TEST2OrgBehaviour

An organization's core technology

An organization's core technology is the work process that is directly related to the organization's mission, such as teaching in a high school, medical services in a health clinic

Need for Integration

As organizations become more differentiated, with multiple products, divisions, departments, and positions scattered across numerous countries, managers face a tremendous integration challenge. Integration refers to the quality of collaboration across organizational units. The question is how to achieve the coordination and collaboration that is necessary for a global organization to reap the benefits of economies of scale, economies of scope, and labor and production cost efficiencies that international expansion offers

Three types of global structures

Global product division structure, global geographic division structure, global matrix structure

Global Teams

Global teams, also called transnational teams, are cross-border work groups made up of multiskilled, multinational members whose activities span multiple countries.61 Typically, teams are of two types: intercultural teams, whose members come from different countries and meet face to face, and virtual global teams, whose members remain in separate locations around the world and conduct their work electronically. The most advanced and competitive use of global teams involves simultaneous contributions in three strategic areas.65 First, global teams help companies address the differentiation challenge, enabling them to be more locally responsive by providing knowledge to meet the needs of different regional markets, consumer preferences, and political and legal systems. At the same time, teams provide integration benefits, helping organizations achieve global efficiencies by developing regional or worldwide cost advantages and standardizing designs and operations across countries. Finally, these teams contribute to continuous organizational learning, knowledge transfer, and adaptation on a global level

The three primary segments of the global organizational challenge

Greater complexity and differentiation, the need for integration, and the problem of transferring knowledge and innovation across a global firm

Supply chain management

Refers to managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers (Related to resource dependence)

Interorganizational Framework

Relationships among organizations can be characterized by whether the organizations are dissimilar or similar and whether relationships are competitive or cooperative. (Dissimilar and competitive) First perspective is resource dependence theory. Resource dependence represents the traditional view of relationships among organizations resource-dependence theory argues that organizations try to minimize their dependence on other organizations for the supply of important resources and try to influence the environment to make resources available. Organizations succeed by striving for independence and autonomy. When threatened by greater dependence, organizations will assert control over external resources to minimize that dependence. (Cooperative-Dissimilar) The second perspective is about collaborative networks, wherein organizations allow themselves to become dependent on other organizations to increase value and productivity. Some key reasons include sharing risks when entering new markets, mounting expensive new programs and reducing costs, and enhancing organizational profile in selected industries or technologies. (Similar-Competitive) The third perspective is population ecology. The population-ecology perspective differs from the other perspectives because it focuses on organizational diversity and adaptation within a population of organizations. A population is a set of organizations engaged in similar activities with similar patterns of resource utilization and outcomes. Organizations within a population compete for similar resources or similar customers. The current environment emerge, fill a new niche, and over time take away business from established companies. According to the population-ecology view, when looking at an organizational population as a whole, the changing environment determines which organizations survive or fail. The population-ecology model is developed from theories of natural selection in biology, and the terms evolution and selection are used to refer to the underlying behavioral processes The population-ecology model is concerned with organizational forms. Organizational form is an organization's specific technology, structure, products, goals, and personnel, which can be selected or rejected by the environment. Each new organization tries to find a niche (a domain of unique environmental resources and needs) sufficient to support it. The niche is usually small in the early stages of an organization but may increase in size over time if the organization is successful. If the organization does not find an appropriate niche, it will decline and may perish (Cooperative-Similar) The final approach is called institutionalism and explains why and how organizations legitimate themselves in the larger environment and design structures by borrowing ideas from each other. The institutional perspective describes how organizations survive and succeed through congruence between an organization and the expectations from its environment. The institutional environment is composed of norms and values from stakeholders (customers, investors, associations, boards, other organizations, government, the community, and so on). Thus the institutional view believes that organizations adopt structures and processes to please outsiders, and these activities come to take on rulelike status in organizations Legitimacy is defined as the general perception that an organization's actions are desirable, proper, and appropriate within the environment's system of norms, values, and beliefs. Institutional theory thus is concerned with the set of intangible norms and values that shape behavior, as opposed to the tangible elements of technology and structure.

Interorganizational relationships

Relationships that are the relatively enduring resource transactions,flows, and linkages that occur among two or more organizations

The dimensions of variety and analyzability form the basis for four major categories of technology: routine, craft, engineering, and nonroutine.

