Ch 10 The Organization of Global Business

Stateless Corporation

Corporation transcending nationality for efficiency.

Global Company Stage 1

Produces goods in one country, exports to others.

Global Company Stage 2

Establishes foreign subsidiaries for exports.

Global Company Stage 3

Sets up operations in foreign countries.

Global Company Stage 4

Locates functions globally for competitive advantage.

Organizational Structure

Formal system controlling task and authority relationships.

Division

Subunit responsible for specific products or services.

Purpose of Organizational Structure

Facilitates coordination through labor division and specialization.

Export Department

Initial step for domestic firms entering global markets.

International Division

Concentrates international efforts in one location.

Advantages of International Division

Signals importance to international customers and fosters global mindset.

Joint Ventures

Partnerships to share risks and investments in foreign markets.

Local Partner Role

Helps navigate domestic economic and political environments.

Export Growth

Increased demand leads to larger export departments.

Hierarchical Supervision

Management structure ensuring coordination and integration.

Formal Rules and Procedures

Guidelines regulating organizational activities and interactions.

Training and Socialization

Processes for integrating new employees into the organization.

Departmentalization

Grouping activities based on function or product.

Standardization

Establishing uniform procedures across the organization.

Specialization

Focusing tasks on specific functions or roles.

Organizational Boundaries

Defines limits of organizational activities and interactions.

Competitive Advantage

Edge gained through strategic resource location.

Export Products

Goods sold internationally from domestic production.

Functional Structure

Groups employees by similar tasks or skills.

Divisional Structure

Organizes functions by products, markets, or regions.

Hybrid Structure

Combines multiple organizational structures for flexibility.

Matrix Structure

Simultaneously groups by function and division.

Advantages of Functional Structure

Promotes economies of scale and skill development.

Disadvantages of Functional Structure

Limited responsiveness to environmental changes.

Product Structure

Divides products based on similarities or differences.

Market Structure

Divides products based on customer needs.

Geographical Structure

Divides products based on regional needs.

Advantages of Divisional Structure

Focuses activities on specific products or markets.

Disadvantages of Divisional Structure

High operating costs and potential resource competition.

Stateless Corporations

Companies operating without a national identity.

Export Departments

Specialized units managing international sales operations.

International Divisions

Dedicated divisions focusing on global market strategies.

Role of Export Departments

Facilitates international trade and market entry.

Role of International Divisions

Oversees global operations and strategic direction.

Economies of Scale

Cost advantages due to increased production.

In-depth Skill Development

Enhances employee expertise within specific functions.

Collaboration and Efficiency

Encourages teamwork and streamlined processes.

Communication Problems

Issues arising from poor inter-division interactions.

Role Ambiguity

Unclear responsibilities within a matrix structure.

Limited Promotion Opportunities

Lateral movement restricts upward career advancement.

Stateless Corporation

Firms transcending nationality for global operations.

Globalization Stages

Four stages of international business development.

First Stage of Globalization

Producing goods in one country for export.

Second Stage of Globalization

Establishing foreign subsidiaries for exports.

Third Stage of Globalization

Setting up operations in foreign countries.

Fourth Stage of Globalization

Locating core functions across countries for advantage.

Purpose of Organizational Structure

Facilitates coordination and resource utilization to achieve goals.

Division

Business subunit responsible for specific products or services.

International Division

Organizational unit managing international operations.

Departmentalization

Grouping activities based on functions or products.

Standardization

Uniform procedures across organizational functions.

Specialization

Focusing on specific tasks for efficiency.

Integration Mechanisms

Methods coordinating activities within an organization.

Hierarchical Supervision

Management structure overseeing employee activities.

Formal Rules and Procedures

Established guidelines for organizational operations.

Training and Socialization

Processes for integrating new members into the organization.

Competitive Advantage

Edge gained through unique organizational capabilities.

Global Presence

Operating in multiple countries simultaneously.

Resource Coordination

Aligning people and resources to achieve objectives.

Organizational Boundaries

Limits defining an organization's scope and interactions.

Export Department

Specialized unit handling product exports.

International Division

Consolidates global business efforts in one location.

Global Enterprise

Company evolved beyond need for international division.

Functional Structure

Organizational model grouping activities by function.

Divisional Structure

Organizational model grouping functions by product or market.

Market Expertise

Knowledge of foreign markets for successful operations.

Organizational Division

Segment of a company focusing on specific operations.

Global Mindset

Perspective fostering international business awareness.

Coordination

Efforts to align activities across different divisions.

Economies of Scale

Cost advantages from increased production levels.

In-depth Skill Development

Specialized training enhancing employee expertise.

Local Optimization

Focus on local goals over global objectives.

Global Optimization

Alignment of goals across all international operations.

Resource Allocation

Distribution of resources among various divisions.

Long-term Strategy

Company's plan for future growth and direction.

Communication Barriers

Obstacles hindering information flow between divisions.

Conflict Potential

Risk of disagreements between domestic and international operations.

Narrow Product Line

Limited range of products offered by a firm.

High Integration

Close interrelation of products within a company.

Corporate Headquarters

Main office overseeing all company divisions.

Employee Collaboration

Teamwork among staff to achieve common goals.

Environmental Changes

Shifts in market conditions affecting business operations.

Divisional Structure

Organizational structure with autonomous divisions.

Autonomy in Divisions

Degree of decision-making independence for divisions.

Advantages of Divisional Structure

Focus on specific products, markets, or regions.

High-Quality Products

Divisions create products tailored to specific needs.

Common Identity

Shared approach to problem-solving within divisions.

Cohesiveness

Increased unity and performance among division members.

Functional Resources

Complete set of resources within each division.

Accountability

Divisions responsible for their own performance.

Disadvantages of Divisional Structure

High operating costs due to duplicated functions.

Communication Problems

Coordination issues among different division managers.

Resource Competition

Divisions competing for organizational resources.

Product Structure

Divisional structure grouping products by similarities.

Market Structure

Divisional structure based on customer needs.