Assignment 1: Introductory Case – Airbnb

Airbnb is a web-based platform that links people who need a place to stay with people who need to rent
out excess space. It was started in 2008. Anyone can use Airbnb to search for a list of rental houses all
over the world. Airbnb is a marketplace that links people in need of a place to stay with people in need of
a spare room to rent out. Anyone can use Airbnb to search for a list of rental houses all over the world. It
is the world's largest housing provider, but many people are surprised to hear that it has no property of its
own. This Airbnb business analysis explains why the company is so successful.

Both the tenant and the owner find it to be quite handy. The owner can earn some additional money by
renting out their extra space, while the tenant can locate housing near the location they prefer. Due to its
enormous success, Airbnb is currently one of the most valuable businesses in the world. The value of
Airbnb as of November 11th, 2022, is $70.39 billion. People can now rent out their extra space on Airbnb
thanks to the company's ongoing growth and the creation of new markets. Also, the business stays up with
the times by introducing fresh consumer incentive schemes and benefits to entice more hosts to advertise
their properties on the site.

Assignment 2: Discussion Questions

Q2. A small manufacturing firm believes there is a market for handheld tools that are carefully
crafted for local markets. After spending two months in Europe, the president of this firm believes
that his company can create a popular line of these tools. What type of organizational structure
would be of most value to this firm in its initial efforts to go international?
Answer:

For a small business, moving further overseas and exporting items globally can improve demand,
allowing you to reinvest in your firm, secure jobs, and promote your brand on a global scale. Exporting
and importing can provide quick access to international markets. When your company is ready to expand
internationally, there is a lot to gain as a small business by dealing beyond your local market. Companies
that specialize in exporting commodities expand faster and more efficiently than those that simply deal in
their native country.

Initial Division Structure would be ideal for the small manufacturing company's initial worldwide
operations. Initial Division Structure is typically used by companies engaged in export and some on-site
production. A specific division structure is being developed to handle the business's worldwide
operations. This framework is being used for all businesses that are still establishing their plans to expand
worldwide. The top management is exposed to the knowledge about the attitude of the global market and
the international operations are executed together which are the advantages. Manufacturing companies
frequently opt for export agreements as their first option, particularly those with highly sophisticated
products. Because to the lack of, if any, competition, the company is able to set a higher price and manage
sales through an export manager. The export manager typically reports directly to the head of marketing,
and this division oversees overseas operations if the company has a limited range of products. The export
manager will oversee a distinct department and frequently report directly to the president if the company
has a wide range of products and plans to sell a number of them into foreign markets.

Q4. If the company in question 2 finds after three years of international effort that it is selling 50
percent of its output overseas, what type of organizational structure would you suggest for the
future?

1
Answer:

I would suggest Global Area Division because it will be helpful in the future. Global Area Division is the
practice of managing a company's activities based on geographic region as opposed to product type. This
worldwide area division is used by many businesses that typically sell only a few products. The
advantages of a global area division include the ability to cut cost per unit and price products
competitively, the maintenance of domestic and international operations at the same level, and the
management of company operations in a particular geographic area by global area division managers.
Global operations are structured according to a geographic orientation as opposed to a product
orientation. Because overseas operations are now placed on an equal footing with domestic operations,
this strategy frequently denotes a significant change in corporate direction. Under this system, global
division managers are in charge of all business operations within their assigned geographical region.

Q5. In what way do the concepts of formalization, specialization, and centralization have an impact
on MNC organizational structures? In your answer, use a well-known firm such as IBM or Ford to
illustrate the practical expressions of these three characteristics.

Answer:

Formalization:

The use of established structures and processes for decision-making, communicating, and controlling is
known as formalization. Formalization is used more frequently in some nations than others, which has an
impact on how organizations operate on a daily basis. Organizational charts, information booklets,
operational instructions, written job descriptions, procedure manuals, written policies, work-flow
timetables, and programs are just a few examples of the things that were used to objectively quantify
formalization. The degree to which goals were left open-ended and undefined, informal restrictions were
employed, and culturally engendered values made it easier to complete tasks were utilized to gauge the
degree of subjective formalization.

Specialization:

As a trait of an organization, specialization is the assignment of people to narrowly focused activities.

Horizontal specialization:

Individuals are given a certain function to execute as a result of horizontal specialization, and they tend to
stick to this niche. Customer service, sales, recruiting, training, purchasing, and marketing research
occupations are a few examples. Personnel will get functional expertise in a single area when there is a lot
of horizontal specialization.

