BU491 Chapter Notes - Chapter 4: Laundry Detergent
BU491 Chapter 4 – Developing a Transnational Organization: Managing
Integration, Responsiveness, and Flexibility
Beyond Structure: Fit
Companies looked for a way they could organize their company so that it was best aligned to
operate worldwide
The easy solution was a global matrix
oBut… it turned out to be very disappointing and became very confusing for many
companies
Failure of the Matrix
In theory the matrix is supposed to balance centralized efficiency and national responsiveness
There was a lot of confusing dual reporting, overlapping responsibility, and turned small
problems into heated battles
Building Organizational Capability
The reason companies failed in their search for structure fit is because they were only focused
on formal structure
o1. Choosing between a product-focus vs. a geographic focus caused managers to lose
sight of external factors
o2. The focus on structure led to static roles and responsibilities
o3. Companies were shocked by the change because they would switch everything over
pretty much overnight
Formal structure was powerful but a much too blunt way of organizing the company
The key is not to focus on structure so much, but rather an internal network of relationships that
reshapes the core decision-making process
Administrative Heritage
A company is shaped not only by the external forces of demand, but also from past internal
structures and managerial biases
A company’s culture affects how it operates
Admin. heritage can be a company’s greatest asset but it can also be a huge liability can
potentially resist change
MNEs are captives of their past, because it will surely affect their future
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Decentralized Federation
Many MNEs gave their subsidiaries so much autonomy they were basically their own company,
pretty much a bunch of investments rather than being part of an global business
They used the multinational strategy through a decentralized federation organization model
oThis includes Phillips, Unilever, Nestle mostly European MNEs
Coordinated Federation
American MNEs wanted to delegate responsibility to their subsidiaries but still have overall
control
oThey were located in the largest, richest economy in the world as opposed to Europe
oAll the ideas and products come from the parent company
oMany companies used the international strategy using coordinated federation
Centralized Hub
Japanese MNEs would have primary decision making done at home, but offshore other activities
in areas where they were more efficient
oThey used a global strategy as part of a centralized hub
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Bu491 chapter 4 developing a transnational organization: managing. Companies looked for a way they could organize their company so that it was best aligned to operate worldwide. The easy solution was a global matrix: but it turned out to be very disappointing and became very confusing for many companies. In theory the matrix is supposed to balance centralized efficiency and national responsiveness. There was a lot of confusing dual reporting, overlapping responsibility, and turned small problems into heated battles. The reason companies failed in their search for structure fit is because they were only focused on formal structure: 1. Choosing between a product-focus vs. a geographic focus caused managers to lose sight of external factors: 2. The focus on structure led to static roles and responsibilities: 3. Companies were shocked by the change because they would switch everything over pretty much overnight. Formal structure was powerful but a much too blunt way of organizing the company.
