Case Studies 1

SUPPLY CHAIN MANAGEMENT WEEK 4-LECTURE 2

CHAPTER 8

DR. ISMAIL CIVELEK

BUILDING THE GLOBAL ORGANIZATION

• Organization structure comprises the reporting relationships in a business.

• Management processes comprise the activities such as planning and budgeting that make the business run.

• People comprise the human resources of the worldwide business and include both managerial and non- managerial employees.

• Culture comprises the values and rules that guide behavior in a corporation.

2

ORGANIZATION STRUCTURE

• One of the most effective ways to develop and implement a global strategy is to integrate or centralize authority so that all units of the same business around the world report to a common global sector head.

• In some cases, an alternate approach is to appoint global business directors who operate across the functional and geographic organizations.

• Another option is to have global heads of individual functions or value-adding activities.

3

MANAGEMENT PROCESSES

• Information systems comprise the data that are collected, analyzed, stored, and communicated as well as the methods for performing these activities.

• Having information about the world is a minimum requirement for being able to formulate and implement a global strategy.

• Information technology makes it easier to maintain a global strategy and remain competitive.

4

MANAGEMENT PROCESSES

• Creating cross-country coordination mechanisms provides a way to make up for the lack of direct reporting structure.

• The lack of coordination can bring drastic consequences. Cross-country coordination mechanisms range from information sharing (considered the least coercive) to setting direct requirements (considered the most coercive).

• Global teams have become popular to facilitate cross- country coordination. Additionally, some companies use global product managers or global account managers for the same purpose.

5

MANAGEMENT PROCESSES • Global strategies and programs need global budgets to implement

them.

• In other cases, the challenge is to have global budgeting processes that provide for geographically neutral costs as the base point.

• In some cases, companies do not have global budgets that are available only for global programs.

6

PEOPLE

• Global strategy can be implemented only by the people in the organization.

• The ideal human resource policy for global strategy provides a mix of different national backgrounds represented in the management of each country’s business. Also, it is executives from globally strategic countries who should be favored for global careers.

7

CULTURE • A strong national identity can hinder the willingness and ability to

design global products and programs. It can also create a “them or us” split among employees.

• A truly global culture would transcend the nationality of the home and other countries.

• Many companies view their domestic employees as somehow more important than their foreign employees and are much more committed to preserving domestic employment than to developing employment regardless of location.

• Such a cultural bias hinders globalization. A culture of local business autonomy, when carried too far, can be a barrier to globalization.

8