International Organization Design And Control

CHAPTER 14


International Organization Design and Control



After studying this chapter, students should be able to:


> Define and discuss the nature of international organizational design and identify and describe the initial impacts of international business activity on organizational design.
> Identify and describe five advanced forms ofinternational organizational design and discuss hybrid global designs.
> Identify and describe related issues in global organization design.
> Explain the general purpose of control and the levels of control in international business.
> Describe how international firms manage the control function.


LECTURE OUTLINE

OPENING CASE: Unilever Matches Strategy andStructure

The opening case describes Unilever’s effort to streamline its operations and focus on its core business areas.

Key Points

1. With sales of $46 billion annually, Unilever, a packaged goods company, is second only to industry giant Procteor and Gamble. Its brand names include Lipton, Dove, Q-tips, and Vaseline, and its product groups range from frozen foods topersonal care products.


2. Over the years, Unilever’s growth strategy often involved acquiring consumer products businesses, many of which had supporting operations. However, this strategy resulted in an unwieldy structure consisting of five basic business groups: food products, personal products, soap/laundry products, cosmetics/perfume/hair products, and specialty chemicals.


3.The specialty chemicals group had only indirect linkages with the other groups, and consequently, had higher administrative costs. In addition, the group was not meeting its performance targets, and perhaps even more disturbing, some of the chemicals it made could often be bought at a lower price on the open market.


4. In 1997, Unilever sold its specialty chemical group in order toeliminate the inefficiencies in the firm’s structure and finance new acquisitions that were a better fit with the core business areas. It acquired Ben & Jerry’s and Slimfast.

5. The sales and acquisitions failed to deal with Unilever’s other problems –: slow decision making and weak control of worldwide marketing strategies.

6. In 2000, Unilever launched another restructuring.

CHAPTERSUMMARY

Chapter Fourteen explores the various organization designs that may be adopted by companies as they pursue their international strategies. In addition, issues related to global organization design are discussed and the topics of corporate culture and changes are considered.

I. THE NATURE OF INTERNATIONAL ORGANIZATIONAL DESIGN

• Organization design, also known asorganization structure, is the overall pattern of structural components and configurations used to manage the total organization.
• A firm, through its design, allocates organizational resources, assigns tasks to its employees, instructs those employees concerning the firm’s rules, procedures, and expectations about their job performances, and collects and transmits information necessary forproblem solving and decision- making.
• There is no single best structure for all organizations, rather organizations should select a design that fits with their situations. Factors affecting the selection of organization design include size, strategy, technology, environment, and cultures of the countries in which it operates. The text provides examples of why Procteor and Gamble and Black& Decker have selected their organization designs.
• Organization design is an ongoing process that reflects the changes in a firm’s strategy.
• Organization design changes as a firm expands internationally. At their start, many firms do not consider international markets in their strategies, and may in fact make their initial entrance to foreign markets through indirect...