Exam 10: Organizational Design and Control

A business entity with a clearly defined market, specific competitors, the ability to carry out its business mission, and a size appropriate for control by a single manager is a strategic operating unit.

Regarding the way international companies are structured and integrated:

Reengineering is:

For controls to be effective, all operating units of an IC must provide headquarters with timely, accurate, and complete reports, including those dealing with financial, technological, market opportunity, and political and economic information.

The primary dimensions that need to be considered when designing the structure of an international company are:

An organization in which top-level divisions are required to heed input from a staff composed of experts of another organizational dimension in an attempt to avoid the double-reporting difficulty of a matrix organization but still mesh two or more dimensions is known as a:

The increasing pace of change and intensity of competition in many markets of the world, as well as continued differences across many markets, are causing even large experienced companies to delegate at least some decision-making authority to subsidiary managers.

The type of structure that simplifies the task of directing worldwide operations because every country in the world is clearly under the control of someone who is in contact with headquarters is global product.

Pricing that is established for transactions between members of the enterprise is called transfer pricing.

In a firm without a global product policy, the preference of the operations management people in the home office has always been to localize the product or at least the production process in as many overseas plants as possible.

The regionalized organization:

A structure organized by more than one dimension at the top level is a matrix organization.

The consequence for management in a world out of control is a six-element recipe developed at Massachusetts Institute of Technology for devising a system of distributed control, which includes:

In designing an international organization, it is essential that the structures and systems being implemented are consistent not merely with each other but also with the strategy the company and its competitors are using.

Advantages of the virtual corporation concept include that it allows a company to build competence from the ground up and to increase management's control over the corporation's activities.

The horizontal corporation:

What are the four primary dimensions that need to be considered when designing the structure of an international company, and why are they important?

With less than 50 percent of the voting stock, or even with no voting stock, an IC can still have control.

According to the text, every successful company uses controls to put its plans into effect, evaluate, correct, and reward.

Disadvantages of the regionalized organization structure include: