ItIM

• to realize the overall task of the firm in an efficient and effective way, the division of labor is favorable
• decentralization favors differences in goal interpretation and task realization; the realization of the basic overall task might be endangered
• coordination is necessary to harmonize the departments and subsidiaries of a MNC which itself is a prerequisite of success

1. Hierarchy: principle of instruction and obedience (Fayol)
2. market: price mechanism; supply and demand as coordinative institutions e.g. profit center (Schmalenbach)
3. clan: culture as coordinative power; no need for instructions or market coordination because of shared values (Ouchi)

• organizational structure
• technocratic mechanism
• person-oriented mechanisms

• differentiated structure: national and international business is strictly seperated; organizational units are responsible either for national or for international business:
  • export consultant
  • international division
  • international holding
• integrated structure: no sepraration between national and international business
  • worldwide functional structure
  • worldwide product structure
  • worldwide geographic structure
  • worldwide customer structure
  • worldwide matrix structure

4.3 - Folien 9-26

• firms mix structures to implement strategies best
• mixed form organizations called hybrid structures

1. internal (transnational) networks
2. external (strategic) networks
3. virtual MNCs

• reduce hierarchy within HQ-Subs-relation in order to increase flexibility and to exploit decentrally located knowledge
• resources, people and ideas flow in all directions (no one-ways)
• HQ is no longer sole coordination unit; different nodes or centers in th network coordinate product, functional and geographic information and own respective authority
• coordination competence stems from skills and knowledge (centers and excellence)
• dispersed subunits; specialized operations; interdependent relationships

• work best in case of blocked global strategy and respective environmental demands
• require extreme coordination efforts
• provide high degree of flexibility
• high likelyhood of double work

• try to exploit the fact that firms of an industry usually have their competitive advantage in different activities in the value chain
• rely on vertical specialization
• central function of brokers
• coordination between firms is based on market mechanisms and plans
• implement a network-wide information system
• 4.3 - Folie 32

advantages:

• maximizes effectiveness of the core unit
• do more with less resources
• flexibility

disadvantages:

• fragmentation makes it difficult to develop control systems
• success is dependent on ability to locate sources
• difficult to develop employee loyalty

• based on same features as external networks
• cooperation is limited in time (project-oriented)
• example: slim-fast

• de-coupled from a personal creator
• coordinative power stems from a "formalized" authority
• relies heavily on the bureaucratic system (Weber)
• existence is not necessarily a result of hierarchy and respective initial instructions (e.g. outcome of joint committees of HQs and subsidiaries)

1. politics and policies, e.g. HRM, marketing and quality standards
2. standardization and formalization of operative procedures and/or material of joint committees of HQ and subsidiaries

• existence and function is bound to a person
• instructions, cultural assimilation via expatriation programs or visits

• interdependence as a cause of coordination:
  • the degree to which organizational units are interrelated; consequence of labor division
• three primary levels of unit integration
  • sequential interdependence (dependency)
  • pooled interdependence
  • reciprocal interdependence (interdependency)

• occurs when organizational units have a common resource but no interrelationship with one another
• almost typical of the multinational strategy
• low coordinative efforts

• occurs when organizational units must coordinate the flow of information, resources and tasks from one unit to another
• typical of the ethnocentric strategy and the simple global strategy
• medium coordinative efforts

• occurs when information, resources and tasks must be passed back and forth between organizational units
• typical of the Global Ratiionalization strategy and the Blocked Global (transnational) strategy
• highest coordinative efforts; global rationalization < blocked global

• ethnocentric strategy typically of young internationalizers or older firms with strong home market orientation (low internationalization degree in terms of foreign sales)
• simple global strategy can be based on pure exporting; lower internationalization degree (multidimensional approach) than strategies that require FDI (multinational, global rationalization and blocked global strategy)

-formulation of strategies

-design of management systems

-implementation of management tools

in order to:

-deal with different national contexts and challenges in an integrative way

-take advantage of international opportunities

-respond to international threats

-any company that engages in business functions (mainly downstream activities)

-beyond its domestic borders

-on a regularly and not neglectable basis (strategic importance)

-> qualitative concept

-large and small companies

-differs from MNCs that are based on FDI

-to seek global opportunities

-to keep an eye on global competition

-to react on competitors

-additional sales

-cost advantages

-demand for specific resources (natural resources, knowledge)

-strategy (interdependencies to other factors; offensive or defensive motives, e.g. attacking competitors in their home market)

Internationalization Motives are devided into internal or external and proactive or reactive factors

-Managerial urge

-growth and profit goals

marketing advantages

-economies of scale

• risk diversification
• extnd sales of a seasonal product
• excess capability of resources

• foreign market opportunities
• change agents (e.g. state owned export promoters)

• unsolicited orders
• small home market
• stagnant or declining home market

- "Natural" Heterogenity of National Markets

• stage / phase of economic development
• industrial structure
• distribution channels
• demand specifities of customers

- Claims of National Governments

• barriers of trade
• demand behaviour of the government (defense products, telecommunication sector)

Forces towards localization and globalization influence each other.

Localization -->

• "old" forms of a firm's internationalization - exports; if FDI, then as "localized firm"

Globalization -->

• "new" forms of a firm's internationalization - more and more FDI and intrafirm trade with standardized programs

• Until 1880: mainly local or regional industries
• 1880 -1914/1939: first wave of globalization by strong increase of int. trade and larger FDIs (Ford, Gilette, Singer)
• 1939 - 1945: War- effected crash of internationalization
• 1950 - 1980: renewal of internationalization; strong exports and FDI; still strong local adaption; growth of international trade and FDI (tariff barriers) substantially larger than growth of domestic economies
• 1980 - : globalization

Globalization is the strong trend for businesses to see the world as only one market.

consequences for:

• products and services (homogenization)
• customers (global availability of products and services)
• competitors (loss of protected niches)
• nation states (erosion of power to govern supranational firms

1. falling borders
2. growing cross-border trade and investment
3. the rise of global products and customers
4. privatizations
5. new competitors in the world market
6. the rise of global standards of quality and production
7. growing sophistication of information technology

There is a circle of:

• Convergence-Assumption
• Standardization-Assumption
• Centralization -Assumption
• Assumption of Cost- and Price-Advantages

• Free trade areas and the world trade organization
• The surge in RTAs has continued undebated since the early 1990s
  • In 2005, the number of regional trade agreements reached about 300, more than doubling the number since 1995
• Trade agreements:
  • reduce tariffs and restrictions
  • EU, NAFTA, APEC
  • GATT
  • WTO

• averade rate of 6% world trade growth from 2002-2005, 13,8% in 2010, 3,7% in 2012
• more than half of the world trade between EU, US and Asia-Pacific-Region - the triad
• FDI in developed countries counts for approximately $380 billion

• needs of customers growing more similiar (television, tourism, internet)
• global customers search the world for their supplies withour regard to national boundaries

• sale of government owned businesses to private investors
• developing countries and transition economies use privatization to become capitalistic economies

--> benefits for MNC

• opportunities for bargain basement investments
• gaining of market access (often government incentives e.g. several years tax free)

Emerging markets especially in South America and Asia