Seminar The Organization of International Business Chapter 15
Learning Objectives p Profile the evolving process of organizing a company for international business p Describe the features of classical structures p Describe the features of neoclassical structures p Discuss the systems used to coordinate and control international activities p Profile the role and characteristics of organization culture
Introduction Learning Objective 1: Profile the evolving process of organizing a company for international business
Introduction p The goal of MNEs is to standardize activities to maximize global efficiency and at the same time adapt activities to maximize local effectiveness p To achieve this goal the MNE must establish the right structure to implement it
Introduction Factors Affecting Organizing Operations
Changing Situations, Changing Organizations p Environmental trends, industry conditions, and market opportunities are forcing change n Expansion of international business n The Internet as a design standard n Managerial standards n Social contracts n Building a magical organization
Organization Structure Learning Objective 2: Describe the features of classical structures
Organization Structure p Organizational structure n the formal arrangement of roles, responsibilities, and relationships in the MNE n Vertical differentiation p the balance between the centralization and decentralization of authority n Horizontal differentiation p involves specifying which people do which jobs in which units
Vertical Differentiation p Centralization versus Decentralization n Centralization p degree to which high-level managers make strategic decisions and delegate them to lower levels for implementation n Decentralization p degree to which lower-level managers make and implement strategic decisions
Horizontal Differentiation p Horizontal differentiation n Specifies the set of tasks to accomplish n Divides the tasks among SBUs, divisions, departments, committees, teams, jobs, and individuals n Stipulates superior and subordinate relationships p Classical structures used to achieve this n functional, area or divisional, matrix or mixed
Functional Structure p The functional structure n groups people based on common expertise and resources n is popular among companies with narrow product lines
Functional Structure The Functional Structure
Divisional Structure p The divisional structure n divides employees based on the product, customer segment, or geographical location n duplicates functions and resources across divisions p International division p Global product structure p Worldwide area structure
Divisional Structure The International Division Structure
Divisional Structure Product Division Structure
Divisional Structure Geographic (area) Division Structure
Matrix Structure p The matrix structure n Institutes overlaps among functional and divisional forms n Gives functional, product, and geographic groups a common focus n Violates the unity of command principle p has dual reporting relationships rather than a single line of command
Matrix Structure Matrix Division Structure
Mixed Structure p The mixed structure n Combines elements of the functional, area, and product structures n Allows the firm to better adapt to market conditions worldwide
Neoclassical Structures Learning Objective 3: Describe the features of neoclassical structures
Neoclassical Structures p Neoclassical structures n emphasize coordination and cultivation not command and control n Network structure p arranges differentiated elements in patterned flows of activity that allocate people and resources to problems and projects in a decentralized manner keiretsu, sogo shosha, chaebol n Virtual organization p dynamic arrangement among partners that efficiently adapts to market change
Neoclassical Structures A Simplified Network Structure
Coordinated Systems Learning Objective 4: Discuss the systems used to coordinate and control international activities
Coordinated Systems p Coordination by n Standardization p relies on objectives and schedules to set rules and regulations n Plan p requires interdependent units to meet common deadlines and objectives n Mutual adjustment p depends on managers interacting extensively with their counterparts
p Control systems Control Systems n define how managers compare performance to plans, identify differences, and where found, assess the basis for the gap and impose corrections p Bureaucratic control p Market control p Clan control
Control Mechanisms p Control tools include n Reports n Visits to subsidiaries n Evaluative metrics n Information systems
Organization Culture Learning Objective 5: Profile the role and characteristics of organization culture
Organization Culture p Organization culture n the coherent set of assumptions about an MNE and its goals and practices shared by its members p management values and principles p work climate and atmosphere p how we do things around here patterns p traditions p ethical standards
Organization Culture and Strategy p An organization s culture n shapes its strategic moves n varies with the strategy the MNE pursues
Organization Culture and Strategy Strategy and Organizational Culture in International Business
The Rise of Corporate Universities p Corporate universities n Expanding mission n Integrating diversity n Crucible of change n Filling gaps
Activities p Handouts
Chapter 16 Marketing Globally
