MANA 1301-005 Exam 3 Chapter 10

Stateless Corporation

a new phase in the evolution of the multinational corporation, where work is sourced wherever it is most efficient, and the corporation transcends nationality altogether

What's another name for stateless corporations?

Metanationals

Examples of stateless corporations

Lenovo, Arcelor Mittal, Nestle, Coca Cola, Apple, Accenture

4 Stages of Globalization that lead to Stateless Corporations

1. Exporting

2. Establish foreign subsidiaries to handle exports from home country

3. Set up operations in other countries

4. Stateless corporations locate core functions & executives in different countries to achieve competitive advantage

Characteristics of Stateless Corporations

- view world as supply/demand, not nations/borders

- legal domicile, management, and assets located in different countries

- employees spread all over the world

- global supply chains

- optimize performance in taxes, technology, and talent

- concentrate business efforts around megacities

Megacities

cities with more than 10 million people

World's 20 Largest Cities Locations

- most in Asia

- 3 in Africa

- none in Europe

- 1 in U.S. (NYC)

What is the largest city in the world?

Tokyo, Japan

Implications of Growth of Stateless Corporations

- Taxation

- Labor force

- Corporate culture

- Social responsibility accountability

- Market/customer acceptance

Organization

a tool that people use to coordinate their actions to obtain something they seek or value

Organizational Structure

the formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals

3 Purposes of Organizational Structures

1. Allows members to perform variety of activities based on division of labor that leads to departmentalization, standardization, and specialization of functions and tasks

2. Permits members coordination of their activities by integration mechanisms such as hierarchical supervision, formal rules/procedures, and training/socialization

3. Determines boundaries and regulates contact with environment and other organizations

Importance of Organizational Structure

1. Establish clear lines of responsibility

2. Develop expertise in area

3. Reduces redundancies & promotes efficiency

4. Promote communication & coordination

What's the first step a domestic firm takes when entering global arena?

To export some of its products

Export department

- typically done by one or two sales representatives

- employees handling exports may work in other functions

- formed when number of people needed increases due to increase in demand of exported goods

- usually under sales function

International Division

- volume of exports grow, may be easier to manufacture/sell products in countries where exports are being shipped

- adjust product to local tastes and culture

- thus, export department becomes international division

Advantages of INTERNATIONAL Division

- permits global firms to concentrate all international efforts and expertise in one location

- signals international customers their importance to company

- fosters global mindset in workers within division

- facilitates designing products that cater to local tastes and cultures

Disadvantages of INTERNATIONAL Divisions and separating domestic and international operations

- conflict between domestic and international operations

- lack of communication and coordination

- prevent design of products with domestic and international appeal

- prevent sharing of core competencies and knowledge

- complications in capturing learning-curve savings from consolidating production in manufacturing plants around the world

The 4 Common Organizational Structures

1. Functional Structure

2. Divisional Structure

3. Hybrid Structure

4. Matrix Structure

Which structure do most domestic firms start with?

Functional structure

Functional Structure

groups people together because they hold similar positions in a company, perform similar tasks, or use the same kinds of skills

Global businesses that use a functional structure typically have a _________________ or a ______________________

narrow product line; highly integrated product mix

Advantages of FUNCTIONAL Structure

-Promotes economies of scale

-Promotes in-depth employee skill development

-Encourages collaboration, efficiency, and quality within the function

Disadvantages of FUNCTIONAL Structure

-Inability to respond to environmental changes that require coordination between functional areas

-Employees have a restricted view of the firm's primary goals

-Accountability is diffused

Divisional Structure

functions are grouped together to serve the needs of products, markets, or geographical regions

While the functional structure is organized according to the various __________, the divisional structure is instead organized according to the various ___________

inputs; outputs

Advantages of DIVISIONAL Structure

-Functions able to focus their activities on a specific kind of product, market, or geographical region

-Divisions develop a common identity and approach to problem solving

-Divisions can respond to needs of products, markets, or regions and adapt quickly as needs change.

- Each division can be held fully accountable

- Increases employee commitment, loyalty, and job satisfaction

Disadvantages of DIVISIONAL Structure

-High operating and managing costs

-Communication problems may arise among division managers

-Divisions may start to compete for organizational resources

3 Types of Divisional Structures

- Product structure

- Market structure

- Geographical region structure

Product Structure

groups products into separate divisions according to their similarities or differences

-example: ExxonMobil

Market Structure

groups products into separate divisions according to needs of different customers

-example: Hilton Hotels Corporation

-aka customer structure or customer class structure

Geographical Region Structure

groups products into separate divisions according to the needs of the different geographical regions the company serves

-example: Cementos Mexicanos S.A.B. de C.V.

Hybrid Structure

- a combination of different organizational structures

- business with this structure are organized by more than one dimension at top level

Matrix Structure

- people are grouped simultaneously by function and by division

- functional managers and the division managers have equal authority

- employees report to both managers

Advantages of MATRIX Structure

-Allows the company to meet multiple demands from the environment

-Resources can be flexibly allocated.

-Facilities innovation and creativity

Disadvantages of MATRIX Structure

-Determining responsibility and authority relationships can be problematic

-There is role ambiguity by design

-Opportunities for promotion are limited because employees move laterally from division to division