Organization structure and control


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Organisational structure and control of multinationals.
Evolution in Organisational structure of Airtel

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  • DEBRIEFExamplesWhen structures are likely to work wellAssociated with what type of firm
  • Organization structure and control

    1. 1. International BusinessOrganizational Structure, Control –Early Experiences, Evolution of New Structureand Performance. IIM StudentsOld and New Organization Structure and Control of AIRTEL
    2. 2. Agenda1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel
    3. 3. 1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel International Business
    4. 4. Organizational Structure There is no permanent organization chart for the world. . . . It is of supreme importance to be ready at all times to take advantage of new opportunities. -Robert C. Goizueta, (Former) Chairman and CEO, Coca-Cola CompanyInternational Business
    5. 5. Organizational Structure  Organization is defined by the formal structure, coordination and control systems, and the organization culture.  It’s the formal arrangement of roles, responsibilities and relationships within an organization.  It’s a powerful tool to implement strategy.International Business
    6. 6. Vertical Differentiation Centralization V/S Decentralization  Vertical Integration: The issue of determining where in the hierarchy, the authority to make decisions stand.  Centralization is the degree to which high level managers, usually above the country level, make strategic decisions and pass them over to lower levels for implementation.  Decisions made at foreign subsidiary level are considered decentralized, and those made at HQ are considered to be centralized.International Business
    7. 7. Horizontal Differentiation The Design of the Formal Structure Horizontal Differentiation: The way a co. designs its formal structure to perform the following functions  Specify the set of organizational tasks.  Divide these tasks into jobs, departments, subsidiaries and divisions to get the work done.  Assign authority relationships to get the work done in a way that supports co. strategy.International Business
    8. 8. 1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel International Business
    9. 9. Types of Organizational Structures  Functional Structure  International Division Structure  Product Division Structure  Geographic (Area) Division Structure  Matrix Division StructureInternational Business
    10. 10. Functional Structure  Specialized jobs are grouped according to traditional business functions.  Ideal for Co. having a narrow product CEO line, sharing similar technology.  Helps maximize economies of scale Production Marketing  Highly efficient. India USA India USAInternational Business
    11. 11. International division structure.  Grouping each international business activity into its own division.  Creates a critical mass of international expertise.  Creates quick response to environmental CEO changes enabling them to deal with different markets.  Prevents duplication of activities. Aerospace  Often struggles to get resources from Industrial Automotive Electronics International Division Division Division domestic divisions. Division  This structure is suited for multi-domestic strategies that demand little integration Diesel Electronics Brake and standardization between domestic Company Company Company (France) (France) (Mexico) and foreign operations.  Frustrates its ability to exploit economies of scale.International Business
    12. 12. Product Division Structure  These are popular among international companies with diverse products. CEO  Similar products are grouped under one product head e.g. Perfumes and Cosmetics, each focusing on a single product segment for its global market. Power Systems Industry And Group Defense Group  Suited for a global strategy Elevator Construction  There may be duplicate functions and Electric Company Meter Company Company Products (Belgium) (Argentina) activities among divisions. (Belgium) Company (Italy)  No formal means by which one product division can learn from another international expertise.International Business
    13. 13. Geographic (Area) Division Structure  These are used when foreign operations are large and not dominated by a single country or region.  Useful when managers can gain economies of scale on a regional rather CEO than on global basis.  Drawback is the potential of duplication of Europe and North work among areas as the company Latin America and America Pacific locates similar value activities in several Division Division places rather than consolidating them in the most efficient place. U.K. Venezuela Italy U.S. Japan CanadaInternational Business
    14. 14. Matrix Division Structure CEO  This tries simultaneously to deal with competing pressures for global integration and local responsiveness.  Institutes overlaps among functional and divisional forms.  Gives functional, product, and geographic Textile Agricultural Europe-Africa groups a common focus. Latin Groups Products Group  It makes each group share responsibility America Group for foreign operations and enables each Group group exchange information and resources more willingly.  Drawbacks- Stop championing their group’s unique needs, and thereby eliminate the multiple knowledge- generating and decision making relationship that it is supposed to engage. U.K. MexicoInternational Business
    15. 15. 1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel International Business
    16. 16. Control Systems Control Organizational Strategy and Employees Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about whether the organization’s strategy and structure are working efficiently and effectively.International Business
    17. 17. Organizational Control Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goalsInternational Business
    18. 18. Control Methods Market Control  Use external market mechanisms to establish internal performance benchmarks & standards Bureaucratic Control  Here company uses centralized authority to install rules and procedures to power broad range of activities Clan Control  Shared values among employees to idealize the preferred behaviorInternational Business
    19. 19. 1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel International Business
