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Organization of the multinational firm

Organization of the multinational firm. Hedl Maria Eschbacher Claudia. Agenda. Organizational structures (Perlmutter) Ethnocentrism Polycentrism Geocentrism Stages of international development (Daft) Matrix structure vs. Heterarchy (Hedlund)

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Organization of the multinational firm

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  1. Organization of the multinational firm Hedl MariaEschbacher Claudia

  2. Agenda • Organizational structures (Perlmutter) • Ethnocentrism • Polycentrism • Geocentrism • Stages of international development (Daft) • Matrix structure vs. Heterarchy (Hedlund) • The home based MNC (Porter, Sölvell, Zander)

  3. Organizational structures (Perlmutter) • Ethnocentrism

  4. Organizational structures (Perlmutter) • Polycentrism

  5. Organizational structures (Perlmutter) • Geocentrism

  6. Difficulties of geocentric MNCs • Differences between nations and regions • Cultural differences • Size • Skilled managers • Specialization of subsidiaries • No adaption to local markets

  7. Stages of international development (Daft) • Domestic stage • International stage • Multinational stage • Global stage

  8. Model for global vs. local opportunities Globalization strategy means that product design and advertising strategy are standardized throughout the world. Multidomestic strategy means that competition in each country is handled independently of competition in other countries.

  9. Model for global vs. local opportunities GlobalProduct Structure Heterarchy Global Matrix Structure Development of Globalization Strategy International Division GlobalGeographic Structure Development of Multidomestic Strategy

  10. International division

  11. Global Product Strucutre

  12. Global Geographic Division

  13. Global Matrix Structure International Excecutive Committee Country Managers Business Sectors Local Companies

  14. Global Heterarchy (Hedlund) • large transnational firms • whole world as their playing field • no single country base • local and global advantages • complex multidimensional structure

  15. Global Heterarchy (Hedlund) • Differences from Matrix Structure • Many centres • Stratic role for MNC of subsidiary managers • Different kinds of centres • Coordination through corporate culture

  16. Global Heterarchy (Hedlund) • Differences from Matrix Structure • Degree of coupling between units • Holographic organization • „firm as a brain“ rather than „brain of the firm“ • Coalitions • Managers have authority

  17. The home based MNC(Sölvell, Zander, Porter) • 4 Diamonds • Factor endowments • Demand conditions • Relating and supporting industries • Firm strategy, structure and rivalry  supplies to regions or nations rather than the international environment

  18. The home based MNC(Sölvell, Zander, Porter) The home base is best understood as a limited geographical area, where a firm has a cluster of core functions including strategic decision making, research development and often some form of core manufacturing.

  19. The home based MNC(Sölvell, Zander, Porter) • Simple home-based MNC • Selective tapping • Multi-home-based MNC • Separate bases for individual lines of business

  20. Case 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

  21. Case Study • 235 plants in 24 countries • Profit after tax € 155,5 million • Brands & Products: • POROTHERM - Bricks • TERCA - Facing bricks • KORAMIC - Roof tiles • SEMMELROCK - Pavers • BRAMAC & TONDACH GLEINSTÄTTEN - Roof • PIPELIFE - Pipes • Wienerberger Ofenkachel

  22. Structure and Organization

  23. Structure and Organization • Mature product lines in core business • Not all products in all countries • Stable technologies • Diveded into regions • Regions report to managing board • Each region full control over activities  Geographic division structure

  24. Thank you for your attention!!

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