Organizing for Worldwide Effectiveness

Organizing for worldwide Effectiveness: The Transnational solution : Companies with international operations must engender global coordination and flexibility, to be able to remain competitive in increasingly global setting. On the other hand traditional organization practices provides different approach to the problem. The author illustrates this dichotomy in approach through the experience of two prominent electronic market competitors Philips, an example of decentralized federation structure, which is well suited to the promotion of national flexibility and Matsushita, a company with a centralized hub configuration, which ensures high efficiency. Reasons for Philips Success. Philips success can be attributed to making local management effective. 1) Hiring talented individual for the role of Entrepreneurial expatriates and giving them principle autonomy. 2) Integrating diverse functions within subsidiaries by including multi-disciplinary individuals, such as technical, commercial, and financial, in decision-making processes. 3) Creating autonomous overseas business unit subsidiaries, by dispersing responsibilities and decentralizing assets, to improve local responsiveness. Reasons for Matsushita’s Success. 1) Gaining inputs of the subsidiaries into organizational management practices by maintaining strong bi-direction linkages between Subsidiaries and HQ. 2) Substantiate the positive correlation between development efforts and market demand. 3) Suitable navigation of responsibility transfer through various department, from conceptualization to Marketing. Unfortunately, both these strategies have strategic drawbacks. He argues that a successful global entity will maintain, mix of both approaches, a transnational strategy characte...

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...) For fire control products it was recommended that R&D be centralized and product sourced locally, because fire prevention was highly regulated industry and required close association with nation regulatory bodies and control agencies. Additionally, they recommended that the company evolve to a more differentiated organization using decision matrix tool defining core decisions business by business and then creating a process to analyze how to exercise decisions. Localization of marketing programs needed by consumer product line to respond to the consumer needs and varying competition, (2) Global control required by medical plastics business, (3) the fire prevention was a highly regulated industry, which should use both the local way (R&D) and the global (Coordination) way. Use of decision matrix was also emphasized to evolve into a more differentiated organization.