Routine technologies are characterized by little task variety and the use of objective, computational procedures. The tasks are formalized and standardized. are characterized by a fairly stable stream of activities, but the conversion process is not analyzable or well understood. Tasks require extensive training and experience because employees respond to intangible factors on the basis of wisdom, intuition, and experience Engineering technologies tend to be complex because there is substantial variety in the tasks performed. However, the various activities are usually handled on the basis of established formulas, procedures, and techniques. Employees normally refer to a well-developed body of knowledge to handle problems Nonroutine technologies have high task variety, and the conversion process is not analyzable or well understood. In nonroutine technology, a great deal of effort is devoted to analyzing problems and activities. Several equally acceptable options typically can be found

Global Coordination Mechanisms

Some of the most common are the use of global teams, stronger headquarters planning and control, and specific coordination roles.

global matrix structure

Structure is similar to the matrix described in Chapter 3, except that for multinational corporations the geographic distances for communication are greater and coordination is more complex. The matrix works best when pressure for decision making balances the interests of both product standardization and geographic localization and when coordinationto share resources is important.

Designing the service organization

The feature of service technologies with a distinct influence on organizational structure and control systems is the need for technical core employees to be close to the customer A service firm deals in information and intangible outputs and does not need to be large. Its greatest economies are achieved through disaggregation into small units that can be located close to customers. Stockbrokers, doctors' clinics, consulting firms, and banks disperse their facilities into regional and local offices. Manufacturing firms, on the other hand, tend to aggregate operations in a single area that has raw materials and an available workforce Service technology also influences internal organization characteristics used to direct and control the organization. For one thing, the skills of technical core employees typically need to be higher. These employees need enough knowledge and awareness to handle customer problems rather than just enough to perform mechanical tasks. Employees need social and interpersonal skills as well as technical skills.51 Because of higher skills and structural dispersion, decision making often tends to be decentralized in service firms, and formalization tends to be lo

Increased Complexity and Differentiation

When organizations enter the international arena, they encounter a greater level of internal and external complexity than anything experienced on the domestic front. Companies have to create a structure to operate in numerous countries that differ in economic development, language, political systems and government regulations, cultural norms and values, and infrastructure such as transportation and communication facilities All the complexity in the international environment is mirrored in a greater internal organizational complexity. Recall from Chapter 4 that, as environments become more complex and uncertain, organizations grow more highly differentiated, with many specialized positions and departments to cope with specific sectors in the environment

Service Firms

Whereas manufacturing organizations achieve their primary purpose through the production of products, service organizations accomplish their primary purpose through the production and provision of services, such as education, health care, transportation, banking, and hospitality

Technology

refers to the work processes, techniques, machines, and actions used to transform organizational inputs (materials, information, ideas) into outputs (products and services).

. Technical complexity

represents the extent of mechanization of the manufacturing process. High technical complexity means most of the work is performed by machines. Low technical complexity means workers play a larger role in the production process

Niche

(a domain of unique environmental resources and needs) sufficient to support it.

uncertainty avoidance

. High uncertainty avoidance means that members of a society feel uncomfortable with uncertainty and ambiguity and thus support beliefs that promise certainty and conformity. Low uncertainty avoidance means that people have a high tolerance for the unstructured, the unclear, and the unpredictable.

characteristics distinguish the transnational organization from other global organization forms such as the matrix

1. Assets and resources are dispersed worldwide into highly specialized operations that are linked together through interdependent relationships. Resources and capabilities are widely distributed to help the organization sense and respond to diverse stimuli such as market needs, technological developments, or consumer trends that emerge in different parts of the world. To manage this increased complexity and differentiation, managers forge interdependent relationships among the various product, functional, or geographic units. Mechanisms such as cross-subsidiary teams, for example, compel units to work together for the good of their own unit as well as the overall organization. Rather than being completely self-sufficient, each group has to cooperate to achieve its own goals. Such interdependencies encourage the collaborative sharing of information and resources 2. Structures are flexible and ever-changing. The transnational operates on a principle of flexible centralization. It may centralize some functions in one country, some in another, yet decentralize still other functions among its many geographically dispersed operations. An R&D center may be centralized in Holland and a purchasing center may be located in Sweden, while financial accounting responsibilities are decentralized to operations in many countries. A unit in Hong Kong may be responsible for coordinating activities across Asia, while activities for all other countries are coordinated by a large division headquarters in London. The transnational model requires that managers be flexible in determining structural needs based on the benefits to be gained 3. Subsidiary managers initiate strategy and innovations that become strategy for the corporation as a whole. In traditional structures, managers have a strategic role only for their division. In a transnational structure, various centers and subsidiaries can shape the company from the bottom up by developing creative responses and initiating programs in response to local needs, then dispersing those innovations worldwide. Transnational companies recognize each of the worldwide units as a source of capabilities and knowledge that can be used to benefit the entire organization 4. Unification and coordination are achieved primarily through corporate culture, shared vision and values, and management style, rather than through formal structures and systems. A study by Hay Group found that one of the defining characteristics of companies that succeed on a global scale is that they successfully coordinate worldwide units and subsidiaries around a common strategic vision and values rather than relying on formal coordination systems alone

