Decision-Making in Global Organizations
In today's business environment, there is sustained pressure for companies to maximize productivity in order to be competitive in the marketplace. Many businesses are moving a variety of activities, such as manufacturing and product development, to countries with low labour costs. They are also opening up sales channels in many new markets. The resulting global organizations need to structure themselves, so that they can effectively manage operations across numerous locations. This paper looks at how the organizational structure of a global company influences decision-making at the regional level, and how this can affect the business performance. This paper will:
- Consider whether centralized and decentralized business structures will make different business decisions depending on the cultural values in the region.
- Explore how a transition from an autonomous structure to a centralized structure affects regional performance.
- Examine how a global company can delineate decision-making responsibility that balances a corporate code of conduct with regional cultural differences to achieve optimal business results.
- Recommend steps that global organizations can take to optimize regional decision-making, and corresponding business results, across regions with different cultural backgrounds.
Large corporations have been attempting to find a balance between the traditional hierarchical structure and the flexible local entrepreneurial structure for many years. Increasing global competition has made it critical that multinational enterprises be both globally integrated and locally responsive at the same time (Bartlett & Ghoshal, 1988). Sohn & Paik (2004) describe the efforts of Toshiba to achieve a hybrid of centralized control and localized autonomy. Irrespective of the structure chosen, corporations can all be placed somewhere along the continuum between centralized and decentralized management. A centralized structure will be slower to respond to changing market conditions but provides stability and control. A decentralized structure provides autonomy for local businesses to make their own decisions quickly, ; however, the decisions may not align with the parent organizations' strategic objectives and ethics. Many business decisions involve conflict between making money and ethical treatment of employees, customers, and the environment. Centrally managed organizations are more likely to align decisions with a universal corporate code of conduct. Autonomous subsidiaries will make decisions that are reflective of the local cultural values. The risk to the parent organization is that some of these decisions may severely conflict with shareholder values. Treatment of women, children, and respect for the environment are some areas where regional differences exist.
General Motors is knocking on the door to world class business performance. Ohmae’s five stages of global operation support General Motors aspirations. From stage one to stage five there are significant differences to becoming a global organization. For instance, stage one, states that a company supports arm’s length customer export activity by a domestic company that links up with local and distributors to function. This stage represents the entry level global corporation. General Motors is at stage 4 of Ohmae’s five stages of becoming a global corporation, because it has exemplified the following traits: Systems and tools used globally not just at headquarters, R&D, Engineering and other business operations have a global focus, and all support functions are applied globally. (MFGO 601, WK. #2 Lecture Notes) An example of Ohmae’s, stage ...
Outsiders wondered how each company’s internal changes would affect their endless competitive battle in the industry. The case illustrates how global competitiveness depends on the organizational capability, the difficulty of overcoming deeply rooted administrative heritage, and the limitations of both classic multinational and global models.
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.
An increase of international trade, Due to global competitive environment, organisation addresses the rapid changes and complexity. Expansion in different location, launching new products, entering new market and this enables organizations to respond and
It is very important for every business to have a global code of conduct as it sets a comprehensive ethical and behavioral guideline about the decisions that the organization makes in their everyday activities. A global code of conduct makes sure that all of the organizations standards are set high for conducting effective business in both a legal and ethical manner. All of the employees within the organization are expected to comply with all of the guidelines and polices that are stated in the global code of conduct. The global code of conduct gives the organization the opportunity to be able to make it extremely clear to all of its employees and also stakeholders of how the organization seeks to do business. The global code is one of the most important keys to being able to adopt ethical communication within your organization. This code should focus more on the value system that the global company uses rather than on how the employees act with respect to the laws of their local jurisdiction. The code must also include all business lines, employees, and departments. Although it can be really difficult to cover all of the aspects at a global level, you must try to add different sections that cover all the different jurisdictions related to the local subsidiaries. Most importantly, organizations need to realize that the code has to be updated with the move of time and employees must always be informed when there are changes that are made to the code. Along with all of this, some of the things that I would also include in my organizations global code of conduct would be:
When it comes to doing business internationally the decision making is more complex. There are many interactions between each country that need to be addressed. In order for a business to be successful in the international market they need to examine and analyze all the facets of their company. They need
Culture can be seen as a basis for understanding and assessment of human activities and areas of interest, and has been defined by many scholars in different aspects. However, they still have many similarities which often reflect the religious and historical. In the past fifty years, there have been dramatic growths in the economic and political communications across the country, and the immigrants result interleaving or collision across cultures (Tung, 2008). As a result, if the decision makers misunderstood or ignored cultural backgrounds of different nations, it might probably be a high risk of the collapse of the enterprise. In this period of international business, it is essential to comprehend and adapt to cross-cultural issues by the use of the Internet. In global markets, especially with organizations in another country, culture has become critical to the success of the corporation. It must be dealt with cohesion and wisdom. Therefore, the purpose of this literature review is to compare the three cross-cultural researches from a commercial perspective, to identify cultural differences affect the way of doing business internationally. The results of business ethics and cultural differences will be talked in the two sections of this article.
