Chapter 14 - The organization of international business. The goals of this chapter are: Understand the concept of supply chain management, recognize the relationship between design and supply chain management, describe the five global sourcing arrangements, appreciate the importance of added costs of global sourcing, | International Business 9e By Charles . Hill McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 14 The Organization of International Business What Is Organizational Architecture? Organizational architecture is the totality of a firm’s organization including Organizational structure Control systems and incentives Processes, organizational culture, and people To be the most profitable the elements of the organizational architecture must be internally consistent the organizational architecture must fit the strategy the strategy and architecture must be consistent with each other, and consistent with competitive conditions LO1: Explain what is meant by organization architecture. What Is Organizational Architecture? Organizational Architecture What Are The Dimensions Of Organizational Structure? Organizational structure has three dimensions Vertical differentiation - location of decision-making responsibilities within a structure Centralized decision-making Decentralized decision-making Horizontal differentiation - formal division of the organization into sub-units Integrating mechanisms - the mechanisms for coordinating sub-units LO2: Describe the different organizational choices that can be made in an international business. Why Is Horizontal Differentiation Important? Initially, most firms have no formal structure, but as they grow, develop a functional structure Firms may switch to a product divisional structure where each division is responsible for a distinct product line When firms expand internationally, they often group all of their international activities into an international division LO2: Describe the different organizational choices that can be made in an international business. What Is A Functional Structure? A Typical Functional Structure LO2: Describe the different organizational choices that can be made in an international business. What Is A Product Divisional Structure? A Typical Product . | International Business 9e By Charles . Hill McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 14 The Organization of International Business What Is Organizational Architecture? Organizational architecture is the totality of a firm’s organization including Organizational structure Control systems and incentives Processes, organizational culture, and people To be the most profitable the elements of the organizational architecture must be internally consistent the organizational architecture must fit the strategy the strategy and architecture must be consistent with each other, and consistent with competitive conditions LO1: Explain what is meant by organization architecture. What Is Organizational Architecture? Organizational Architecture What Are The Dimensions Of Organizational Structure? Organizational structure has three dimensions Vertical differentiation - location of decision-making responsibilities within a structure .
