BU491 Chapter 4: Chapter 4 – Developing a Transnational Organization
Chapter 4 – Developing a Transnational Organization
Difficulties for implementing the 3 strategic objectives
Beyond Structure: “Fit” – finding which formal structure provided the right fit in various
conditions
oArea Division – companies that expand abroad by entering more countries with a limited
range of products
oWorldwide product division – expended by increasing their foreign product diversity in
fewer countries
oGlobal matrix – where there is a high level of foreign product and foreign sales
Failure of the Matrix
oReally complex and rather bureaucratic processes and relationships
oHad dual reporting which led to conflict and confusion
oHad barriers of distance, time, language, culture, and managers found it hard to resolve
conflicts
Building Organizational Capability
oProblems with search of structural fit is that it was only focused on one organizational
variable – formal structure
Deciding whether to go product based or geographically based structures forced
managers to ignore external environment
Focus on structure led to static set of roles, responsibilities, and relationships
Restructuring was harmful as it caused major realignment of roles,
responsibilities and relationships by overnight changes in structure
Administrative heritage – a company’s history and its embedded management culture, e.g. values,
norms, practices of its management
Organizational Configuration Models – three basic archetypes
Decentralized Federation – most key assets and resources decentralized, loose, personal
controls, corporate management treat subsidiaries as independent national businesses, strategy
of national responsiveness
Coordinated Federation – many assets and resources decentralized by controlled from center,
tight, formal, system-based controls, corporate management treats subsidiaries as foreign
extension of domestic operations, strategy of knowledge transfer
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Document Summary
Failure of the matrix: really complex and rather bureaucratic processes and relationships, had dual reporting which led to conflict and confusion, had barriers of distance, time, language, culture, and managers found it hard to resolve conflicts. Building organizational capability: problems with search of structural fit is that it was only focused on one organizational variable formal structure. Deciding whether to go product based or geographically based structures forced managers to ignore external environment. Focus on structure led to static set of roles, responsibilities, and relationships. Restructuring was harmful as it caused major realignment of roles, responsibilities and relationships by overnight changes in structure. Administrative heritage a company"s history and its embedded management culture, e. g. values, norms, practices of its management. Decentralized federation most key assets and resources decentralized, loose, personal controls, corporate management treat subsidiaries as independent national businesses, strategy of national responsiveness.
