International Business: Chapter 11

International Division Structure

1. An international division with its own manager keeps domestic and international activities separate. 2. Concentrates international expertise in one division where the manager becomes a specialist in foreign exchange, exporting, and so on. Firm reduces costs, increases efficiency, and prevents international activities from disrupting home operations. 3. Potential problems with this structure are: (1) poor coordination between the international division and the rest of the company can hurt performance; and (2) destructive rivalries may arise between different country managers within the division.

Global Matrix Structure

1. Brings together geographic area managers and product area managers in joint decision making. 2. Bringing specialists together creates a team-type organization. Increases local responsiveness, reduces costs, coordinates worldwide operations, and can increase coordination while improving agility and local responsiveness. 3. Two major shortcomings: (1) The matrix form can be quite cumbersome as the need for complex coordination tends to make decision making time consuming and slows the reaction time. (2) Individual responsibility and accountability are blurred in the matrix organization structure; because of shared responsibility, managers may attribute poor performance to the other manager.

Global Product Structure

1. Divides worldwide operations according to a company's product areas. Suitable when a firm has a diverse set of products. 2. Because the primary focus is on the product, domestic and international managers for each product division must coordinate their activities so they do not conflict.

International Area Structure

1. Organizes a company's global operations into countries or regions. The more countries in which a company operates, the greater the likelihood it will organize into regions, not countries. 2. decision making decentralized to country or regional managers. 3. Useful structure when there are vast cultural, political, or economic differences among nations or regions. 4. But because units act independently, resources may overlap, and cross-fertilization of knowledge across units can be limited

Business-Level Strategies

A company may need only one strategy for its one line of business or others may need many strategies; a general competitive strategy in the marketplace.

Structure and flexibility

A. Organizational structure is not permanent, but is modified to suit changes within a company and in its external environment. b. Changes in strategy and in the business environment force modifications in organizational structure; some countries are characterized by rapidly shifting business environments.

Value-chain analysis involves separating a company's activities into what two categories of activities?

A: Value-chain analysis is the process of dividing a company's activities into primary and support activities and identifying those that create value for customers. Primary activities include inbound and outbound logistics, manufacturing (or operations), marketing and sales, and customer service. Support activities include firm infrastructure, human resource management, technology development, and procurement. Each primary and support activity is a source of strength or weakness for a company.

1111111111111111111111111111111111111111What type of organizational structure tends to concentrate all international expertise in one division?

An international division structure separates domestic from international business activities by creating a separate international division with its own manager.

What type of decision making helps coordinate the operations of international subsidiaries?

Centralized decision making is the degree to which decision making is centralized at a high level in one location such as headquarters. Decentralized decision making is the degree to which decisions are made at lower levels, such as in international subsidiaries.

Cross-functional teams

Composed of employees who work at similar levels in different functional departments. Such teams can help improve interdepartmental coordination and help boost product quality.

Strategy

Developing an effective strategy requires a clear definition of objectives (or goals) and a plan to achieve them.

Self-managed teams

Employees from a single department accept responsibilities of former supervisors. In production settings, self-managed teams reduce the need for direct supervisors and increase productivity, product quality, customer satisfaction, employee morale, and company loyalty.

COMPANY ANALYSIS

Firms must determine what products to produce, where to produce them, and where and how to market them. Whether a site for operations or potential market, each international location has a rich mixture of cultural, political, legal, and economic traditions and processes.

Global teams

Group of top managers from both headquarters and subsidiaries who meet to develop solutions to company-wide problems.

Combination strategy

Mixes growth, retrenchment, and stability strategies across a corporation's business units.

A written statement of why a company exists and what it plans to accomplish is called a what?

Most companies have a general purpose for why they exist that they express in a mission statement—a written statement of why a company exists and what it plans to accomplish.

Review the different types of Strategies.

Multinational strategy Global strategy Growth strategy Retrenchment strategy Stability strategy Combination strategy Low cost leadership strategy Differentiation strategy Focus strategy

Department-Level Strategies

Reaching corporate- and business-level objectives depends on effective departmental strategies that focus on activities that transform resources into products; rely on capabilities—primary and support activities that create value for customers.

