Ib2 Grpb L3 New Approaches To Managing Mnc - Michelle Loon
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Ib2 Grpb L3 New Approaches To Managing Mnc - Michelle Loon as PDF for free.
More details
- Words: 1,031
- Pages: 13
Action in heterarchies – new approaches to managing the MNCs By Gunnar Hedlund and Dag Rolander Presented by: Michelle Loon
Introductions & Overview
Increasing diffusion of technology and managerial competence internationally gives rise to competition and create opportunities for scanning new ideas to manage MNCS. Reassessment of current notions is needed in managerial practice in research and theory. 4 parts of this article:1. Summary/discussion of an important stream of research on strategy-structure paradigm. 2. Outlines an alternative framework and discussion on “structure”, “strategy” & “environment” and their relationship. 3. Empirical support for theoretical arguments. (e.g. Swedish MNCs) 4. Author’s Conclusion & Suggestion on avenues for further research
Article’s overview: Article suggest for new approaches to two issues of crucial
importance. (a) Org structure and mode of control in highly international MNCs is shifting towards a model “heterarchy, Geographical diffusion of core strategic activities & coordinating roles. A break away from one uniform hierarchy of decision as well as org positions and increase focus control mechanism. (b) Frames of reference for the understanding of MNCs relationship to its environment are proposed. Instead of analyzing strength and weaknesses on immediate competitive environment, which was found to be too restrictive, Author argue that stronger emphasis should be put on learning and the search for opportunities and on actions aimed at reshaping the environment or selecting the environment that they want to be in.
Summary and discussion of an important stream of research on strategy-structure paradigm.
Change in environments => change in Strategy=>change in structure of corporation. 4 main dimension of Strategy
Growth Degree & Type of vertical integration Geographical extension Degree of product diversification
2 main aspect of Structure – Formal or Informal (e.g. In areas of line of authority, communication, formation and data flow)
Chandler (1962) Environmental factors such as :
Population Income Technology.
Some Literatures on SSP…
Galbraith and Nathanson (1978) - Nature of information flows for the design of organizational structure, informational complexity facing the firm rather than broader environmental or strategic factors, seen as determining the way firm is managed Porter (1980) – strategy dimensions and generic strategies Fombrun (1983) investigates the association between Porter’s generic strategies and structural solutions but does not find any strong relationships. Conclusion: There are indications both from practice and in academic writing that there are some fundamental problems in applying the strategy-structure framework to the task of effectively managing the MNC. For problems with SSP approach refer to pg 19-22
Traditional Approaches vs Alternative Framework Traditionally , SSP approach is develop from
external environment to internal strategies adoption and then to internal corporate structuring (which is too restrictive) Alternative framework : exploitation (current and potential – pg 28) and experimentation (changing future potential) give rise to organization structures and then subsequent acting and reacting to the environment.
SSP logic and alternative framework logic SPP logic Environment with given
common constraints leads to an action program (strategy) leads to an appropriate type of hierarchy in an organisation (structure) From an external to internal approach
Alternative framework Programs of exploitation
(learning and searching of current and potential opportunities) and experimentation (changing future potential) Shapes the structure of the organization Select the environment to be in and discover what to do using the structure of the firm (reacting to the environment accordingly)
Structure as heterarchy / Alternative framework 9 Main Characteristic of the heterarchical MNCs
(Refer to pg 25-26) Action program-> aim at market creation. This applies mostly in new or rapidly changing fields of business Action programmes for the exploitation of comparative advantages between countries and region, the co-ordination of activities to optimize on such, rather long-run, possibilities. – most applicable in mature industries where global restructuring is taking place Action programmes for flexible global arbitrage.
Strategy in Alternative Framework – exploration and experimentation. Exploration primary aim is to seek opportunities - Aim at
capturing the current potential
Exploitation primary focus on the effective utilization of
given resources and the appropriation of value stemming from current activities. - Aim at changing the future potential
Fast experimentation in multiple direction and systems,
enables the firm to learn from experience, are crucial in a global environment where change is fast and competition strong.
E.g. GM/Toyota Joint Venture to manufacture Toyota designed cars in Fremont, California, sold under the Chevrolet brand name. is a clear e.g. of the two intertwined processes. (find reading in pg 28)
Relationship between “Structure”, “Strategy” & “Environment”
7 main differences between a new model and the traditional model (SSP) Refer pg 32-36
E.g. of MNC practices (ref to pg 36-40) Swedish MNCs has both advantages and disadvantages e.g. IKEA They face high degree of environmental heterogeneity earlier in their development and also cannot rely on one dominant market which provides the backbone for the structure and action of the firm (New approaches framework)
Author’s conclusion
Dimension of both strategy and structure need to be enriched and the relationship between them needs to be reassessed. Elements for revision for MNCs includes:
Build strategy on advantages inherent in global coverage Normative integration mechanism (e.g globally coordinated core functions, a complex Heterarchyof geographically diffused structure) Information processing and storage should be strongly integrated Alternative framework suggest that corporate actions experimentation, entails search for opportunities and fast learning & exploitation of historical strengths. Exploration of the environment in terms of its potential whereby it is an active, selective mode instead of a passive defensive one.
Author’s Suggestion on avenues for further research New efforts to create a new type of MNC, building on
global presence rather than historical and nationally deprived strengths, need to be closely assessed. More research needs to be done factoring into a/cs such as :
Character of the knowledge based economy Geographical dispersion of country’s comparative advantages over functions in industry arena explored The rate of technical change Culture-generating capacity of the end product.
Any questions?
