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Structure, control and monitoring system

You are representing a Japanese parent company setting up a new international joint venture (IJV) in Sweden. There has been some debate over the type of control system the company should use.

Task: Present a top-level business plan to the parent company's executive board delineating a set of controls and monitoring systems for the IJV, keeping in mind that you represent a Japanese company.

Consider the following questions in your business plan.

* As a Japanese company, what are the variables that you have to consider when designing the organizational structure for the international operations?

* How do these variables interact?

* Which variables do you think are the most important for the success of the IJV?

* What is the importance of "being global and acting local?"

* How can your firm design its organization to enable "being global and acting local?"

You must research the organizational structures common among Japanese MNCs.

Solution Preview

Variables for designing Organizational Structure for International Operations

Organization structure is the main design of the company. Organization structure of a firm must change in accommodate a firm's evolving internationalization. The structure must support organization's strategy or it should "fit" the strategy for it to work. The design of firm's structure should be based on variables, which establish lines of authority and decision making while describing where employees are located from different functional groups across the country. Major variables include the firm's strategy, size, technology, and environment of international operations. Additional variables affecting structural choices are geographic dispersion, as well as differences in time, language, cultural attitudes, and business practices.

Japanese MNCs are known for keeping a large concentration of expatriates in the country of foreign operations. Because of this factor itself, as per international standards, Japanese MNCs show a high degree of centralization in decision-making. Japanese follow the approach of having strong but informal centralized co-ordination of foreign operations, which are highly reliant on making a network of Japanese expatriates. Some of the general characteristics of Japanese MNCs as were prominent at an earlier phase of time were:

1. Sense of belonging to Japanese head office is very high
2. Appoint less local personnel as senior board directors, senior executives, and top management
3. The control of international operations is very strong when compared to Japanese counterparts

With increasing internalization of trade, Japanese MNCs have gone through changes in their styles. When expatriates were sent to other countries to establish operations, they took initiative to develop the company for whom they were working. Japanese MNCs have also started hiring lot of qualified local managers, but local people have still not been able to make it to the top positions in the organization. This remains a basic problem at Japanese Corporate headquarters management ...

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