Deck 8: Organization Structure and Control Systems

Question 1

Discuss the implications of the relative centralization of authority and decision making at headquarters versus local units or subsidiaries. How would you feel about this variable if you were a subsidiary manager

Answer 1

Decision making at the headquarters versus local units or subsidiaries:
Decision making in an organization can be centralized or decentralized.
Centralized decision making is a top-down approach where top executives make decisions and convey it to lower level managers.
Decentralized decision making is done at regional offices. There is no hierarchy being followed to make decisions. Different managers take decisions as per the requirements and organization's values and principles.
Both these affect the working environment and motivation level of employees within the organization.
Relative impact of "centralization and de-centralization" as a subsidiary manager is as mentioned below:
• Centralization insists control over the subsidiaries while, decentralization relaxes the control and enables the subsidiaries to make decisions themselves as per the prevailing situation. This gives a sense of belongingness to the employees and thus has positive impact.
• Centralization concept has a narrow view over the problem. Decentralization views every nook and corner to eliminate the problem.

Question 2

Discuss the challenges that IKEA could face down the line in establishing its stores in the Indian market. What steps should IKEA take to succeed in the Indian furniture market

Answer 2

The Company IK is a privately held company deals with designing and selling of ready-to-assemble furniture, home appliances, and accessories. The company's products are well known for their modern architecture and eco-friendly designs. Furthermore, the company pays attention to cost control, operational details, and continuous product development that allows it to cut down the prices.
The challenges that Company IK could face down in establishing stores in the Country IN market are as follows:
• Alternative or substitute products were easily available at low costs than Company IK's products.
• Procurement and sourcing strategies that are followed in western countries are much different than that of Country IN.
• Huge investment is required to establish number of stores in the County IN.
• People of the Country IN are less or not aware of the Company IK.
The Company IK should take the following steps to succeed in the Country IN furniture market:
• The company should segment demographically and target the premium customers with high income level.
• The company should focus on creating brand awareness among the customers by promotional activities.
• The company should formulate the strategy for long-term by compromising profits and revenues.
• The company should collaborate with major e-commerce players to increase the reach in the Country IN market.
• The company leverages the digital marketing platform including high visibility and various locations.
• The company should offer its product at competitive price and give promotional discounts.

Question 3

As an international manager, what would make you suggest restructuring your firm What other means of direct and indirect monitoring systems do you suggest

Answer 3

Restructuring:
Restructuring refers to reorganization of the company structurally, legally, and operationally.
Reasons for restructuring a firm are as mentioned below:
• A firm decides on restructuring to remove the risk of negative process and enhance company's image.
• It is done to incorporate new method of work and management.
• Firms also restructure if it wants to downsize.
• Changing nature of business, merger and acquisition also leads to restructuring of a firm.
Direct and indirect monitoring systems:
Direct mechanism is the overall guidance of foreign management operations that includes designing the appropriate structures and efficient staffing practices. These decisions are a set of proactive operational goals rather than problems that have occurred.
Indirect mechanism provides information regarding sales and financial performances of the subsidiary at the final year quarter. This information includes sales quotas, budgets, financial tools etc.
Methods which a firm can use for monitoring includes auditing and doing regular reviews to check the progress of work.

Question 4

What were the reasons for Wal-Mart shifting its focus to Africa Do you think Africa offers good growth prospects for Wal-Mart in the future

Question 5

What is the role of information systems in the reporting process Discuss the statement "Inadequate MIS systems in some foreign affiliates are a control problem for MNCs."

Question 6

Why did Wal-Mart face opposition from trade unions and other government departments over its acquisition of Massmart Do you think the opposition coalition had a valid point in opposing the deal Justify your answer.

Question 7

If you have personal access to a company with international operations, try to conduct some interviews and find out about the personal interactions involved in working with the organization's counterparts abroad. In particular, ask questions about the nature and level of authority and decision making in overseas units compared with headquarters. What kinds of conflicts are experienced What changes would your interviewees recommend

Question 8

What strategies should Wal-Mart follow to succeed in a market like Africa with its low income levels and high poverty incidence Do you think its low-cost model will be successful in Africa Give reasons to support your answer.

Question 9

Do some research on monitoring and reporting issues facing an MNC with subsidiaries in (1) a country in Asia, and (2) a country in South America. Discuss problem areas and your recommendations to the MNC management as to how to control potential problems.

Question 10

What are your views of the Chrysler-Fiat strategic alliance in 2009

Question 11

Find out about a foreign company with an IJV in the United States. Google some articles, email the company for information, and if possible visit the company and ask questions. Present your findings on the company's major control issues to the class-both at the beginning of the venture and now. What is the company doing differently in its control process compared to a typical domestic operation Are the control procedures having the desired results What recommendations do you have

Question 12

Analyze and evaluate the new company, Fiat Chrysler Automobiles (FCA), and its strengths and weaknesses in global markets.

Question 13

How do you evaluate HSBC's global reorganization after the 2008 global financial crisis, its position in 2015, and its current position

Question 14

Compare and contrast Fiat Chrysler automobiles with three other auto manufacturers (Toyota, General Motors, and Ford) in the global auto industry.

Question 15

Compare and contrast HSBC and other multinational banks in global business.

Question 16

What do you anticipate beyond 2016 regarding the growth of FCA in the automotive industry

Question 17

What did you learn from HSBC's case when applying concepts and theories from this chapter

Question 18

What did you learn from the Fiat-Chrysler automobiles case

Question 19

Give a brief overview of China's m-commerce market and its major players.

Question 20

Discuss the competition between Alibaba and Tencent.

Question 21

Discuss the opportunities and challenges for Alibaba and Tencent in China's m-commerce market.

Question 22

What variables have to be considered in designing the organizational structure for international operations How do these variables interact, and which do you think are most important

Question 23

Analyze the reasons for IKEA's delayed entry into the Indian market.

Question 24

• In groups of four, consider a fast-food chain going into Russia. Decide on your initial level of desired involvement in Russia and your entry strategy. Draw up an appropriate organizational design, taking into account strategic goals, relevant variables in Russia, technology used, size of the firm, and so on. At the next class, present power points of your organization chart and describe the operations and rationale. What are some of the major control issues to be considered

Question 25

Discuss the market entry strategy of IKEA for the Indian market. What are the advantages and disadvantages of adopting the wholly-owned subsidiary route in entering the market

Question 26

Explain the need for an MNC to "be global and act local." How can a firm design its organization to enable this

Question 27

Describe the key elements of IKEA's globally successful business model. What are the sources of IKEA's competitive advantage

Question 28

What is a transnational organization Since many large MNCs are moving toward this format, it is likely that you could at some point be working within this structure. How do you feel about that

Question 29

Describe the bureaucratic and cultural challenges faced by IKEA in gaining approval to enter India. How did the company overcome these