The Organization of International Business

Flashcards covering key vocabulary and concepts from Chapter 14 on the organization of international business.

Organizational Architecture

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

Vertical Differentiation

The centralization and decentralization of decision-making responsibilities within an organization.

Horizontal Differentiation

The division of the firm into subunits based on different functions or product lines.

Integrating Mechanisms

Structures and processes used to achieve coordination between subunits of an organization.

Control Systems

Methods used to monitor and manage the performance of organizational subunits.

Incentives

Devices used to reward appropriate employee behavior, typically linked to performance metrics.

Cultural Controls

Controls based on shared norms and values within an organization that promote self-regulation among employees.

Performance Ambiguity

A situation where the causes of good or bad performance are not clearly identifiable.

Localization Strategy

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

Global Standardization Strategy

A strategy aimed at realizing location and experience curve economies, with a need for high integration between units.

Transnational Strategy

A strategy that balances local responsiveness with global efficiency, requiring both centralized and decentralized decision-making.

Organizational Change

The process of modifying an organization’s structure, culture, or systems to meet new challenges or opportunities.

Informal Integrating Mechanisms

Knowledge networks that facilitate information sharing through informal contacts between managers.

Functional Structure

An organizational structure where divisions are based on functional areas like production, marketing, and R&D.

Global Matrix Structure

An organizational structure that combines product divisions and geographic areas, facilitating dual decision-making.

Organizational Culture

A system of shared values, norms, and behaviors within an organization that influences employee behavior.

Control Ambiguity and Costs of Control

A concept detailing how the level of performance ambiguity affects management costs and oversight.