What are the differences between Strategy and Planning?

Strategy is set of planned actions taken by managers to help a company meet its objectives Planning is the process of identifying and selecting an organization's objectives and deciding how the organization will achieve those objectives

Multinational strategy

a. Adapts products and marketing strategies in each national market to suit local preferences. b. Benefit: monitor buyer preferences in each local market and respond quickly and effectively to new buyer preferences. Drawback: cannot exploit scale economies in product development, manufacturing, or marketing.

Low-cost leadership strategy

a. Companies contain administrative costs and the costs of its various primary activities, including marketing, advertising, and distribution. b. based on efficient production in large quantities guards against attack by competitors because of the large start-up costs. c. A negative aspect: low customer loyalty—buyers will purchase from the low-cost leader if everything else is equal.

Focus strategy

a. Competition forces more products to be distinguished by price, quality, or design. Greater product range leads to refinement of market segments; firms serve the needs of one ethnic or racial group

Global strategy

a. Firms take advantage of scale and location economies by producing entire inventories or components in a few optimal locations. They perform product R&D in one or a few locations and design promotional campaigns and advertising strategies at headquarters. b. Benefit: cost savings from standardized products and marketing; lessons learned in a market are shared. c. Drawback: may overlook differences in buyer preferences. Competitors can step in and satisfy unmet local needs creating a niche market.

Stability strategy

a. Guards against change and used to avoid either growth or retrenchment. b. Corporations have met objectives, are satisfied with accomplishments, and see no opportunities or threats.

Differentiation strategy

a. the perception of exclusivity or meeting the needs of a certain group. b. Companies develop loyal customer bases to offset smaller market shares and higher costs of producing and marketing a unique product. c. Products basis of quality, brand image, and product design. Special features differentiate goods and services in the minds of consumers.

Core competency

ability of a company that competitors find extremely difficult or impossible to equal. Refers to multiple skills coordinated to form a single technological outcome.

Corporate-Level Strategies

by identifying the markets and industries in which to operate. Overall objectives for different business units are developed and the role of each unit in reaching those objectives is determined.

Retrenchment strategy

by identifying the markets and industries in which to operate. Overall objectives for different business units are developed and the role of each unit in reaching those objectives is determined.

Growth strategy

designed to increase the scale or scope of a corporation's operations. Scale refers to the size of a corporation's activities; scope to the kinds of activities it performs.

Support activities

include firm infrastructure, human resource management, technology development, and procurement.

Primary activities

include inbound and outbound logistics, manufacturing, marketing and sales, and customer service; managers look for areas in which the company can increase customer value.

Centralized decision making

occurs at a high level in one location such as headquarters; a. helps coordinate international subsidiaries; important when one subsidiary's output is another's input. b. Companies maintain strong central control over financial resources by channeling all subsidiary profits back to the parent for redistribution to subsidiaries. c. Other companies centrally design policies, procedures, and standards to stimulate a single global organizational culture. .

Decentralized decision making

occurs at lower levels, such as in international subsidiaries; a. beneficial when fast changing business environments require local responsiveness. b. Because subsidiary managers are in contact with local culture, politics, laws, and economies, decentralized decisions result in products suited to the needs and preferences of local buyers. c. Delayed response and misinterpreted events result in lost orders, stalled production, and weakened competitiveness. d. Participative management and accountability

Quality-improvement teams

the most common type of self-managed team in many manufacturing companies because they reduce production waste and cut costs.

Organizational structure

the way in which a company divides its activities among separate units and coordinates activities among those units.

Work Teams

useful in improving responsiveness by cutting across functional boundaries (between production and marketing) that slow decision making in an organization. Work teams coordinate their efforts to arrive at solutions and implement corrective action. 1. Cultural differences can cause resistance to the concept of self-management and the use of teams. Experts suggest that international managers use caution when implementing them. 2. Certain cultures are less individualistic and more collectivist; some harbor greater respect for differences in status. In cultures in which people are hard working, teams will be productive if given greater autonomy.

Mission statement

written statement of why a company exists and what it plans to accomplish (e.g., supply the highest level of service in a market segment).