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Organization of MNCs Operations

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         Organization of Multinational
8        Operations




Kamal Fatehi                                                  Chapter 8
Managing Internationally     Organizational of Multinational Operations
                           Table of Contents


 •    Chapter Vignette
 •    Organization of MNC’s Operations
 •    Development of International Corporate Structure
 •    MNC Corporate Structure
 •    Organizational Structures




Kamal Fatehi                                                           Chapter 8
Managing Internationally              Organizational of Multinational Operations
                           Chapter Vignette


• Born Global
     – MCS Energy




Kamal Fatehi                                                          Chapter 8
Managing Internationally             Organizational of Multinational Operations
          Organizational of MNC’s Operations


• Definition
      – Designing The Skeleton and The Structure That
        Delineate The Nature and Extent of Formal
        Relationships Among:
            • Internal Components: Tasks, Jobs and Units
            • Physical and Nonphysical Forms in Response to
              Internal Requirements and External Environment
            • A Tool for Goal Attainment

Kamal Fatehi                                                            Chapter 8
Managing Internationally               Organizational of Multinational Operations
          Organizational of MNC’s Operations

• Factors Influencing MNC Structure
      – External Forces
            •   Economic Conditions
            •   Technological Development
            •   Product-Market Characteristics (Competition)
            •   Host Government Policies
      – Company Factors
            •   History
            •   Top Management Philosophy
            •   Nationality
            •   Corporate Strategy
            •   Degree of Internationalization
Kamal Fatehi                                                                Chapter 8
Managing Internationally                   Organizational of Multinational Operations
  Development of International Corporate Structure

• From Simple to Complex
• From Domestic Orientation to Global
  Perspective
• Product Life Cycle
      – Introduction
            • Competition is Limited to Domestic Firms
            • Export
            • International Operation Is An Extension of
              Domestic
Kamal Fatehi                                                             Chapter 8
Managing Internationally                Organizational of Multinational Operations
  Development of International Corporate Structure

• Product Life Cycle
      – Growth
            • Technology Diffusion and Price Competition-
              Manufacturing Facilities in Low-Cost Countries
            • International Division
      – Maturity
            • Most of The Corporate Revenues Are From Abroad
                  – Organize Operations on a Global Basis



Kamal Fatehi                                                                   Chapter 8
Managing Internationally                      Organizational of Multinational Operations
                      MNC Corporate Structure


• The Extension of Domestic Structure
      – Export Manager Reports to the Marketing
        Executive (Narrow Product Line)
      – Export Manager Reports to C.E.O. (Broad
        Product Line)
      – Increased Competition and Marketed Maturity--
        Local Manufacturing


Kamal Fatehi                                                        Chapter 8
Managing Internationally           Organizational of Multinational Operations
                      MNC Corporate Structure


• Autonomous Foreign Subsidiary
      – Distant Operations Are Given Local Decision-
        Making
      – Control Through Financial Reporting
      – Foreign Sub. May Have Local Board of
        Directors
      – Advantages and Disadvantages

Kamal Fatehi                                                        Chapter 8
Managing Internationally           Organizational of Multinational Operations
                      MNC Corporate Structure


• International Division Structure
      – Four Factors Prompt The Establishment of
        International Division
            • Increased International Involvement -- Require a
              Senior Executive
            • Concentration Allows Exploiting The Worldwide
              opportunities
            • Internal Specialist Are Needed
            • A Desire to Be Proactive (Identify Opportunities)
Kamal Fatehi                                                             Chapter 8
Managing Internationally                Organizational of Multinational Operations
                      MNC Corporate Structure


•    The Geographic Division
•    The Product Division
•    The Functional Structure
•    Mixed and Matrix Forms




Kamal Fatehi                                                        Chapter 8
Managing Internationally           Organizational of Multinational Operations
                  Geographic Division Structure
                                Figure (3.4)


                                CEO



        Headquarters Staff


European                   North American              South American
Division                      Division                    Division


Kamal Fatehi                                                                 Chapter 8
Managing Internationally                    Organizational of Multinational Operations
                         Product Division Structure
                                    Figure 3.5


                                   CEO



           Headquarters Staff



Product Group A               Product Group B         Product Group C


   Kamal Fatehi                                                              Chapter 8
   Managing Internationally                 Organizational of Multinational Operations
                 International Function Structure
                                       Figure 3.6


                                      CEO




  R&D                         Marketing     Manufacturing               Finance
(Worldwide)                  (Worldwide)    (Worldwide)               (Worldwide)




  Kamal Fatehi                                                                   Chapter 8
  Managing Internationally                      Organizational of Multinational Operations
                    International Mixed Structure
                                           Figure 3.7


                                       CEO




 Product A                    Product B                                    European
                                               USA Division
(Worldwide,                  (Worldwide,                                   Division
 except US                    except US
 and Europe                   and Europe

  Kamal Fatehi                                                                      Chapter 8
  Managing Internationally                         Organizational of Multinational Operations
                           Management Views of IB

 • Ethnocentric
       – Superiority of everything from the home country.
 • Polycentric
       – Foreigners are different.
 • Centocentric
       – Classical global strategy, treat the world as one
         market, produce at home.
 • Geocentric
       – Locally responsive, globally integrated.

Kamal Fatehi                                                             Chapter 8
Managing Internationally                Organizational of Multinational Operations

				
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