non-core technology

A non-core technology is a department work process that is important to the organization but is not directly related to its primary mission

Headquarters Planning

A second approach to achieving stronger global coordination is for headquarters to take an active role in planning, scheduling, and control to keep the widely distributed pieces of the global organization working together and moving in the same direction.

Why are services generally less suitable for global expansion

Because different customs and habits often require a different approach to providing service.

Institutional similarity

Called institutional isomorphism in the academic literature, is the emergence of a common structure and approach among organizations in the same field. Isomorphism is the process that causes one unit in a population to resemble other units that face the same set of environmental conditions

Three National Approaches to Coordination and Control

Centralized Coordination in Japanese Companies. When expanding internationally, Japanese companies have typically developed coordination mechanisms that rely on centralization. Top managers at headquarters actively direct and control overseas operations, whose primary focus is to implement strategies handed down from headquarters. A recent study of R&D activities in high-tech firms in Japan and Germany supports the idea that Japanese organizations tend to be more centralized. Whereas the German firms leaned toward dispersing R&D groups out into different regions, Japanese companies tended to keep these activities centralized in the home country.80 This centralized approach enables Japanese companies to leverage the knowledge and resources located at the corporate center, attain global efficiencies, and coordinate across units to obtain synergies and avoid turf battles. Top managers use strong structural linkages to ensure that managers at headquarters remain up to date and fully involved in all strategic decisions. European Firms' Decentralized Approach. A different approach has typically been taken by European companies. Rather than relying on strong, centrally directed coordination and control as in the Japanese firms, international units tend to have a high level of independence and decision-making autonomy. Companies rely on a strong mission, shared values, and informal personal relationships for coordination. Thus, great emphasis is placed on careful selection, training, and development of key managers throughout the international organization. Formal management and control systems are used primarily for financial rather than technical or operational control With a decentralized approach, each international unit focuses on its local markets, enabling the company to excel in meeting diverse needs. One disadvantage is the cost of ensuring, through training and development programs, that managers throughout a huge, global firm share goals, values, and priorities The United States: Coordination and Control through Formalization. U.S.-based companies that have expanded into the international arena have taken still a third direction. Typically, these organizations have delegated responsibility to international divisions, yet retained overall control of the enterprise through the use of sophisticated management control systems and the development of specialist headquarters staff. Formal systems, policies, standards of performance, and a regular flow of information from divisions to headquarters are the primary means of coordination and control. Decision making is based on objective data, policies, and procedures, which provides for many operating efficiencies and reduces conflict among divisions and between divisions and headquarters. However, the cost of setting up complex systems, policies, and rules for an international organization may be quite high. This approach also requires a larger headquarters staff for reviewing, interpreting, and sharing information, thus increasing overhead costs. Finally, standard routines and procedures don't always fit the needs of new problems and situations. Flexibility is limited if managers pay so much attention to the standard systems that they fail to recognize opportunities and threats in the environment.

Flexible manufacturing is typically the result of three subcomponents:

Computer-aided design (CAD). Computers are used to assist in the drafting, design, and engineering of new parts. Designers guide their computers to draw specified configurations on the screen, including dimensions and component details. Computer-aided manufacturing (CAM). Computer-controlled machines in materials handling, fabrication, production, and assembly greatly increase the speed at which items can be manufactured. CAM also permits a production line to shift rapidly from producing one product to any variety of other products by changing the instruction tapes or software codes in the computer • Integrated information network. A computerized system links all aspects of the firm—including accounting, purchasing, marketing, inventory control, design, production, and so forth. This system, based on a common data and information base, enables managers to make decisions and direct the manufacturing process in a truly integrated fashion.

challenges with global teams

Cultural and language differences can create misunderstandings, and resentments and mistrust can quickly derail the team's efforts. Many times an "us against them" mentality develops, which is just the opposite of what organizations want from global teams

institutional perspective

Describes how organizations survive and succeed through congruence between an organization and the expectations from its environment.