    20. 20. Evolution and Change in MNC  Internationalization is the process by which a firm gradually changes in response to international competition, domestic market saturation, and the desire for expansion, new markets, and diversification.  Structural Evolution (Stages Model) occurs when managers redesign the organizational structure to optimize the strategy’s changes to work, making changes in the firm’s tasks and relationships and designating authority, responsibility, lines of communication, geographic dispersal of units and so forthInternational Business
    21. 21. Basic Organizational Structures A number of basic structures exist that permit an MNC to compete internationally  Structure must meet the need of both the local market and the home-office strategy of globalization  Contingency approach  Balances the need to respond quickly to local conditions with the pressures for providing products globally  Most MNCs evolve through certain basic structural arrangements in international operationsInternational Business
    22. 22. Organizational Structures High Pressure for globalization Mixed and Global Structural Transnational Arrangements Structures Initial Division Low Structures International Division Structures Low High Pressure for local responsivenessAdapted from Figure 9–2: Organizational Consequences of Internationalization
    23. 23. 1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel International Business
    24. 24. Evolutionary and Revolutionary Change Evolutionary change  gradual, incremental, and narrowly focused  constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate changes in the environmentInternational Business
    25. 25. Evolutionary and Revolutionary Change Revolutionary change  Rapid, dramatic, and broadly focused  Involves a bold attempt to quickly find ways to be effective  Likely to result in a radical shift in ways of doing things, new goals, and a new structure for the organizationInternational Business
    26. 26. Steps in the Organizational Change ProcessInternational Business
    27. 27. Implementing the Change Top Down Change  A fast, revolutionary approach to change in which top managers identify what needs to be changed and then move quickly to implement the changes throughout the organization.International Business
    28. 28. Implementing the Change Bottom-up change  A gradual or evolutionary approach to change in which managers at all levels work together to develop a detailed plan for change.International Business
    29. 29. 1 Organizational Structure2 Types of Organizational Structures3 Control Systems4 Evolution and Change in MNC5 Organizational Change6 Bharti Airtel International Business
    30. 30. Bharti Airtel  Bharti Airtel Limited is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa.  Headquartered in New Delhi, India, the company ranks amongst the top 5 mobile service providers globally in terms of subscribers.  In India, the companys product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers.  In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had over 246 million customers across its operations at the end of February 2012.International Business
    31. 31. Background International Business
    32. 32. Business Divisions International Business
    33. 33. Bharti Airtel - Country Map Source: Wikipedia International Business
    34. 34. Bharti Airtel – Overseas Operations Source: WikipediaInternational Business
    35. 35. Earlier Organization StructureFunctional Structure International Business
    36. 36. Organization Structure After (August 1 2011)  Through this new structure, the company aims to decentralize decision making and increase accountability across all levels of management.  The new structure, separates the business to business (B2B) and the business to consumer (B2C) segments.  The B2C business unit (Headed by K Srinivas) will service the retail consumers, homes and small offices, by combining the erstwhile business units — mobile, telemedia, digital TV, and other emerging businesses. DECENTRALIZED Structure:  International Division StructureInternational Business  Geographic (Area) Division Structure
    37. 37. Organization Structure After Aug 1, 2011  International Division Structure  Geographic (Area) Division StructureInternational Business
    38. 38. Organization Structure (South Asia) After August 1 2011Market operations in India and South Asia is divided into three regions, each headed by an operations director. The north, east and Bangladesh operations is headed by Ajai Puri The south and Sri Lanka operations by Vineet Taneja Operations in the west is headed by Raghunath Mandava (along with national distribution portfolio). International Business
    39. 39. Governance Structure :  The Group Chairman and M.D is responsible for providing strategic direction, leadership and governance, leading transformational initiatives, international strategic alliances besides effective management of the Company with a focus on enhancing Bharti’s global image.  The CEO(International) and joint M.D. is based in Nairobi, Kenya and responsible for the overall business performance, management and expansion of the international operations.  He is also responsible for employee engagement, customer satisfaction, outsourcing initiatives and the internal control metrics for the international operations.  The CEO ( India and south east Asia) heads south asia operations and is responsible for overall business performance in this region. He is also responsible for employee engagement, customer satisfaction, ensuring success of outsourcing initiatives and improvements in the internal control metrics for India and south asia operations.International Business
    40. 40. Board Members:  The Board of Directors of the Company has an optimum mix of Executive and Non-Executive Directors, which consists of three Executive and fifteen Non-Executive Directors.  The Chairman and Managing Director, Mr. Sunil Bharti Mittal, is an Executive Director and the number of Independent Directors on the Board is 50% of the total Board strength.  The independence of a Director is determined on the basis that such director does not have any material pecuniary relationship with the Company, its promoters or its management, which may affect the independence of the judgment of a Director.  The Board members possess requisite skills, experience and expertise required to take decisions, which are in the best interest of the CompanyInternational Business
    41. 41. Organization Structure (South Asia) After August 1 2011 BB.O.D BOARD OF DIRECTORS :
    42. 42. Thank YouThank You