Organization of the Organization of the multinational firmmultinational firm

Hedl MariaHedl MariaEschbacher ClaudiaEschbacher Claudia

AgendaAgenda

Organizational structures Organizational structures (Perlmutter)(Perlmutter)EthnocentrismEthnocentrismPolycentrismPolycentrismGeocentrismGeocentrism

Stages of international development Stages of international development (Daft)(Daft)Matrix structure vs. Heterarchy Matrix structure vs. Heterarchy (Hedlund)(Hedlund)

The home based MNC The home based MNC (Porter, Sölvell, Zander)(Porter, Sölvell, Zander)

Organizational structures Organizational structures (Perlmutter)(Perlmutter)

EthnocentrismEthnocentrism

Type of interdependenceType of interdependence Sequential Sequential

Control styleControl style HQ-derivedHQ-derived

Strategic role of subsidiaryStrategic role of subsidiary Implement local strategyImplement local strategy

Recruitment and rotationRecruitment and rotation Home-country managers, much rotationHome-country managers, much rotation

Organizational structures Organizational structures (Perlmutter)(Perlmutter)

PolycentrismPolycentrism

Type of interdependenceType of interdependence PooledPooled

Control styleControl style CalculativeCalculative

Strategic role of subsidiaryStrategic role of subsidiary Formulate & implement local strategyFormulate & implement local strategy

Recruitment and rotationRecruitment and rotation Local managers, little rotationLocal managers, little rotation

Organizational structures Organizational structures (Perlmutter)(Perlmutter)

GeocentrismGeocentrism

Type of interdependenceType of interdependence System of central and reciprocalSystem of central and reciprocal

Control styleControl style Normative, coerciveNormative, coercive

Strategic role of subsidiaryStrategic role of subsidiary Implement & adapt to global strategyImplement & adapt to global strategy

Recruitment and rotationRecruitment and rotation Mixed, much rotationMixed, much rotation

Difficulties of geocentric MNCsDifficulties of geocentric MNCs

Differences between nations and regionsDifferences between nations and regionsCultural differencesCultural differencesSizeSizeSkilled managersSkilled managersSpecialization of subsidiariesSpecialization of subsidiariesNo adaption to local marketsNo adaption to local markets

Stages of international Stages of international development development (Daft)(Daft)

Domestic stageDomestic stage

International stageInternational stage

Multinational stageMultinational stage

Global stageGlobal stage

Model for global vs. local Model for global vs. local opportunitiesopportunities

Globalization strategyGlobalization strategy means that product means that product design and advertising strategy are design and advertising strategy are standardized throughout the world.standardized throughout the world.

Multidomestic strategyMultidomestic strategy means that means that competition in each country is handled competition in each country is handled independently of competition in other independently of competition in other countries.countries.

GlobalProduct Structure

GlobalGeographic

Structure

International Division

Heterarchy

Global Matrix

Structure

Development of

Globalization Strategy

Development of Multidomestic

Strategy

Model for global vs. local opportunitiesModel for global vs. local opportunities

International divisionInternational division

CEO

HR Finance R & D Int. Division

Europe

Mideast

Brazil

Staff

Global Product StrucutreGlobal Product Strucutre

Chairman

Law Engineering President Finance International

Global Automobile Components

GlobalIndustrial

Group

GlobalInstrumentsProduction

GlobalTruck

Components

Global Geographic DivisionGlobal Geographic Division

CEO

Pacific Division

European Division

Latin American Division

Corporate Staff

Long Term Planning

ProductCoordination

Global Matrix StructureGlobal Matrix Structure

GermanyGermany NorwayNorway SpainSpain

TransportationTransportation

IndustryIndustry

Power Transf.Power Transf.

International Excecutive Committee

Business

Sectors

Country Managers

Local Companies

Global Heterarchy Global Heterarchy (Hedlund)(Hedlund)

large transnational firmslarge transnational firms

whole world as their playing fieldwhole world as their playing field

no single country baseno single country base

local and global advantageslocal and global advantages

complex multidimensional structurecomplex multidimensional structure

Global Heterarchy Global Heterarchy (Hedlund)(Hedlund)

Differences from Matrix StructureDifferences from Matrix Structure

Many centresMany centres

Stratic role for MNC of subsidiary managersStratic role for MNC of subsidiary managers

Different kinds of centresDifferent kinds of centres

Coordination through corporate cultureCoordination through corporate culture

Global Heterarchy Global Heterarchy (Hedlund)(Hedlund)

Differences from Matrix StructureDifferences from Matrix Structure

Degree of coupling between unitsDegree of coupling between units

Holographic organizationHolographic organization

„„firm as a brain“ rather than „brain of the firm“firm as a brain“ rather than „brain of the firm“

CoalitionsCoalitions

Managers have authorityManagers have authority

The home based MNCThe home based MNC (Sölvell, Zander, Porter)(Sölvell, Zander, Porter)

4 Diamonds4 DiamondsFactor endowmentsFactor endowmentsDemand conditionsDemand conditions

Relating and supporting industriesRelating and supporting industries

Firm strategy, structure and rivalryFirm strategy, structure and rivalry

supplies to regions or nations rather than the supplies to regions or nations rather than the international environmentinternational environment

The home based MNCThe home based MNC (Sölvell, Zander, Porter)(Sölvell, Zander, Porter)

The home base is best understood as a The home base is best understood as a limited geographical area, where a firm limited geographical area, where a firm has a cluster of core functions including has a cluster of core functions including

strategic decision making, research strategic decision making, research development and often some form of core development and often some form of core

manufacturing.manufacturing.

The home based MNCThe home based MNC (Sölvell, Zander, Porter)(Sölvell, Zander, Porter)

Simple home-based MNCSimple home-based MNCSelective tappingSelective tapping

Multi-home-based MNCMulti-home-based MNCSeparate bases for individual lines of businessSeparate bases for individual lines of business

Case StudyCase Study

1819Founding by Alois Miesbach on the Wienerberg in Vienna

1869Trading starts on the Vienna Stock Exchange

1986Start of internationalization and expansion (Germany)

1990 Start of expansion in Eastern Europe

1999 Advance to Global Player

Case StudyCase Study 235 plants in 24 countries235 plants in 24 countries Profit after tax € 155,5 millionProfit after tax € 155,5 million Brands & Products:Brands & Products:

POROTHERM - BricksPOROTHERM - Bricks TERCA - Facing bricksTERCA - Facing bricks KORAMIC - Roof tilesKORAMIC - Roof tiles SEMMELROCK - PaversSEMMELROCK - Pavers BRAMAC & TONDACH GLEINSTÄTTEN - RoofBRAMAC & TONDACH GLEINSTÄTTEN - Roof PIPELIFE - PipesPIPELIFE - Pipes Wienerberger OfenkachelWienerberger Ofenkachel

Structure and OrganizationStructure and Organization

Structure and OrganizationStructure and Organization Mature product lines in core businessMature product lines in core business Not all products in all countriesNot all products in all countries Stable technologiesStable technologies

Diveded into regionsDiveded into regions Regions report to managing boardRegions report to managing board Each region full control over activitiesEach region full control over activities

Geographic division structureGeographic division structure

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