Vertical specialization:
Vertical specialization divides the task into groups or departments where everyone is accountable for their
performance. The distinct contrasts between the hierarchy's levels, where people at the top are given far
more status than those at the bottom, and the overall height of the structure are further characteristics of
vertical specialization.
Ford is a business that prioritizes specialized work, as shown by its assembly line manufacturing process.
Increased productivity and efficiency derive from the assembly line's division of the production process
into specialized jobs carried out by several people. In a similar vein, IBM places a high importance on

2
specialization, with employees choosing to focus on fields like software development, hardware design,
and consulting services.

Centralization:

With a centralized management structure, major decisions are taken at the top. The usefulness of
centralization will vary in an international setting depending on the local environment and organizational
goals. German multinational corporations (MNCs) decentralize operational decisions in accordance with
the local circumstances in the host country while centralizing strategic headquarter-specific decisions
independent of the host country.

Ford has a very hierarchical organizational structure, which demonstrates the company's preference for
centralization. A corporation that supports decentralization is IBM, which has a very flat organizational
structure that promotes greater employee autonomy and decision-making power.

Assignment 3: International Management in Action – Organizing in Germany

Germany has the world's fourth-biggest economy and is a European powerhouse, with the largest
economy in the European Union. The country is a key business hub in Europe. Both the service and
industrial industries are thriving in Germany, a country known around the world for its automotive and
engineering sectors. German cultural standards and values are essential for conducting successful
company. Business is regarded seriously, and German values such as fairness, loyalty, punctuality,
professionalism, and dependability should be matched. Ethics, as well as corporate social responsibility,
are important to daily German business practice. Communication in corporate culture and meetings is
professional, and employees speak to one another nicely but effectively. Germans place a high value on
product and service quality.
German multinational corporations frequently overserve the market by offering more than is required.
Another tactic is to keep foreign-born managers in charge for protracted periods of time. In doing so, they
learn about the community's culture and consequently its market, and they become more equipped to
address both the demands and the issues of their clients. Customers become more willing to do repeat
business with the company's staff as a result of getting to know them. Another tactic employed by
German multinational corporations is to precisely match employee skills to client needs. A final tactic is
to become very independent so that when issues arise, internal staff can address them.
Assignment 4: Internet Exercise – Organizing for effectiveness
Q. What type of organizational arrangement(s) do you see the two firms using in coordinating their
worldwide operations? Which of the two companies has the more modern arrangement? Do you
think this increases that firm’s efficiency, or does it hamper the company’s efforts to contain costs
and be more competitive? Why?
Answer:
The organizational structure of Ford is based on the requirement to govern operations based on regional
market conditions. Similarities between markets in the same region are utilized as the foundation for
regional organization. Ford's organizational structure is based on a standard corporate hierarchy. Ford's
organizational structure is divided into large regional regions. Ford's organizational structure, on the other
hand, is structured into simply three regional geographic divisions that cover all of its markets worldwide.

3
This organizational structure element may have the effect of making it easier to integrate corporate
strategy.
The corporate hierarchy in Ford's organizational structure provides global direction and control.
Furthermore, the worldwide functional groups maintain such hierarchy through functional support, such
as human resource management, in order to keep Ford's workforce. Ford's worldwide functional
organizational structure divides up the company's operations into functional areas including marketing,
finance, and operations, with regional divisions in charge of managing operations in various regions of
the world. This organizational style places a strong emphasis on regional process and procedure
standardization and centralization.
A global product division is used by the Volkswagen Group. Domestic divisions are given global
responsibility for product categories in this system. The company's operations can be divided into two
categories: automotive and financial services. VW has a stronger product design projection and a solid
matrix organization balance. Volkswagen is more receptive to new ideas and allows lower management to
make decisions since it uses a decentralized decision-making approach. This demonstrates Volkswagen's
trust in its employees and provides for effective communication between the management and operations
departments. Volkswagen, on the other hand, has a transnational organizational structure that includes
aspects of both global and local organizations. The business offers both global functions and local
customization and decision-making. The corporation promotes a decentralized approach to operations and
gives regional divisions a great deal of autonomy in decision making.
It depends on the particular context and sector as to whether method is more current. For some industries,
like manufacturing, a worldwide functional organization, like the one Ford employs, can be effective and
efficient. This strategy, meanwhile, can also be faulted for being overly inflexible and for not allowing for
sufficient local adaptability. More flexibility and agility are made possible by a transnational structure,
like the one Volkswagen uses, which can be advantageous in sectors where customer preferences or
market conditions are subject to quick change. Without taking into account the particular environment
and industry, it is challenging to determine whether method is more contemporary or superior. Ford and
VW have both achieved success in their specialized markets and sectors because to their unique
approaches to global organizational structure.