Three factors that motivate companies to expand internationally

Economies of Scale. Building a global presence expands an organization's scale of operations, enabling it to realize economies of scale. . Through large-volume production, these industrial giants were able to achieve the lowest possible cost per unit of production Economies of Scope. A second factor is the enhanced potential for exploiting economies of scope. Scope refers to the number and variety of products and services a company offers, as well as the number and variety of regions, countries, and markets it serves. Having a presence in multiple countries provides marketing power and synergy compared to the same size firm that has presence in fewer countries Low-Cost Production Factors. The third major force motivating global expansion relates to factors of production. One of the earliest, and still one of the most powerful, motivations for U.S. companies to invest abroad is the opportunity to obtain raw materials, labor, and other resources at the lowest possible cost

Woodward's scale of technical complexity three condensed groups

Group I: Small-batch and unit production. These firms tend to be job shop operations that manufacture and assemble small orders to meet specific needs of customers. Custom work is the norm. Small-batch production relies heavily on the human operator; it is thus not highly mechanized Group II: Large-batch and mass production. Large-batch production is a manufacturing process characterized by long production runs of standardized parts. Output often goes into inventory from which orders are filled, because customers do not have special needs. Group III: Continuous-process production. In continuous-process production, the entire process is mechanized. There is no starting and stopping. This represents mechanization and standardization one step beyond those in an assembly line. Automated machines control the continuous process, and outcomes are highly predictable.

power distance

High power distance means that people accept inequality in power among institutions, organizations, and people. Low power distance means that people expect equality in power

Power implications of resource dependence

In resource-dependence theory, large, independent companies have power over small suppliers

Stages of international development

In stage one, the domestic stage, the company is domestically oriented, but managers are aware of the global environment and may want to consider initial foreign involvement to expand production volume and realize economies of scale. Market potential is limited and is primarily in the home country. The structure of the company is domestic, typically functional or divisional In stage two, the international stage, the company takes exports seriously and begins to think multidomestically. Multidomestic means competitive issues in each country are independent of other countries; the company deals with each country individually. The concern is with international competitive positioning compared with other firms in the industry. At this point, an international division has replaced the export department, and specialists are hired to handle sales, service, and warehousing abroad In stage three, the multinational stage, the company has extensive experience in a number of international markets and has established marketing, manufacturing, or research and development (R&D) facilities in several foreign countries. The organization obtains a large percentage of revenues from sales outside the home country. The fourth and ultimate stage is the global stage, which means the company transcends any single country. The business is not merely a collection of domestic industries; rather, subsidiaries are interlinked to the point where competitive position in one country significantly influences activities in other countries

Strategies for survival with respect to the population ecology model

In the population ecology perspective, generalist and specialist strategies distinguish organizational forms in the struggle for survival. Organizations with a wide niche or domain, that is, those that offer a broad range of products or services or that serve a broad market, are generalists. Organizations that provide a narrower range of goods or services or that serve a narrower market are specialists. Specialists are generally more competitive than generalists in the narrow area in which their domains overlap. However, the breadth of the generalist's domain serves to protect it somewhat from environmental changes. Though demand may decrease for some of the generalist's products or services, it usually increases for others at the same time. In addition, because of the diversity of products, services, and customers, generalists are able to reallocate resources internally to adapt to a changing environment, whereas specialists are not. However, because specialists are often smaller companies, they can sometimes move faster and be more flexible in adapting to changes

What is the changing role of management

In this new world, managers think about horizontal processes rather than vertical structures. Important initiatives are not just top down; they cut across the boundaries separating organizational units. Moreover, horizontal relationships now include linkages with suppliers and customers, who become part of the team. Managers learn to see and appreciate the rich environment of opportunities that grow from cooperative relationships with other contributors to the ecosystem. Rather than trying to force suppliers into low prices or customers into high prices, managers strive to strengthen the larger system evolving around them.

Interdependence

Interdependence means the extent to which departments depend on each other for resources or materials to accomplish their tasks. Low interdependence means that departments can do their work independently of each other and have little need for interaction, consultation, or exchange of materials. High interdependence means departments must constantly exchange resources.

Organizational Ecosystem

Is a system formed by the interaction of a community of organizations and their environment. An ecosystem cuts across traditional industry lines.

