Structural design of mnc

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Structural design of mnc:

Structural design of mnc By R.Aparna 82045


MNC A multinational corporation – a company having a subsidiary or a branch or a place of business in two or more countries or operates in two or more countries or territories. ‘transnational corporations’ 63,000 multinational corporations are in the World

Structural design of mnc:

Structural design of mnc Organisation design deals with structural aspects of organizations: it aims at analyzing roles and relationships so that collective effort can be explicitly organized to achieve specific ends. It is “ the process of systematic and logical grouping of activities, delegation of authority and responsibility and establishing working relationships that will enable both the company and employee to realize their mutual objectives.” hierarchical concept

Steps in designing organizational structure::

Steps in designing organizational structure: External environment Overall aims and purpose of the enterprise Objectives Activities Decisions to be taken across horizontal and vertical dimensions Relationships Organization structure Job structure Organization climate Management style Human resource

Organizational structure :

Organizational structure representation of the formal reporting relationships within an organization corporations require an organizational structure that can house the usual business functions - finance, marketing , R&D, production, etc. - as well as those functions required for being successful beyond the domestic market. appropriate organizational structure will be determined by the overall global strategy of the firm

PowerPoint Presentation:

When organizations are small, the owner-manager can personally supervise all workers However, when the organization grows, supervisions becomes more difficult More elaborate designs are needed

Key components of OS:

Key components of OS Designation of formal reporting relationships, including number of levels in the hierarchy and span of control Identifies the grouping of individuals in departments and departments in the organization Designation of systems to ensure effective communication, coordination, and integration across departments

The four basic organizational structures are::

The four basic organizational structures are: International Division Worldwide geographic structure Worldwide product structure Worldwide matrix structure

Organisational Design, Multinational Management by James Cullen:

Organisational Design, Multinational Management by James Cullen

International Division Structure:

International Division Structure department that coordinates and controls a company’s export operations have greater control over its export operations pricing and promotion of products in the international markets As companies evolve beyond initial participation strategies of exporting and licensing need more sophisticated organisation structures to implement more complex multinational strategies.

PowerPoint Presentation:

Pros : Simple Cons : No gains from being global (economies of scale, etc). Knowledge learned in host markets are not easily transferred back to the parent. Best with : Probably works well with the “international” strategy - neither globally integrated nor locally responsive

Worldwide geographic structure:

Worldwide geographic structure regions or large market countries become the geographical divisions of the multinational company Mnc needs to differentiate its product or services by country or by region, it needs an organisational design with maximum geographical flexibility.

A structure that breaks the firm into divisions by area.:

A structure that breaks the firm into divisions by area.

PowerPoint Presentation:

Pros : Focus by region allows the company to tailor strategies to the unique requirements of each region. Cons : Knowledge and best practices are not easily spread from region to region. Doubles on production functions, etc may make it more difficult to achieve the benefits from being global. Best with : Probably best for a “multinational” firm.

Worldwide product structure:

Worldwide product structure A structure that breaks the firm into divisions by product. product structure supports strategies that emphasize the production and support of worldwide products It is usually considered the ideal structure to implement an international strategy

PowerPoint Presentation:

Pros : Focus by product allows the company to gain benefits from economies of scale. Cons : Knowledge transfer between product divisions is difficult because there is little coordination between products of the same company. As there is a marketing function for each product line, they may be doubled. Best with : Probably best for a “global” firm. Eg: P&G

Worldwide matrix structure :

Worldwide matrix structure To balance the benefits produced by geographic and product structures and coordinate a mixture of product and geographic subunits. enables a firm to pursue global and local strategies at the same time. Geographical divisions focus on national responsiveness while product divisions focus on finding global efficiencies

Division report to both a region office and a product office.:

Division report to both a region office and a product office .

PowerPoint Presentation:

Pros : Knowledge transfer between both area and product means that every area of the firm benefits from a solution found in one area of the globe. Gains from being globally integrated as well as locally responsive. Cons : Confusion - having to report to two bosses will make it difficult to operate as you are constantly pulled in two directions. Best with : Probably best for a “transnational” firm. Example :



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