Chapter 7 (Part-B) Chapter 8: Managing in Global Environment and Organizational Structure and Design

Описание: 🔹 PART 1: Managing in a Global Environment
1️⃣ Why Global Management Matters

Today, businesses don’t operate in isolation. Companies compete across borders.

Think about:
Apple Inc. – Designs in USA, manufactures in China
Toyota Motor Corporation – Production across continents
Amazon – Global logistics & digital reach

🌍 Globalization means:

Flow of goods
Flow of capital
Flow of knowledge
Flow of labor

2️⃣ The Global Environment – Key Dimensions

Managers must understand 3 major environments:

🔹 A. Economic Environment

Exchange rates
Inflation
GDP growth
Income levels

👉 Example: A strong dollar makes exports expensive.

🔹 B. Political–Legal Environment

Trade regulations
Tariffs
Stability
Intellectual property laws
👉 Political instability = high risk.

🔹 C. Cultural Environment

Culture shapes:
Leadership style
Negotiation behavior
Employee motivation
One famous framework:
🌍 Hofstede’s Cultural Dimensions

Individualism vs Collectivism
Power Distance
Uncertainty Avoidance
Masculinity vs Femininity
Long-term Orientation
👉 Example: High power distance countries prefer hierarchical leadership.

3️⃣ Entry Modes into Global Markets
When firms go international, they choose different strategies:
Mode Risk Control Investment
Exporting Low Low Low
Licensing Low Medium Low
Joint Venture Medium Shared Medium
Wholly Owned Subsidiary High High High

🔑 Key Insight:
Higher control = Higher risk.

4️⃣ Global Strategies
There are 4 major international strategies:

1️⃣ International Strategy
Centralized at home
Export innovation

2️⃣ Multi-Domestic Strategy
Local responsiveness
Decentralized decision-making

3️⃣ Global Strategy
Standardization
Cost efficiency

4️⃣ Transnational Strategy
Balance global efficiency + local responsiveness

👉 Most complex but most competitive.

5️⃣ Challenges in Global Management
Cultural misunderstandings
Exchange rate volatility
Global supply chain disruption
Political risk

Ethical differences
Example: Labor laws differ significantly across countries.

🔑 KEY WORDS – Chapter 7

Globalization
Political Risk
Hofstede Dimensions
Exchange Rate
Exporting
Licensing
Joint Venture
Wholly Owned Subsidiary
Global Strategy
Transnational Strategy

🔹 PART 2: Organizational Structure & Design

Now that firms operate globally…
How should they structure themselves?

1️⃣ What is Organizational Structure?

Organizational structure defines:

Who reports to whom

Who makes decisions

How tasks are divided

How coordination happens

Structure affects:
✔ Efficiency
✔ Innovation
✔ Speed
✔ Accountability

2️⃣ The Six Key Elements of Organizational Structure

Work Specialization

Departmentalization

Chain of Command

Span of Control

Centralization vs Decentralization

Formalization

3️⃣ Types of Organizational Structures
🔹 1. Simple Structure
4

✔ Low departmentalization
✔ Wide span of control
✔ Centralized authority
✔ Low formalization

Best for:

Startups

Small businesses

🔹 2. Functional Structure
4

Departments based on function:

Marketing

Finance

HR

Operations

✔ Specialization
✔ Efficiency
✖ Poor cross-department communication

🔹 3. Divisional Structure
4

Divided by:

Product

Geography

Customer

Example:

Procter & Gamble uses product divisions.

✔ Flexible
✔ Performance accountability
✖ Duplication of resources

🔹 4. Matrix Structure
4

Employees report to:

Functional manager

Project manager

✔ Efficient resource use
✔ Flexible
✖ Role conflict

4️⃣ Mechanistic vs Organic Organizations
Mechanistic Organic
High formalization Low formalization
Centralized Decentralized
Rigid hierarchy Flexible structure
Stable environment Dynamic environment

👉 Tech startups = Organic
👉 Manufacturing plants = Mechanistic

5️⃣ Contingency Approach

There is NO one best structure.

Structure depends on:

Strategy

Size

Technology

Environment

🔑 Strategy drives structure.

🔑 KEY WORDS – Chapter 8

Organizational Structure
Departmentalization
Span of Control
Centralization
Formalization
Functional Structure
Divisional Structure
Matrix Structure
Mechanistic
Organic
Contingency Approach