“The fundamental purpose of any business firm is to make a profit” (Hill, 2002, p. 379). Especially for multinational companies it is difficult to operate due to the distance, dynamic and diversity. To reach this aim and to compete effectively in an international environment a multinational enterprise has to pursue an appropriate strategy.
In the following, factors that determine the strategy a company pursues will be regarded. In addition, different strategies will be explained as well as different structures for implementing those strategies. Moreover, two companies will be compared regarding their strategies and structures.
Table of Contents
1. Introduction
2. Organisational Strategies
2.1. Determinants of Control Strategies
2.1.1. Internal Environment
2.1.2. External Environment
2.1.2.1. PEST Analysis
2.1.2.2. Porter’s Five Forces
2.2. Locus of decision making
2.3. Control strategies
2.3.1. International Strategy
2.3.2. Global Strategy
2.3.3. Multidomestic Strategy
2.3.4. Transnational Strategy
3. Organisational Structures and Mechanisms
3.1. Organisational Structures
3.1.1. International Division Structure
3.1.2. Functional Division Structure
3.1.3. Global Product Division Structure
3.1.4. Global Area Structure
3.1.5. Global Matrix Structure
3.2. Integrating Mechanisms
3.3. Control Mechanism
4. Synthesis
5. Cases
6. Conclusion
Objectives and Topics
The primary objective of this assignment is to analyze the critical relationship between the strategies and organizational structures of multinational enterprises, emphasizing the importance of alignment with both internal and external environmental factors to achieve business success.
- Determinants of organizational control strategies
- Classification of international, global, multidomestic, and transnational strategies
- Analysis of organizational structures including functional, product, area, and matrix models
- Integration and control mechanisms in multinational corporations
- Case study comparisons of strategy and structure in multinational firms
Excerpt from the Book
2.1.1. Internal Environment
A SWOT analysis can be used as an instrument to inform a company about its environment. SWOT stands for Strengths Internal Weaknesses analysis Opportunities External Threats analysis. In the following, only the strengths and weaknesses will be regarded, because they relate to the internal factors.
The strengths of a company provide a significant market advantage. They can be found in the finance, human resource, production, R&D or marketing sector as well as in the firms operations (Smith, p. 12-13). The strengths of BMW for instance are “its skilled workforce, innovative engineers, and reputation for producing high-quality automobiles” (Griffin & Pustay, 1995, p. 356).
The weaknesses can usually be found in the above-mentioned sectors as well. They hinder a company’s competitiveness. An example for the weaknesses of BMW is its high labour cost (Griffin & Pustay, 1995, p. 356).
Summary of Chapters
1. Introduction: Provides an overview of the challenges faced by multinational enterprises and outlines the scope of the assignment regarding strategy and structure.
2. Organisational Strategies: Examines the environmental determinants of strategy and details four fundamental approaches to international competition.
3. Organisational Structures and Mechanisms: Discusses various structural models used to implement international strategies and explores the role of formal and informal integration.
4. Synthesis: Bridges the concepts of strategy and structure by focusing on performance ambiguity and the necessity for organizational fit.
5. Cases: Applies the theoretical frameworks to real-world corporate examples, specifically focusing on Bayer AG and Visa International.
6. Conclusion: Summarizes the essential requirement for multinational enterprises to align their structure and control systems with their specific environmental context.
Keywords
Multinational Enterprise, Strategy, Organizational Structure, SWOT Analysis, PEST Analysis, Porter's Five Forces, Control Mechanisms, Integration, Decentralization, Centralization, Global Strategy, Multidomestic Strategy, Transnational Strategy, Performance Ambiguity, Corporate Culture
Frequently Asked Questions
What is the core focus of this assignment?
The assignment explores how multinational enterprises select and implement organizational structures and control strategies to compete effectively in dynamic international markets.
What are the primary themes discussed?
Key themes include the impact of internal and external environmental factors, the choice between centralized and decentralized decision-making, and the application of diverse structural models like matrix or product divisions.
What is the research goal of this paper?
The goal is to determine how a company can achieve an optimal "fit" between its environment, strategy, organizational structure, and control systems to avoid performance failures.
Which scientific methods are applied?
The paper utilizes established management analysis frameworks such as SWOT, PEST, and Porter’s Five Forces, alongside case study evidence from major global corporations.
What topics are covered in the main section?
The main section covers the determinants of strategy, four specific international strategy types, structural implementation methods, integration mechanisms, and the conceptual link to performance.
Which keywords define this work?
The work is defined by terms such as Multinational Enterprise, Global Strategy, Multidomestic Strategy, Organizational Structure, and Performance Ambiguity.
How does Bayer AG illustrate the global strategy model?
Bayer serves as an example of a global strategy by standardizing products and dispersing R&D and production globally to achieve cost efficiencies, organized under a global product division structure.
In what way does Visa International's structure differ from Bayer AG?
Visa utilizes a modern multidomestic strategy and is structured according to a global area model, prioritizing regional autonomy and localization over the standardized global approach adopted by Bayer.
- Quote paper
- Silke Frey (Author), 2003, Determinants of Control Strategies and Organisational Structures of Multinational Enterprises, Munich, GRIN Verlag, https://www.grin.com/document/34050
