How to avoid failure? - Answers 1. Pre-acquistion screening: finances, operations, management
techniques, to find the right firm. Due diligence on the firm
2. Post-acquistion integration planning: merger of management, systems and operations...
Organizational architecture - Answers Overall framework of an MNE. Structure, processes, culture and
incentives, control systems.
Why is organizational architecture important? - Answers - must be consistent throughout the company
- Good architecture needed for good deployment of strategy.
Organizational structure - Answers A model which provides a guide for the application of the
management process.
What does organizational structure determine? - Answers - how an organization is divided into subunits
- the relationships and communication between subunits
- coordination and control of the activities of subunits
- where the locus of decision making is
Vertical differentiation - Answers The locus of decision making (heaquarters or subsidiaries?)
Horizontal differentiation - Answers The division and segmentation of the firm (subunits)
Centralization - Answers Responsibility of decision making is on upper level managers, usually at the
headquarters
In favour of centralization - Answers 1. consistency/uniformity
2. easier coordination
3. Avoids duplication
4. easier to make radical changes (absolute power)
Against centralization - Answers 1. If something goes wrong, will affect the whole firm
, 2. Higher degree of control leads to poorer work morale
Decentralisation - Answers Decision making responsbility is delegated to lower level managers in
subsidiaries.
In favour of decentralisation - Answers 1. Increases motivation and innovation
2. increase responsibility and commitment
3. reduces pressure on top management
4. fosters flexibility and strategic agility
Challenges of decentralisation - Answers 1. Harder to ensure that subsidiaries stick to company values
2. lack of consistency
3. scope for variation
Mixed control - centralize... - Answers 1. standards and procedures
2. financial management
3. procurement
4. production?
Mixed control - decentralise - Answers 1. strategy and HR
2. marketing
3. production
HQ factors that will help decide - Answers 1. expertise
2. confidence in subsidiary
3. interdependence
4. importance of foreign market
Subsidiary factors - Answers 1. performance
2. ownership structure
Host country factors - Answers 1. laws
2. culture
3. env complexity
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