C H A P T E R

Organization of Multinational Operations

Kamal Fatehi Managing Internationally

Chapter 8 Organizational of Multinational Operations

Table of Contents
Chapter Vignette Organization of MNCs Operations Development of International Corporate Structure MNC Corporate Structure Organizational Structures

Kamal Fatehi Managing Internationally

Chapter 8 Organizational of Multinational Operations

Chapter Vignette Born Global

MCS Energy

Kamal Fatehi Managing Internationally

Chapter 8 Organizational of Multinational Operations

Organizational of MNCs 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 Managing Internationally Chapter 8 Organizational of Multinational Operations

Organizational of MNCs Operations

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

Company Factors

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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 Managing Internationally Chapter 8 Organizational of Multinational Operations

Development of International Corporate Structure

Product Life Cycle

Growth
Technology Diffusion and Price CompetitionManufacturing Facilities in Low-Cost Countries International Division

Maturity
Most of The Corporate Revenues Are From Abroad
Organize Operations on a Global Basis

Kamal Fatehi Managing Internationally

Chapter 8 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 Managing Internationally

Chapter 8 Organizational of Multinational Operations

MNC Corporate Structure Autonomous Foreign Subsidiary

Distant Operations Are Given Local DecisionMaking Control Through Financial Reporting Foreign Sub. May Have Local Board of Directors Advantages and Disadvantages
Kamal Fatehi Managing Internationally Chapter 8 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 Managing Internationally Chapter 8 Organizational of Multinational Operations

MNC Corporate Structure The Geographic Division The Product Division The Functional Structure Mixed and Matrix Forms

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Chapter 8 Organizational of Multinational Operations

Geographic Division Structure

Figure (3.4)

CEO

Headquarters Staff

European Division

North American Division

South American Division

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Chapter 8 Organizational of Multinational Operations

Product Division Structure

Figure 3.5

CEO

Headquarters Staff

Product Group A

Product Group B

Product Group C

Kamal Fatehi Managing Internationally

Chapter 8 Organizational of Multinational Operations

International Function Structure

Figure 3.6

CEO

R&D (Worldwide)

Marketing (Worldwide)

Manufacturing (Worldwide)

Finance (Worldwide)

Kamal Fatehi Managing Internationally

Chapter 8 Organizational of Multinational Operations

International Mixed Structure

Figure 3.7

CEO

Product A (Worldwide, except US and Europe

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Product B (Worldwide, except US and Europe

USA Division

European Division

Chapter 8 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 Managing Internationally Chapter 8 Organizational of Multinational Operations