1. Unfreezing the organization. 2. Moving to the new state. 3. Refreezing the organization.

Why are integrating mechanisms necessary for multinational companies?

To ensure effective coordination, especially when pursuing global standardization, international, or transnational strategies.

What is the significance of adapting incentive systems in multinational firms?

Incentive systems should align with performance metrics and consider national cultural differences.

What does horizontal differentiation involve?

Division of the firm into subunits and organizing them along functional or geographic lines.