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Market Global Structure
The organizational structure of a multinational firm, which reflects the “global” philosophy that the world is basically one homogeneous market, is called “global structure”. For example, according to this philosophy, many large electronics and consulting firms design products and services that are essentially the same worldwide, although they allow minor local adjustments in packaging and language. However, there are some differences in terminology and philosophy in this field.
First, the “global” philosophy is characterized by seeing the world as a more or less monolithic market with similar tastes and preferences. In modern parlance, this is the opposite of the “polygamous” (or multinational or multilocal) philosophy, which sees the world as composed of many or very rare markets, each with its own unique tastes and preferences. The position between these two extremes is called regionalism, whereby we see the world as consisting of a small number of fairly homogeneous regions. These constructs are applicable to industries, firms, and organizational structures and are informative for understanding how global thinking is applied at industry and strategic levels.
For example, George Yip sees globalization as a function of the degree to which the global market is fragmented, local customer needs differ, local sourcing imperatives exist, costs are heterogeneous, and trade barriers are significant to cross-border trade. Thus, Randall Schuler, Peter Dowling, Helen De Cieri, and other scholars refer to some industries as global industries, such as commercial aircraft, photocopiers, generic drugs, most electronics, and computer hardware; retail, food industry and most services are considered to be significantly polygamous.
Multinational companies and other large firms are generally divided into several divisions, divisions, or divisions that reflect some aspect of their strategy. This relationship between structure and strategy was popularized in Alfred DuPont Chandler’s classic book Strategy and Structure. For example, a firm with five product categories may be structured into five divisions, each division empowered to manage one of the product categories. Chris Bartlett and Sumantra Ghoshal build on this logic as they focus on organizational responses to global and local forces; and they describe four organizational types (or mentalities) for a global organization that represent organizational and strategic responses to various industry contingencies. For example, they describe a global firm that sees the world as its market, assumes that national tastes are more similar than different, and believes in standardized products; and these strategic approaches require structural integrative mechanisms that link worldwide operations, production, marketing, research and development (R&D), and planning.
Thus, it is these structural processes that are meant by the term global structure. Mechanisms All large organizations need some form of coordinating and integrating structure. However, the global strategy relies on these structures for implementation. There are three main aspects to such a structure. First, it is a place of strategic responsibility. Second, the structure dictates the way reporting relationships are separated and how the firm is divided. This aspect of structure can be called structuring. The last aspect is the types of coordination and integration systems – these can be called processes.
Locus of strategic responsibility: An important aspect of organizational structure is the degree to which decision-making autonomy is delegated from corporate headquarters to parts of the business. In a global firm, there is a strategic imperative to centralize important strategic decisions. For example, decisions about product range, research and development, branding and human resource management are usually made at the corporate level rather than at the subsidiary level. Even the core policies and standards of customer service, a function closer to the customer, can be set at the corporate level. Structuring: A characteristic of a global structure is that it is relatively blind to geographic distance and instead focuses on one or more other strategic dimensions, such as products or markets, that it deems more important (than geography) to the success of a global strategy. .
Thus, the global structure usually has a basic high-level division into product categories (commonly called global product structure), markets (global market structure), or some matrix (global matrix structure). As an example of a global product structure, Procter & Gamble (P&G) has three global product divisions, namely Global Beauty, Global Household Care, and Global Health and Wellbeing. However, the distinction between product and market structures is likely to be blurred—for example, Boeing’s business units appear to be different product units (commercial aircraft, integrated defense systems, and Boeing Capital Corporation), but in fact all three are marketing oriented. different aircraft and aerospace products and services to different market groups – in this case commercial airlines, governments and financial intermediaries.
A global matrix structure attempts to organize activities across two (or more) management dimensions, such as product, geography, and/or market. For example, HJ Heinz simultaneously has geographic divisions in North America, Europe, Australia/New Zealand, and emerging markets (select countries in Asia and Eastern Europe); several product categories, namely ketchup/condiments/sauces, meals and snacks (including frozen foods), soups/beans and pasta, and baby food; and separate operations for the retail and foodservice channels. In a global structure, these various departments and business units may have necessary aspects of a local focus, but essentially they work together to implement the firm’s global strategy.
Processes: Finally, and most importantly, structure refers to processes such as coordination, integration, and information systems. These processes are pronounced in the global structure and are generally very common in modern organizations. Kwangsoo Kim and Jong-Hun Park identify four common integration mechanisms: (1) people-based integration mechanisms that use people to coordinate business operations across boundaries, involving the transfer of managers, meetings, teams, committees, and integrators; (2) information-based integration mechanisms use information systems such as databases, e-mail, the Internet, intranets, and electronic data interchange to integrate business operations across borders; (3) formalization-based integration mechanisms rely on the use of standardized or common work procedures, rules, policies, and guidelines across units; and (4) centralization-based integration mechanisms retain decision-making authority at corporate headquarters—a concept similar to that in the “strategic area of responsibility” section above.
The more global a firm is, the more it uses these processes. For example, Intel uses relatively few formal structural mechanisms, but several cross-functional groups including information technology (IT), knowledge management, human resources, finance, legal, change control, data warehousing, general catalog data management, and cost reduction. uses the functional command. – as integration processes that allow them to quickly adapt to changing conditions. Integration mechanisms can also have negative effects—perhaps tying the hands of local managers, imposing compliance costs (both time and other resources), and creating unintended bureaucratic obstacles to effective decision-making. For example, a study by David Brock and Ilene Siscovick found that the effects of integrative factors at the subsidiary level were often negative.
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