International Management #6 Cont...

[samvara]

Working from home (well from father's place) is awesome, went straight to class from there and managed to get in some reading before it started.

- Lecture on Organisation and Management
- Discussion on handout of international functional activities
- Group Case Study – Text case 5, Page 157 – The Leo Burnett Company (assigned reading)

Review of last week.

1. What's the purpose of a company having a strategic plan? What to achieve, communicate it, get people on the same track - Direction and Cohesion.
2. What are the three stages of strategic planning? Formulation, Implementation (hardest to get right) and Control/Evaluation.
3. What are the implications of "structure follows strategy" - develop strategy first, structure will/should implement. Eg: going international is a big change in strategy, should have corresponding change in structure
4. Difference between scripted and unscripted planning - proactive vs reactive
5. Porter's three generic strategies - cross leadership, differentiation and focus
6. What are the four major steps for designing a strategy for going international - environmental scan, internal resource analysis, preliminary design/cost benefit analysis, and specific plan.
7. Three factors to consider when going international - attractiveness, risk and capability.
8. Conditions to consider if going offshore with a foreign direct investment - competitive advantage, more from fdi than exporting, profitable to retain control of operation
9. Six ways of going international - import/export, licensing, franchising, joint ventures, wholly owned subsidiaries, management contracts - risk and benefits increase
10. Types of risk - macro (economic, political) and micro (buearocratic system - licensing arrangements, setting up business)
11. Three ways of managing risk - insurance, integrate with local community, bargaining power (if you're big) and defensive measures.

Introduction: Organisation and Management

Relationship between strategy, structure and management

• For management purposes, organisations (enterprises) are formal socio-technical systems technical systems which are created and operated by people to achieve specific goals
• Goals and the broad plan to achieve them comprise strategy: + the concepts of vision and mission strategy:
• The organisation structure itself is the vehicle for implementing strategy
• Management is the integrating mechanism that co-ordinates the interface between strategy and structure. (Management decides these as well!)

Organisation concepts

• Organisation is a verb and a noun – know when each is applicable!
• Organisations are systems: inputs, transformation, outputs, control and maintenance
• As systems, organisations are neither totally closed nor totally open
• Systems concepts - boundary management, goal achievement processes, and system maintenance and development processes
• Equifinality and negative entropy – useful systems concepts for managers.

Organisation design/types

• Division of work creates horizontal differentiation (the departments)
• Division of management creates vertical differentiation (the hierarchy)
• Can consider three sub systems -- operating, managing and service/control
• Importance of the “underworld” system (official and unofficial –– “internal guanxi”)”)
• (Mintzberg’s view --view strategic apex, middle line, operating core, techno structure, support
• Core types: line (hierarchy), staff (assistant to general, provides support to line - personal assistants etc.), functional, project (outside of line and functional, limited lifetime) and matrix (line managers supporting a number of different projects) designs (extra note: the GVT see P.102-- • Organisation variables - context, structure, activity (work and management), performance, results
• Work activities –marketing, manufacturing, finance/accounting, IS, labour relations, HRM
• Management activities – managing processes (organise and control, plan, set tasks) and people (communication, handling grievances, conflict resolution, training and development) involved in work activities
• Although created by people, once formed, the organisation develops a life of its own beyond its creators and the legal identity it acquires
• Design questions -- Task groupings? Levels? Location? Co-ordination? Bottom up or top down?
• Typical international structures: - product division, area division, functions division, mixed
• Other types: - Transnational or networked structure (matrix) - Japanese keiretsu and Korean chaebol (family) structures
• If strategy changes, structure must change (structure follows strategy)
• Modularity ––company designs product and its modules, outsources module production and receives modules for assembly into final product (eg: cars, electronics etc.) - make or buy?
• Tips on structure design
  • Establish least levels essential to sound operation
  • Put authority as close as possible to where action originates
  • Decentralise wherever territorial considerations apply
  • Avoid overlapping functions and bring related work together under one and same control
  • Distinguish clearly between administration, management and operational
  • Change detailed info. into control info. as it moves up (manage by exception)
  • Exhaust individual channels of performance before setting up committees (committees are good at workshopping, talking and making decisions but not good at acting and 'doing')
  • Always have individual, group and organisational objectives clearly defined and well known

Management concepts•

• Management involves handling processes and people
• Processes - Fayol planning, organising, staffing, decision making, controlling (or Mintzberg roles??)
• People - communicating, directing, communicating, directing, motivating, leading, appraising, disciplining
• Proportion depends on level

Decision making and control

• Key choices related to organisation design are the desired techniques of decision making and control
• Decision making - centralised (authoritarian, directive) or decentralised (autonomous delegated, consensus, co-determination) or a or a mixmix
• Control - input, throughput and output controls, direct and indirect (approvals, structural, reports etc.) controls
• Both processes become more complicated in international operations
• Factors influencing techniques:
  • Size
  • Technology
  • Geography
  • Management competence
  • Financial risk
  • Cultural norms

Key issues/questions•

• How to balance global and local pressures in structural design?
• Do traditional structures suit international ventures?
• Official versus unofficial decision making and control?
• Centralisation versus decentralisation?
• Make or buy or modularise?
• Degree of specialisation - horizontal and vertical?
• Strategic balance of power between enterprises and national governments?
• How to organise the (small to medium) SME for international operations?
• How to transform local managers into international managers?

End presentation
Discussion of readings - quick overview.
Break

Discussion of assignments: essay should be your argument justified, or not, by reference to credible sources.

Issues with essays previously encountered that R. is hoping we will avoid

• Lack of sub headings to indicate progress of argument - when this is done add a contents page. Contents not required but requires "excellent literary skills".
• Referencing, should be alpha by author / topic, web site MUST give exact location for checking, references must be USED, references used must be REFERENCED, and please no plagiarism.
• Appendices should be referenced in essay/assignment or not included (bulk has good "thud" value)
• No conclusion to essay argument
• Limited use of credible academic journals - web sites are overused (Wikipedia is not a credible reference)
• Excessive use of dot points

I'm not feeling intimidated by this :p

What does R. want?

• Obvious planning
• Good research from credible sources (at least 12)
• Direct quotes must indicate source page
• Logical flow to a convincing and credible argument
• Your argument but backed by credible sources
• Good introduction that defines terms, outlines your topic and tells reader what is to follow in essay
• Good conclusion that wraps up your argument (not more information that should be in the body)
• Harvard referencing
• No plagiarism

Case Study - Leo Burnett

1. Assume the role of a LB employee
   • a) What is your everyday work environment like (assume this would normally be face-to-face teams)? Specifically, consider how you would fill in your day, what the office environment would be, what would determine your work priorities, and the nature of your relationship with your colleagues and clients(s)? Friendly, social, interactive. High pressure, long hours, lots of face to face meetings.
   • b) How is this different from your roles as part of the Forever Young virtual team? Horrible! Isolated and lacking in managerial support.
2. What are some of the difficulties that the Forever Young global advertising and communications team faced during the launch process? Why did these occur? Assumption that geographically separate team would function the same as people sharing the same office.
3. As Janet, do you now decentralise the team? Why or why not? Yes, keep team the same, provide the same level of oversight as the Taiwan team and vastly improve communication and oversight.

What actually happened: they didn't decentralise, it wasn't very successful, they are still trialling and asking should they have given Canada more autonomy? They are getting better at communication but still feeling the impact of the previous experience. Also, piloting managing cross culture teams.

Final exercise: Mitsubishi Keiretsu and flowsheet for international move sequence.