Question

Explain company analysis techniques that precede strategy selection to determine the appropriate organizational structure for its strategic plans. Outline the key issues behind the selection of organizational structure. Explain various international structures and types of work teams. Companies rarely remain static and thrive; describe a scenario in which a company might need to modify its strategy and, by extension, its structure.

Answer 1

Company analysis techniques that precede strategy selection can be broken down into a three-stage process. Stage one and two involve company analysis, and stage three involves the selection and formulation of strategies.

· Stage 1 – Identify Company Mission and Goals

o Define the Business

o Define the Main Objectives

· Stage 2 – Identify Core Competency and Value-Creating Activities

o Analyze Firm’s Unique Abilities

o Analyze Firm’s Primary Activities

o Analyze Firm’s Support Activities

o Analyze National and International Business Environments

· Stage 3 – Formulate Strategies

o Select Multinational or Global Strategy

o Formulate Corporate-Level Strategy

o Formulate Business-Level Strategies

o Formulate Department-Level Strategies

The key issues behind the selection of an organization structure are centralization versus decentralization. Centralization involves decision making at a high organizational level, usually in one location, such as a company’s headquarters. Decentralization spreads decisions to lower organizational levels, such as to international subsidiaries. However, companies will rarely choose one method for ALL decision making. Rather, they will typically seek an approach that results in the greatest efficiency and effectiveness. They may centralize decision making in one market, while decentralizing it in others.

There are various international structures and types of work teams. The four most common international structures are division structure, area structure, product structure, and matrix structure. International division structure separates domestic from international business activities by creating a separate international division with its own manager. International area structure organizes a company’s entire global operations into countries or geographic regions. Global product structure divides worldwide operations according to a company’s product areas, and Global Matrix Structure splits the chain of command between product and area divisions. In an effort to arrive at solutions and implement corrective action, a company will coordinate work teams.

There are several different types of work teams that globalization companies have formed to design and implement their strategies. Self-managed teams, cross-functional teams, and global teams. Self-managed teams have employees from a single department take on the responsibilities of their former supervisors. Cross-functional teams are composed of employees who work at similar levels in different functional departments, and global teams contain top managers from both headquarters and international subsidiaries who meet to develop solutions to company-wide problems.

If a company is engaged in international business activities, they can use either a multinational or global strategy to approach the market. The international companies that choose to follow a multinational strategy will oftentimes adapt their products and marketing in each national market to suit local preferences. Most often, they will function as an independent company in industries where buyer preferences do not converge across national borders. This is most prevalent with food products and some print media. However, this strategy can be more expensive as it will require separate marketing, research and development, and manufacturing which will cause them to charge a higher price for their product to make a profit.

The international companies that choose to follow a global strategy are planning to offer the same products using the same marketing strategy in all their national markets. Their global products can include certain electronic components, industrial goods such as steel, and various consumer goods such as paper and writing instruments. These companies are able to take advantage of scale by producing inventory, marketing, and research and development in a select few locations which allows them to contain their costs and remain competitive. However, if a particular countries political or social atmosphere change, the company may need to make modifications to be successful in that market.