lecture 9 industry studies student
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TOPIC 9TRANSCRIPT
Industry Studies: Consumer Goods Industry
Topic: Developing and implementing strategies globally
Topic Number: 9
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Overview
Organisations operating in the CGI need to develop a robust framework to determine how decision-making is done and implemented. A key decision is the level of head office control vs subsidiary autonomy as this has significant implications for global strategy alignment.
In this lecture, we will explore a multitude of these issues and determine how different organisations approach them. We will initially determine the impact of international business activity on organisation design and look at the 5 forms of international organisation design. Thereafter, we will go on to explore the purpose of control and how decisions are developed in international business.
Finally, we will look at some issues relating to implementation.
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Learning Outcomes
• Determine and articulate how strategy is developed globally
• Understand and discuss the dynamics of home country control vs local subsidiary autonomy
• Be able to explain the key features of organisation control and how it influences decision making and implementation
• Critically evaluate the key issues that organisations in the CGI may face when developing and implementing strategy
Developing and implementing strategy
Every company has two organisational structures: The formal one is written on the
charts; the other is the everyday relationship of the
men and women in the organisation.
Harold Geneen
I try to motivate people and align our individual
incentives with organisational incentives.
And then let people do their best.
John Liu
Why is organisation design important to strategy development?
Allocate resources
Provide information
Assign tasks
Obtain information
Different organisation approaches
Corollary Approach
Export Approach
International Approach
Span of control
Global Organisation Design
Global organisation design
• Area Knowledge
• Product Knowledge
• Functional Knowledge
5 forms of organisation design
Product design
Area design
Functional design
Customer design
Matrix design
Why is organisation design important for strategy and implementation?
Determines who makes the decision
Determines what the objective is
Determines how the decision
affects strategy
Determines who implements
strategy
For example…
Related Products Unrelated Products
M-Form
Multidivisional
H-Form
Holding
Global product design
Advantages Disadvantages
Management Skill
Efficient Production Coordination Levels
Global Marketing Corporate Learning
Global product design
Duplication of Efforts
Chapter 14 - 13
Marketing-Driven Strategy
Brand-Name Reputation
Local Market Expertise
Global area design
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Disadvantages of global area design
May sacrifice
cost efficiencies
May slow diffusion of technology
Results in duplication
of resources
Raises costs of
coordination
Impedes global
product planning
•Transfer Expertise
•Centralize Control
•Focus on Functions
Global functional design
Limited Products or Customers
Difficult to Coordinate
Duplication of Resources
Disadvantages of global functional design
Take 5 minutes and determine the structures of these companies
Levels of global control: Managerial Philosophy
Ethnocentric Polycentric Geocentric
Decision Making Focus
Corporate Headquarters
Local Subsidiary
Local Market
Response
Overall Needs of the Firm
Lower Higher
Higher Lower
Centralisation vs Decentralisation
Little Formal Power
Substantial Authority
Board of Directors
Decentralization
Local Business and Politics
Ethical and Social Responsibility
Level of Accountability
Empowering the subsidiary board of directors
Organizational Hierarchy
Rules and Procedures
Ad Hoc TechniquesInformal
Mechanisms
Coordination in the global organisation
1. Define Control Standards
2. Develop Performance Measures
3. Compare Performance and Standards
4. Respond to Deviations
Keeping decision-making and implementation in check
Accounting Systems
Policies and Procedures
Rules and Regulations
Performance Ratios
Control techniques
RecognisingResistance
MinimisingResistance
Behavioural Aspects
•Reaction to Over-Control
•Inappropriate Focus
•Increased Accountability
What causes resistance?
CultureDiagnostics
AccountabilityParticipation
Reducing Resistance
End of presentation
© Pearson College 2013