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C H APTER
    12
MNEs confront two sets of pressures:
   Cost reduction – calls for global integration.
   Local responsiveness – calls for local adaptation.

               Integration Responsive Framework




                                 ©
.
International division: Typically used when firms
        engage home replication strategy
Geographic Area Structure: appropriate for
          localization strategy.
Global product division structure: Highly
responsive to pressure for cost efficiency; Reduces
    inefficient duplication in multiple countries.




                         ©
Global matrix: Designed to be both cost efficient
   and locally responsive; Difficult to deliver in
                     practice.
Institution-Based Considerations




  External            Internal
relationships      relationships
External relationships:

  •MNEs are subject to frameworks
  erected by governments Informal
  • institutions dealing with host and
  home countries.

Internal relationships:

  •Organizational structure specifies
  scope of various parties’
  responsibilities.

  Organizational norms, values, and
  networks
    © 2010 Cengage Learning. All rights reserved.
Resource-Based Considerations

 Does a structural change add value?

 Strategy must be rare.

 Inimitability – formal structures are easier to
observe, making informal structures more popular.

 Organization of MNEs, formal and informal.
Knowledge management:
the structures, processes, and systems that actively
    develop, leverage, and transfer knowledge.


Two categories of knowledge:
   Explicit knowledge – codifiable.
   Tacit knowledge – non-codifiable. Transfer
  requires hands-on practice.




                        .
“The differences in knowledge
  management in MNEs stem
     fundamentally from the
 interdependence between the
    headquarters and foreign
subsidiaries, and among various
                           subsidiaries”.




  © 2010 Cengage Learning. All rights reserved.
Subsidiary control:
Subsidiary initiatives may inject a spirit
of entrepreneurship throughout the larger
corporation.

Corporate control:
Hard to distinguish between good-faith
subsidiary initiative and opportunistic
empire-building.
Subsidiary initiatives are not necessarily
compatible with corporate-wide goals.
Twelve chapter of_i.b[1]

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Twelve chapter of_i.b[1]

  • 2. MNEs confront two sets of pressures:  Cost reduction – calls for global integration.  Local responsiveness – calls for local adaptation. Integration Responsive Framework ©
  • 3. .
  • 4. International division: Typically used when firms engage home replication strategy
  • 5. Geographic Area Structure: appropriate for localization strategy.
  • 6. Global product division structure: Highly responsive to pressure for cost efficiency; Reduces inefficient duplication in multiple countries. ©
  • 7. Global matrix: Designed to be both cost efficient and locally responsive; Difficult to deliver in practice.
  • 8. Institution-Based Considerations External Internal relationships relationships
  • 9. External relationships: •MNEs are subject to frameworks erected by governments Informal • institutions dealing with host and home countries. Internal relationships: •Organizational structure specifies scope of various parties’ responsibilities. Organizational norms, values, and networks © 2010 Cengage Learning. All rights reserved.
  • 10. Resource-Based Considerations  Does a structural change add value?  Strategy must be rare.  Inimitability – formal structures are easier to observe, making informal structures more popular.  Organization of MNEs, formal and informal.
  • 11. Knowledge management: the structures, processes, and systems that actively develop, leverage, and transfer knowledge. Two categories of knowledge:  Explicit knowledge – codifiable.  Tacit knowledge – non-codifiable. Transfer requires hands-on practice. .
  • 12.
  • 13. “The differences in knowledge management in MNEs stem fundamentally from the interdependence between the headquarters and foreign subsidiaries, and among various subsidiaries”. © 2010 Cengage Learning. All rights reserved.
  • 14. Subsidiary control: Subsidiary initiatives may inject a spirit of entrepreneurship throughout the larger corporation. Corporate control: Hard to distinguish between good-faith subsidiary initiative and opportunistic empire-building. Subsidiary initiatives are not necessarily compatible with corporate-wide goals.

Editor's Notes

  1. External relationships: MNEs are subject to frameworks erected by governments Informal institutions dealing with host and home countries. Internal relationships: Organizational structure specifies scope of various parties’ responsibilities. Organizational norms, values, and networks.
  2. The differences in knowledge management in MNEs stem fundamentally from the interdependence between the headquarters and foreign subsidiaries, and among various subsidiaries.