1149624038-Steensma 44 -corningglasswork...

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Published on January 13, 2009

Author: aSGuest10326

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Slide 1: Strategy and Organization for the Multinational firm Corning Glass Works Slide 2: Strategy and Organization for the Multinational firm Slide 7: Organizational structure has huge implications for performance! Strategy Structure/ Org. capabilities Environment Slide 8: Current Corning structure Science products Consumer Products Television products Electronic products International Division Headquarters Europe Asia-Pacific Latin America Slide 9: What are some of the problems that Forrest Behm is trying to deal with regarding the Corning International Division? 2. What was his first solution? Why didn’t it work?! 3. What was his second solution? Why didn’t that work? Slide 10: Coordination mechanisms Coordination needs Liaison (Int. Business Managers) Team (world board) Slide 11: Your solution Slide 12: Alternative 1 – Worldwide Product Structure Headquarters VP- Consumer Products VP – Scientific Products VP- Television Bulbs VP- Ophthalmic VP- Electronics Region 1 Region 2 Region 3 Regions Regions Regions Regions Maximizes performance by product What about the contentious French country manager?? Slide 13: Alternative 2 – Worldwide Area Structure Headquarters VP- U.S. VP – Asia VP- Western Europe VP- Latin America VP- Middle East Product 1 Product 2 Product 3 Products Products Products Products Does this solve the problems?? Slide 14: Standard Global OEMs Low cost Varies by country Local retailers Local customization Adapted by country Global and regional Price and delivery Characteristics of the industries Slide 15: The Mckinsey solution Slide 16: Corning paid two million dollars…..what did they get? Independent assessment Analysis of the various businesses Structural recommendation (matrix) An implementation tool Slide 17: Coordination mechanisms Coordination needs Liaison (Int. Business Managers) Team (world board) Matrix Slide 18: What will the future hold?? Slide 19: …..Three years after the reorganization “I believe the structure is working well and don’t see it just as an Interim step towards creating worldwide product divisions for other businesses. We made it very clear in our internationalization announcement that only the medical and electronics businesses would be controlled centrally. One of our strengths is that we have very strong general managers running our country entities, and they would probably not stay around if we transferred all the power to the world-wide business managers.” James Houghton Slide 20: Meanwhile, according to Tom MacAvoy…. “….the big risk I see is that too much structure and Too many systems can discourage entrepreneurial Attitudes and the free spirit that can really propel a Company forward. …I don’t rule out the possibility that other businesses Could be managed more centrally, similar to the way We run electronics and medical products businesses Today.” Slide 21: What happened with Corning? Global Product Structure Slide 22: “…we’ve decided to shift around to speed up the decision-making process in operating areas. The old way made a lot of sense intellectually, but it was a little too subtle. We understood it inside the company, but we always had to keep explaining it.” Tom MacAvoy What about those divisions/industries that require the local touch?? (e.g., Consumer products) Complex organization vs. Value of simplicity Slide 23: What happened with Corning? Not only are they diversified in terms of industry/products…. They are also diversified in terms of dominant logic underlying the industries (i.e., global vs local responsiveness) An additional dimension of diversity - Slide 24: Strategy Structure/ Org. capabilities Environment – complex! Global Multidomestic Slide 26: Two fundamental strategies for multinational firms Global strategy – standardized product/services meeting the needs of a global market - limited customization, ability to limit costs Able to exploit each country’s comparative advantage Different functions in different regions headquarters Slide 28: Multidomestic strategy (consistent with a differentiation strategy) - Focus on increasing performance by customizing - Being nationally responsive to unique needs of each market - A willingness to sacrifice efficiency gains to be different US subsidiary Korean subsidiary Spanish subsidiary R&D Production Marketing R&D R&D Production Production Marketing Marketing Headquarters Slide 29: Competing Forces Pressure for globalization Pressure for national responsiveness lowering trade barriers - consumer tastes