Oesterie, M. J., Richta, H. N., & Fisch, J. H. (2012). The influence of ownership structure on internationalization. International Business Review, 22(1), 187-201.
CG and SR continue to evolve and are no longer viewed the same as years ago. Businesses are now required to take on a broader range of responsibilities to society and provide to human values that were previously seen as unrelated to a company’s operating success. (Dennis et all 1998). These concepts remain a challenge for international companies as they are increasingly pressed to respond to stakeholders’ requests for additional accountability, as the gap between society and businesses continues to...
“Decision making is a process of first diverging to explore the possibilities and then converging on a solution(s). The Latin root of the word decision means "to cut off from all alternatives". This is what you should do when you decide.” (Kotelnikov, 2008). In fact, the decision making process helps reduce doubt and uncertainty about alternative choices to allow individual to choose the best reasonable choice. In addition, the decision making process can make the difference between a successful and an unsuccessful organization. Consequently, management tries to use the best techniques and tools possible to make the best decision. Nowadays, most organizations seem to think that they have the most effective and efficient decision making process. So what are the different styles of decision making processes have organizations implemented? In order to answer this question, the team members will investigate and observe the decision-making processes most prevalent in their organization. As a result, these papers will first compare and contrast the problem identification and formulation styles in the team members’ organizations. Then the most favorable aspects of each style will be discussed to describe a process by which a problem can be identified and described to stakeholders in a manner that is sensitive to their perspective.
“Red is a positive color in Denmark, but represents witchcraft and death in many African countries,” (Understand and heed, 1991, p.1). Simple understandings, such as this one, can make the difference in a business’ success or failure in a foreign country. Various countries have different customs and beliefs that need to be accustomed to when business are to be successful. American businesses especially have difficulties with this concept. “At times in the past, Americans have not had a good track record of being sensitive to cultural distinctions,” (Understand and heed, 1991, p.3). Perhaps this is because America is made up of so many different cultures that American people have become so used to easily adjusting to each other’s differences that they forget that other cultures are not as flexible. Today, more American’s are becoming more sensitive to the differences of other cultures. This sensitivity and understanding has come with a price, after a long string of business failures. It is not until a business fails miserably in another country that they see the adjustments that should have been made in order for their success to be a possibility. With an understanding and sensitivity to the customs and beliefs of other cultures, it is possible for successful businesses that have originated in western cultures to also be successful in foreign countries as well.
Woywode, M. (2002). y global management concepts and local adaptations: Working groups in the frenchand german car manufacturing industry.Organization Studies, 23(4), Retrieved from http://oss.sagepub.com.ezproxy.csusm.edu/content/23/4/497.full.pdf html
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.
Stonehouse, G., Campbell, D., Hamill, J. & Purdie, T. (2004). Global and Transnational Business (2nd ed.). Chichester: John Wiley & Sons.
Within the case analysis students will develop a sense of managerial and cultural hindsight that is extremely pertinent in the business field. For instance, Four Seasons demonstrates the ability and need for cultural awareness. While the company entered international jurisdictions their President of Europe, Middle East, and Africa, Antoine Corinthios, stated that “if you are going to go global you cannot be one way.” In addition, throughout this case, Corinthios taught lessons on being a cultural chameleon; being able to effectively expand into a new market with ease. In addition, Four Seasons taught individuals that agreeableness is a weakness at times, especially concerning excuses since those are not to be tolerated. Individuals must maintain responsibility for their actions and not design excuses as results. As the students continued to absorb the information they learned that just because someone is in higher management does not mean they cannot lend a helping hand. Businesses should be maintained as all for one and one for all; if the one individual makes the business look bad then everyone looks bad. Additionally, students could learn that values and standards are the embodiment of the business. Four Seasons had a motto of: talk to me about my standards and you talk to me about my religion. The individuals that work for the company should constantly represent the values and standards of the company. Finally, the most important note for business students is that this case study allows them to effectively use the three lenses: culture, strategic, and political; to analyze an