Organizational form

Is an organization's specific technology, structure, products, goals, and personnel, which can be selected or rejected by the environment

institutional environment

Is composed of norms and values from stakeholders (customers, investors, associations, boards, other organizations, government, the community, and so on).

Legitimacy

Is defined as the general perception that an organization's actions are desirable, proper, and appropriate within the environment's system of norms, values, and beliefs

Lean manufacturing

Lean manufacturing uses highly trained employees at every stage of the production process, who take a painstaking approach to details and problem solving to cut waste and improve quality. Lean manufacturing incorporates technological elements, such as CAD/CAM and PLM, but the heart of lean manufacturing is not machines or software, but people. Lean manufacturing requires changes in organizational systems, such as decision-making processes and management processes, as well as an organizational culture that supports active employee participation, a quality perspective, and focus on the customer. Employees are trained to attack waste and strive for continuous improvement in all areas Lean manufacturing and flexible manufacturing systems have paved the way for mass customization

Three types of global expansion through international strategic alliances

Licensing A joint venture: is a separate entity created with two or more active firms as sponsors. This is a popular approach to sharing development and production costs and penetrating new markets Companies often seek joint ventures to take advantage of a partner's knowledge of local markets, to achieve production cost savings through economies of scale, to share complementary technological strengths, or to distribute new products and services through another country's distribution channels Become involved in consortia, groups of independent companies— including suppliers, customers, and even competitors—that join together to share skills, resources, costs, and access to one another's markets

A multidomestic strategy

Means that competition in each country is handled independently of competition in other countries. Thus, a multidomestic strategy would encourage product design, assembly, and marketing tailored to the specific needsof each country. Some companies have found that their products do not thrive in a single global market

three mechanisms for institutional adaptation

Mimetic Forces. Most organizations, especially business organizations, face great uncertainty. It is not clear to senior executives exactly what products, services, technologies, or management practices will achieve desired goals, and sometimes the goals themselves are not clear. In the face of this uncertainty, mimetic forces, the pressure to copy or model other organizations, occur Coercive Forces. All organizations are subject to pressure, both formal and informal, from government, regulatory agencies, and other important organizations in the environment, especially those on which a company is dependent. Coercive forces are the external pressures exerted on an organization to adopt structures, techniques, or behaviors similar to other organizations. For example, large corporations have recently been putting pressure on service providers, such as accounting or law firms, to step up their diversity efforts Normative Forces. The third reason organizations change according to the institutional view is normative forces. Normative forces are pressures to change to achieve standards of professionalism and to adopt techniques that are considered by the professional community to be up to date and effective. Changes may be in any area, such as information technology, accounting requirements, marketing techniques, or collaborative relationships with other organizations

global companies

No longer think of themselves as having a single home country, and, indeed, have been called stateless corporations

Explain department design

Once the nature of a department's technology has been identified, the appropriate structure can be determined. Department technology tends to be associated with a cluster of departmental characteristics, such as the skill level of employees, formalization, and methods of communication. Definite patterns exist in the relationship between work unit technology and structural characteristics, which are associated with departmental performance The overall structure of departments may be characterized as either organic or mechanistic. Routine technologies are associated with a mechanistic structure and processes, with formal rules and rigid management processes. Nonroutine technologies are associated with an organic structure, and department management is more flexible and free-flowing. 1. Formalization. Routine technology is characterized by standardization and division of labor into small tasks that are governed by formal rules and procedures. For nonroutine tasks, the structure is less formal and less standardized 2. Decentralization. In routine technologies, most decision making about task activities is centralized to management.61 In engineering technologies, employees with technical training tend to acquire moderate decision authority because technical knowledge is important to task accomplishme 3. Worker skill level. Work staff in routine technologies typically require little education or experience, which is congruent with repetitious work activities. In work units with greater variety, staff are more skilled and often have formal training in technical schools or universities. Training for craft activities, which are less analyzable, is more likely to be through job experience. Nonroutine activities require both formal education and job experience 4. Span of control. Span of control is the number of employees who report to a single manager or supervisor. This characteristic is normally influenced by departmental technology. The more complex and nonroutine the task, the more problems arise in which the supervisor becomes involved. Although the span of control may be influenced by other factors, such as skill level of employees, it typically should be smaller for complex tasks because on such tasks the supervisor and subordinate must interact frequently. 5. Communication and coordination. Communication activity and frequency increase as task variety increases.64 Frequent problems require more information sharing to solve problems and ensure proper completion of activities. The direction of communication is typically horizontal in nonroutine work units and vertical in routine work units

A study of executive roles by the Hay Group distinguished between operations roles and collaborative roles.