Introductions & Overview
Increasing diffusion of technology and managerial competence internationally gives rise to competition and create opportunities for scanning new ideas to manage MNCS. Reassessment of current notions is needed in managerial practice in research and theory. 4 parts of this article:1. Summary/discussion of an important stream of research on strategy-structure paradigm. 2. Outlines an alternative framework and discussion on “structure”, “strategy” & “environment” and their relationship. 3. Empirical support for theoretical arguments. (e.g. Swedish MNCs) 4. Author’s Conclusion & Suggestion on avenues for further research
Article’s overview: Article suggest for new approaches to two issues of crucial
importance. (a) Org structure and mode of control in highly international MNCs is shifting towards a model “heterarchy, Geographical diffusion of core strategic activities & coordinating roles. A break away from one uniform hierarchy of decision as well as org positions and increase focus control mechanism. (b) Frames of reference for the understanding of MNCs relationship to its environment are proposed. Instead of analyzing strength and weaknesses on immediate competitive environment, which was found to be too restrictive, Author argue that stronger emphasis should be put on learning and the search for opportunities and on actions aimed at reshaping the environment or selecting the environment that they want to be in.
Summary and discussion of an important stream of research on strategy-structure paradigm.
Change in environments => change in Strategy=>change in structure of corporation. 4 main dimension of Strategy
Growth Degree & Type of vertical integration Geographical extension Degree of product diversification
2 main aspect of Structure – Formal or Informal (e.g. In areas of line of authority, communication, formation and data flow)
Chandler (1962) Environmental factors such as :
Population Income Technology.
Some Literatures on SSP…
Galbraith and Nathanson (1978) - Nature of information flows for the design of organizational structure, informational complexity facing the firm rather than broader environmental or strategic factors, seen as determining the way firm is managed Porter (1980) – strategy dimensions and generic strategies Fombrun (1983) investigates the association between Porter’s generic strategies and structural solutions but does not find any strong relationships. Conclusion: There are indications both from practice and in academic writing that there are some fundamental problems in applying the strategy-structure framework to the task of effectively managing the MNC. For problems with SSP approach refer to pg 19-22
Traditional Approaches vs Alternative Framework Traditionally , SSP approach is develop from
external environment to internal strategies adoption and then to internal corporate structuring (which is too restrictive) Alternative framework : exploitation (current and potential – pg 28) and experimentation (changing future potential) give rise to organization structures and then subsequent acting and reacting to the environment.
SSP logic and alternative framework logic SPP logic Environment with given
common constraints leads to an action program (strategy) leads to an appropriate type of hierarchy in an organisation (structure) From an external to internal approach
Alternative framework Programs of exploitation
(learning and searching of current and potential opportunities) and experimentation (changing future potential) Shapes the structure of the organization Select the environment to be in and discover what to do using the structure of the firm (reacting to the environment accordingly)
Structure as heterarchy / Alternative framework 9 Main Characteristic of the heterarchical MNCs
(Refer to pg 25-26) Action program-> aim at market creation. This applies mostly in new or rapidly changing fields of business Action programmes for the exploitation of comparative advantages between countries and region, the co-ordination of activities to optimize on such, rather long-run, possibilities. – most applicable in mature industries where global restructuring is taking place Action programmes for flexible global arbitrage.
Strategy in Alternative Framework – exploration and experimentation. Exploration primary aim is to seek opportunities - Aim at
capturing the current potential
Exploitation primary focus on the effective utilization of
given resources and the appropriation of value stemming from current activities. - Aim at changing the future potential
Fast experimentation in multiple direction and systems,
enables the firm to learn from experience, are crucial in a global environment where change is fast and competition strong.
E.g. GM/Toyota Joint Venture to manufacture Toyota designed cars in Fremont, California, sold under the Chevrolet brand name. is a clear e.g. of the two intertwined processes. (find reading in pg 28)
Relationship between “Structure”, “Strategy” & “Environment”
7 main differences between a new model and the traditional model (SSP) Refer pg 32-36
E.g. of MNC practices (ref to pg 36-40) Swedish MNCs has both advantages and disadvantages e.g. IKEA They face high degree of environmental heterogeneity earlier in their development and also cannot rely on one dominant market which provides the backbone for the structure and action of the firm (New approaches framework)
Author’s conclusion
Dimension of both strategy and structure need to be enriched and the relationship between them needs to be reassessed. Elements for revision for MNCs includes:
Build strategy on advantages inherent in global coverage Normative integration mechanism (e.g globally coordinated core functions, a complex Heterarchyof geographically diffused structure) Information processing and storage should be strongly integrated Alternative framework suggest that corporate actions experimentation, entails search for opportunities and fast learning & exploitation of historical strengths. Exploration of the environment in terms of its potential whereby it is an active, selective mode instead of a passive defensive one.
Author’s Suggestion on avenues for further research New efforts to create a new type of MNC, building on
global presence rather than historical and nationally deprived strengths, need to be closely assessed. More research needs to be done factoring into a/cs such as :
Character of the knowledge based economy Geographical dispersion of country’s comparative advantages over functions in industry arena explored The rate of technical change Culture-generating capacity of the end product.
Any questions?
Related Documents
Ib2 Grpb L3 New Approaches To Managing Mnc - Michelle Loon
November 2019 2
Ib2 Grpb L3 New Approaches To Managing Mnc - Joyz Sim
November 2019 2
Ib2 Grpb L3 International Sequential Advantages - Zhang Ruixian
November 2019 5
Ib2 Grpb L3 International Sequential Advantages - Yin Qunyao
November 2019 3
Ib2 Grpb L3 International Sequential Advantages - Tan Xiaolian
November 2019 6