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    Iah6 - K234080887

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    Iah6 - K234080887

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    vidt234081e
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    IAH6 - K234080887

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    Iah6 - K234080887

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    of 1

    This chapter is concerned with identifying the organizational architecture that international

    businesses use to manage and direct their global operations.


    First, the different elements of a firm’s organizational architecture must be internally consistent.
    Second, the organizational architecture must match or fit the strategy of the firm-strategy and
    architecture must be consistent.Large companies strategically changing to be more nimble and
    innovative face this fit issue all the time.
    Third, the strategy and architecture of the firm must not only be consistent with each other but
    also make sense given the competitive conditions prevailing in the firm’s markets—strategy,
    architecture, and competitive environment must all be consistent.Organizational architecture
    refers to the totality of a firm’s organization, including formal organizational structure, control
    systems and incentives, organizational culture, processes, and people.
    1. The entirety of a company's structure, including its formal organizational structure,
    incentives and control systems, procedures, culture, and personnel, is referred to as its
    organizational architecture.
    2. Three requirements must be met for superior enterprise profitability: the various
    components of a firm's organizational architecture must be internally consistent, the
    organizational architecture must match the firm's strategy, and the strategy and
    architecture of the firm must be in line with the competitive conditions that exist in the
    firm's markets.
    3. Three aspects are referred to as organizational structure: the creation of integrating
    mechanisms, the placement of decision-making duties within that structure (vertical
    differentiation), and the official division of the organization into subunits (horizontal
    differentiation).
    4. The measurements used to assess how well managers are managing subunits and gauge
    their performance are called control systems.
    5. The tools used to promote proper employee conduct are referred to as incentives. Annual
    bonus pay is a common kind of incentive for many employees. The performance
    indicators used for output restrictions are typically tightly linked to incentives.
    6. The way decisions are made and work is done inside an organization is referred to as its
    processes. Within an organization, processes exist at many different levels. A company's
    processes frequently incorporate its core capabilities or important skills. Effective and
    efficient procedures can increase a product's value and reduce the expenses associated
    with value generation.
    7. A shared set of conventions and values among personnel is referred to as the
    organization's culture.The behavior patterns or organizational style that new hires are
    immediately urged to follow by their peers are an expression of values and norms.
    8. For businesses pursuing distinct objectives to properly execute those goals, they must
    adopt a separate architecture. Organizational architecture must be in line with the strategy
    of the company, whether it is localization, globalization, internationalization, or
    transnationalization.
    9. All organizations have inertia, but many multinational corporations may find it more
    challenging to adapt their architecture and strategy to new organizational realities due to
    their complexity and worldwide reach. At the same time, it is more important than ever
    for many multinational corporations to accomplish just that because of the trend toward
    globalization in many industries.

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