Operations roles, which have traditional vertical authority and are accountable for business results primarily through direct control over people and resources. Collaborative roles don't have direct authority over horizontal colleagues or partners, but are nonetheless accountable for specific business results. Managers in collaborative roles have to be highly flexible and proactive. They achieve results through personal communication and assertively seeking out needed information and resources

Expanded Coordination Roles

Organizations may also implement structural solutions to achieve stronger coordination and collaboration.71 Creating specific organizational roles or positions for coordination is a way to integrate all the pieces of the enterprise to achieve a strong competitive position. In successful international firms, the role of top functional managers, for example, is expanded to include responsibility for coordinating across countries, identifying and linking the organization's expertise and resources worldwide. In an international organization, the manufacturing manager has to be aware of and coordinate with manufacturing operations of the company in various other parts of the world so that the company achieves manufacturing efficiency and shares technology and ideas across units. Whereas functional managers coordinate across countries, country managers coordinate across functions. A country manager for an international firm has to coordinate all the various functional activities located within the country to meet the problems, opportunities, needs, and trends in the local market, enabling the organization to achieve multinational flexibility and rapid response Another coordination role is that of formal network coordinator to coordinate information and activities related to key customer accounts. These coordinators would enable a manufacturing organization, for example, to provide knowledge and integrated solutions across multiple businesses, divisions, and countries for a large retail customer such as Tesco, Wal-Mart, or Carrefour

Types of interdependence

Pooled interdependence is the lowest form of interdependence among departments. In this form, work does not flow between units. Each department is part of the organization and contributes to the common good of the organization, but works independently. Sequential. When interdependence is of serial form, with parts produced in one department becoming inputs to another department, it is called sequential interdependence. The first department must perform correctly for the second department to perform correctly. This is a higher level of interdependence than pooled interdependence, because departments exchange resources and depend on others to perform well. Sequential interdependence creates a greater need for horizontal mechanisms such as integrators or task forces. Sequential interdependence occurs in what Thompson called long-linked technology, which "refers to the combination in one organization of successive stages of production; each stage of production uses as its inputs the production of the preceding stage and produces inputs for the following stage. Reciprocal. The highest level of interdependence is reciprocal interdependence. This exists when the output of operation A is the input to operation B, and the output of operation B is the input back again to operation A. The outputs of departments influence those departments in reciprocal fashion. Reciprocal interdependence tends to occur in organizations with what Thompson called intensive technologies, which provide a variety of products or services in combination to a client

Perrow specified two dimensions of departmental activities that were relevant to organization structure and process

The first is the number of exceptions in the work. This refers to task variety, which is the frequency of unexpected and novel events that occur in the conversion process. Task variety concerns whether work processes are performed the same way every time or differ from time to time as employees transform the organization's inputs into outputs The second dimension of technology concerns the analyzability of work activities. When the conversion process is analyzable, the work can be reduced to mechanical steps and participants can follow an objective, computational procedure to solve problems. Problem solution may involve the use of standard procedures, such as instructions and manuals, or technical knowledge, such as that in a textbook or handbook. On the other hand, some work is not analyzable

International Division

The international division has a status equal to the other major departments or divisions within the company

service technology

The most obvious difference is that service technology produces an intangible output, rather than a tangible product, such as a refrigerator produced by a manufacturing firm. A service is abstract and often consists of knowledge and ideas rather than a physical product This typically means that service firms are labor and knowledge intensive, with many employees needed to meet the needs of customers, whereas manufacturing firms tend to be capital intensive, relying on mass production, continuous process, and flexible manufacturing technologies Direct interaction between customer and employee is generally very high with services, while there is little direct interaction between customers and employees in the technical core of a manufacturing firm. This direct interaction means that the human element (employees) becomes extremely important in service firms. Whereas most people never meet the workers who manufactured their cars

Process of ecological change with respect to population ecology

The population-ecology model assumes that new organizations are always appearing in the population. Thus, organizational populations are continually undergoing change Variation. Variation means the appearance of new, diverse forms in a population of organizations. These new organizational forms are initiated by entrepreneurs, established with venture capital by large corporations, or set up by governments seeking to provide new services Selection. Selection refers to whether a new organizational form such as Axiom is suited to the environment and can survive. Only a few variations are "selected in" by the environment and survive over the long term. Some variations will suit the external environment better than others. Some prove beneficial and thus are able to find a niche and acquire the resources from the environment necessary to survive Retention. Retention is the preservation and institutionalization of selected organizational forms. Certain technologies, products, and services are highly valued by the environment. The retained organizational form may become a dominant part of the environment.