Learning Objectives p p p p p p p To understand a variety of international product policies and their appropriate circumstances To be aware of product alterations when deciding between standardized and differentiated marketing programs among countries To appreciate the pricing complexities when selling in foreign markets To be familiar with country differences that may necessitate alterations in promotional practices To comprehend the different branding strategies companies may employ internationally To discern effective practices and complications of international distribution To perceive why and how emphasis within the marketing mix may vary among countries
Introduction p Marketing principles in foreign markets are similar to those in domestic markets n Product n Price n Promotion n Place p However, some or all elements may need to be adapted to better fit local markets
Introduction Marketing as a Means of Pursuing an International Strategy
Marketing Strategies p Marketing strategy depends on marketing orientation n Production n Sales n Customer n Strategic marketing n Social marketing
Marketing Strategies p Firms can segment and target markets n By country n By global segment n Using multiple criteria
Product Policies Learning Objective 1: To understand a variety of international product policies and their appropriate circumstances
Product Policies Learning Objective 2: To be aware of product alterations when deciding between standardized and differentiated marketing programs among countries
Why Firms Alter Products p Firms alter products for n Legal reasons n Cultural reasons n Economic reasons
The Product Line: Extent and Mix p Product line decisions depend on n Sales and cost considerations n Product life cycle considerations
Pricing Strategies Learning Objective 3: To appreciate the pricing complexities when selling in foreign markets
Pricing Strategies p Potential obstacles in international pricing n Government intervention p Set minimum or maximum pricing p Prohibit certain pricing practices n Market diversity p Consumers may be willing to pay higher prices
p Pricing tactics Pricing Strategies n Skimming strategy n Penetration strategy n Cost-plus strategy p Export price escalation p Fluctuations in currency value
Pricing Strategies Why Cost-Plus Pricing Pushes Up Prices
Pricing Strategies p Gray market or product diversion n the selling and handling of goods through unofficial distributors
Pricing Strategies Negotiating Import-Export Prices
Promotion Strategies Learning Objective 4: To be familiar with country differences that may necessitate alterations in promotional practices
Promotion Strategies p Promotion n the presentation of messages intended to help sell a product or service p Push-pull mix n Push p uses direct selling techniques n Pull p relies on mass media
Promotion Strategies p Advantages of standardized advertising n lower cost n better quality at local level n common global image n rapid entry into multiple countries p However, firms could have problems with n translation n legalities n market needs
Branding Strategies Learning Objective 5: To comprehend the different branding strategies companies may employ internationally
p Brand Branding Strategies n an identifying mark for a product or service
Branding Strategies p Advantages of a worldwide brand n global image n global player identification p Problems with global brands n language n brand acquisition n country-of-origin n generic and near-generic names
Distribution Strategies Learning Objective 6: To discern effective practices and complications of international distribution
Distribution Strategies p Distribution n the course physical path or legal title that goods take between production and consumption
Distribution Strategies p Deciding whether to standardize n Distribution can vary substantially among countries n Distribution can be difficult to change
Distribution Strategies p When choosing distributors and channels firms must consider n whether internal handling is feasible n which distributors are qualified n the reliability of after-sales service
Distribution Strategies p Distributors choose which products to handle p To get a distributor to work for them, companies may have to n give incentives n use successful products as bait for new ones n convince distributors that their product and company are viable
Distribution Strategies p Factors that can contribute to distribution cost differences among countries include n Infrastructure conditions n The number of levels in the distribution system n Retail inefficiencies n Size and operating hour restrictions n Inventory stock-outs
Distribution Strategies p E-commerce and the Internet n Opportunities p can replace traditional sales methods p faster customer service n Problems p cannot differentiate sales programs between countries p still must comply with local laws
Managing the Marketing Mix Learning Objective 7: To perceive why and how emphasis within the marketing mix may vary among countries
Managing the Marketing Mix p Gap analysis n a method for estimating a company s potential sales by identifying prospective customers it is not serving adequately p Usage p Product line p Distribution p Competitive
Managing the Marketing Mix Gap Analysis
Evolving Challenges to Segment Markets p Disparities between haves and havenots will increase p Companies will have conflicting opportunities to serve both haves and have-nots p Attitudinal differences will continue to affect demand p Materialism, cosmopolitanism, and consumer ethnocentrism
activities p handouts