International Organization Structure

1. Functional Structure

2. International Divison Structure

3. Foreign Subsidiary Structure

4. Product Divison Structure

5. Regional Structure

6. Matrix Structure

Functional Structure

- Product knowledge centered on manufacturing, engineering, marketing or management

Advantages

1. Functional Expertise

2. Tight Control

Disadvantages

1. Weak Regional Coordination

International Divison Structure

-Supervises exports, distribution agreements, foreign sales branches, and staff subsidiaries

Advantages

1. Focused International Responsibility

Disadvantages

1. Bottleneck

2. Exports Slowdown

Foreign Subsidiary Structure

-Each foreign subsidiary is treated as an entity

Advantages

1. Autonomy of affiliates

2. Direct top management involvement

Disadvantages

1. Diffusesness of international responsibility

2. Potential Unwieldiness

Product Division Structure

-Used when corporations are diversified and have many different products

-Each division is responsible for the sales and profits of its products

Advantages

1. Product and technology emphasis

Disadvantages

1. World wide know how

Regional Structure

- Regional heads are responsible for specific territories

-Used by firms with low technology and high market orientation

Advantages

1. Decentralization and Adaption

Disadvantages

1. Weak worldwide product knowledge

Matrix Structure

-combines decentralization decision making with centralized corporate strategy and vision

-used by global corporations

Advantages

1. Coordination and Cooperation

Disadvantages

1. Expensive and Complex

Contractual Alliances

- formed to reduce cost at home

Example

- companies sending IT to India

Networks (clusters)

-corporation subcontracts its manufacturing function to other companies

Example:

-Nike shoe manufacturing

Mixed (Hybrid) Structures

-putting structures together to minimize the weaknesses that are present in the structure

Flat Structure

-minimizing the number of managerial layers

-12 layered companies cannot compete with 3 layered companies

Example:

GM versus Toyota

3 International Managerial Staffing Methods

1. Expatriates

2. Host Country Nationals

3. Third Country Nationals

Expatriate

-

-Home country national assigned to manage the enterprise of the firm abroad

Advantages of Expatriates

-Knowledge of the corporate culture

-Knowledge of the companies management techniques

-Loyalty to the company

-Influence at headquarters

-Easier to assess qualifications

-Foreign Image

Disadvantates of Expatriates

-Expensive overall process

-Unfamiliar with foreign environment

-Communication problem

-Problems adapting (15% return early)

-Best qualified may not want to go

-Liability of foreigness

Host Country Nationals

-Resident/citizen of the country where the firm's operations are located

Host Country Nationals Advantages

-familiar with local environment

-more productive in early stages

-automatic "goodwill"

-less expensive to employ

Host Country Nationals Disadvantages

-Loyalty to country not company

-Difficulty in recruiting and selection

-Lack of understanding of corporate culture

-Lack of clout with local authorities

-Expensive training and development

Third Country Nationals

-Resident/citizen of neither the home country or the host country hired to manage the enterprise of the firm

Third Country Nationals Advantages

-Additional source of personnel

-Technical expertise

-Less expensive then expatriate

-Greater adaptability

-useful if home country and host country relationship is not good

Third Country Nationals Disadvantages

-Double "liability of foreigness"

-Indigenization laws

-Ulterior motives

Ethnocentric Outlook

-staff with people who are like you are

Polycentric Outlook

-staff with employees from the host country

Geocentric

-nationality should not influence assignment

Factors Influencing Choice

-Top management staffing outlook

-Precieved needs (culutral and technological)

-Characteristics of personnel available

-Characteristics of the corporation

-Characteristics of the industry

-Characteristics of the host country

Goodwill

-an intangiable good generally based on reputation or standing with the community

Repatriation

-Assigning the expatriate back home which can cause reverse culture shock

-18 months to adjust

-Need challenge but not pressure

-Financial counseling

-Housing assistance

-Financial assistance for education

-Psycological counseling and support system

Three Primary Functions of International

Human Resources

1. Procurement, allocation, and use

2. Home Country, Host Country, Third Country

3. Home Country employees, Host country employees, Third country employees

Risk Exposure

-Information and Intelligence

-Planning and Preparation

-Prevention

-Response to mechanism

Successful Expatriate Characteristics

-tolerance for ambiguity

-nonjudgemental

-cultural empathy and low ethnocentricism

-interpersonal skills

-adaptive and supportive spouse

-non verbal communication skills

Pre-assignment practices

-cultural briefing

-assignment briefing

-relocation requirements

-language training

During Assignment Practices

-communication plans and process for integrating the expatriate into the home office

-performance management system

-Problem solving system

Expatriate Compensation

-consistent and fair

-attract and retain key employees

-facilitate transfer across company

-consistent with the overall strategy and structure of the company

- key motivation element