Transfer of Knowledge and Innovation

The third piece of the international challenge is for organizations to learn from their international experiences by sharing knowledge and innovations across the enterprise. The diversity of the international environment offers extraordinary opportunities for learning and the development of diverse capabilities. Organizational units in each location acquire the skills and knowledge to meet environmental challenges that arise in that particular locale. Much of that knowledge, which may be related to product improvements, operational efficiencies, technological advancements, or myriad other competencies, is relevant across multiple countries, so organizations need systems that promote the transfer of knowledge and innovation across the global enterprise

What is the transnational model of an organization

The transnational model represents the most advanced kind of international organization. It reflects the ultimate in both organizational complexity, with many diverse units, and organizational coordination, with mechanisms for integrating the varied parts. The transnational model is useful for large, multinational companies with subsidiaries in many countries that try to exploit both global and local advantages as well as technological advancements, rapid innovation, and global learning and knowledge sharing. Rather than building capabilities primarily in one area, such as global efficiency, national responsiveness, or global learning, the transnational model seeks to achieve all three simultaneously. Dealing with multiple, interrelated, complex issues requires a complex form of organization and structure. The transnational model represents the most current thinking about the kind The transnational model addresses these challenges by creating an integrated network of individual operations that are linked together to achieve the multidimensional goals of the overall organization.86 The management philosophy is based on interdependence rather than either full divisional independence or total dependence of these units on headquarters for decision making and control. The transnational model is more than just an organization chart. It is a managerial state of mind, a set of values, a shared desire to make a worldwide learning system work, and an idealized structure for effectively managing such a system. Several characteristics distinguish the transnational organization from other global organization forms such as the matrix,

flexible manufacturing systems (FMS).

The ultimate automated factories are referred to as flexible manufacturing systems (FMS).21 Also called computer-integrated manufacturing, smart factories, advanced manufacturing technology, agile manufacturing, or the factory of the future, FMS links together manufacturing components that previously stood alone The result has revolutionized the shop floor, enabling large factories to deliver a wide range of custom-made products at low mass-production costs.22 Flexible manufacturing is typically the result of three subcomponents:

global geographic structure

divides the world into geographic regions, with each geographic division reporting to the CEO. Each division has full control of functional activities within its geographic area. For example, Nestlé, with headquarters in Switzerland, puts great emphasis on the autonomy of regional managers who know the local culture. Companies that use this type of structure have typically been those with mature product lines and stable technologies. They can find low-cost manufacturing within countries, as well as meet different needs across countries for marketing and sales. The problems encountered by senior management using a global geographic structure result from the autonomy of each regional division. For example, it is difficult to do planning on a global scale—such as new-product R&D—because each division acts to meet only the needs of its region. New domestic technologies and products can be difficult to transfer to international markets because each division thinks it will develop what it needs

Two significant contemporary applications of manufacturing technology are?

flexible manufacturing systems and lean manufacturing

global product structure

the product divisions take responsibility for global operations in their specific product area. This is one of the most commonly used structures through which managers attempt to achieve global goals because it provides a fairly straightforward way to effectively manage a variety of businesses and products around the world. Managers in each product division can focus on organizing for international operations as they see fit and directing employees' energy toward their own division's unique set of global problems or opportunities

mass customization

which refers to using mass-production technology to quickly and cost-effectively assemble goods that are uniquely designed to fit the demands of individual customers

Benefits that result from interunit collaboration

• Cost savings. Collaboration can produce real, measurable results in the way of cost savings from the sharing of best practices across global divisions • Better decision making. By sharing information and advice across divisions, managers can make better business decisions that support their own unit as well as the organization as a whole • Greater revenues. By sharing expertise and products among various divisions, organizations can reap increased revenues. BP again provides an example. More than seventy-five people from various units around the world flew to China to • Increased innovation. The sharing of ideas and technological innovations across units stimulates creativity and the development of new products and services. McDonald's is taking an approach called "freedom within a framework" that allows regional and national managers to develop practices and products suited to the local area