are converging technology life cycles are being compressed need to recoup investments from multiple markets Confluence of factors leading to globalization of industries Slide 30: Recent changes at Mattel Inc. Slide 31: - differences in distribution styles (mega stores vs. mom & pop) - different competition (multinationals vs. locals) - host country differences in regulations, legislation Slide 32: Whirlpool and washing machines Environment National differences in valuing washing machines e.g., China grease removal cycle (bicyclists) aesthetically pleasing (in living areas) Brazil transparent lids, eye catching style, on four legs India caster wheels, pride of the home sari cycle for washing women’s wraparounds Strategy Multi-domestic Organization Decentralized operations Design function in country Slide 33: Some examples of globalization gone wild…… Incorrectly assuming a “global” market Proctor and Gamble – Diapers in Japan Pepsodent in Southeast Asia – “Wonder where the yellow went” The world car Slide 34: Headquarters Product 1 (electronics) Product 2 (Consumer goods) Product 3 (Medical supplies) U.S. Korea China U.S. U.S. Korea Korea China China Global strategy -- Worldwide product structure Advantages: Strong coordination within each product line - information flows across regions for each product 2. No duplication of production– efficient….economies of scale, learning curve… Slide 35: Headquarters Product 1 (electronics) Product 2 (Consumer goods) Product 3 (Medical supplies) U.S. Korea China U.S. U.S. Korea Korea China China Global strategy -- Worldwide product structure Disadvantages: Limited coordination within each region- hampered government relations 2. Difficult information flow between product lines 3. Potential for demoralized country managers Slide 36: Multidomestic strategy – Worldwide area structure Advantages: 1. Easy customization- decisions are made close to the unique customer 2. Strong coordination within each region- better for government relations Slide 37: Multidomestic strategy – Worldwide area structure Disadvantages: 2. Little coordination within product lines- potential for internal competition 1. Extensive duplication, limited experience curves, economies of scale Slide 38: Key points from Corning Glassworks case There is a basic strategic tension between: Global strategy Worldwide product structure High integration Highly centralized Highly efficient Lower cost Multidomestic strategy Worldwide area structure High differentiation Highly decentralized Enables customization National responsiveness Vs. Slide 39: There may be no one ideal structure, only tradeoffs Industries have different requirements in terms of local responsiveness Consumer electronics (e.g., Matsushita) Consumer package goods (e.g., Unilever) Tastes Distribution Regulations Slide 40: Can a firm have it all? Efficiencies of globalization AND national responsiveness Transnational strategy – Gaining the benefits of global efficiency and national responsiveness Standardizing the product as much as possible, yet customizing the product where necessary Exemplar firm: Caterpillar – adding local product features onto a standardized platform. Centralized manufacturing (platform) w/ final assembly in each major market Slide 41: Organizational structure for transnational strategy headquarters US Korea China Consumer products Electronics Medical supplies Manager of Medical supplies In U.S. + Forces information flow across product lines and across region + Shared decision making….better decisions?? - Highly bureaucratic and slow - Potential for conflict and power struggles Slide 42: Global matrix system Looks good on paper, however….it may be inherently unstable - are two managers ever equally powerful? - it involves people…self- interest - requires a truly global manager and supportive culture There is a tradeoff between complexity and simplicity. Simplicity has value! Consider ABB in the power equipment industry - 200 acquisition in 5 years Percy Barnevik was lauded as an organizational genius (next Jack Welch) Slide 43: Another example of matrix ‘gone wild’ Dow (1990) – Chemicals/Pharmaceuticals Global hybrid matrix Business groups by region “We were an organization that was matrixed and depended on teamwork, but there was no one in charge. When things went well, we didn’t know whom to reward; when things went poorly, we didn’t know whom to blame.” William Stavropoulos, CEO (2000) Slide 44: What does it take to have a successful transnational (I.e., matrix) organization? GE, Unilever, Philips Global managers….. Slide 45: Thursday, May 11 The Influence of National Culture

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