7 Favorite Business Case Studies to Teach—and Why

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FEATURED CASE STUDIES

The Army Crew Team . Emily Michelle David of CEIBS

ATH Technologies . Devin Shanthikumar of Paul Merage School of Business

Fabritek 1992 . Rob Austin of Ivey Business School

Lincoln Electric Co . Karin Schnarr of Wilfrid Laurier University

Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth . Gary Pisano of Harvard Business School

The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron . Francesca Gino of Harvard Business School

Warren E. Buffett, 2015 . Robert F. Bruner of Darden School of Business

To dig into what makes a compelling case study, we asked seven experienced educators who teach with—and many who write—business case studies: “What is your favorite case to teach and why?”

The resulting list of case study favorites ranges in topics from operations management and organizational structure to rebel leaders and whodunnit dramas.

1. The Army Crew Team

Emily Michelle David, Assistant Professor of Management, China Europe International Business School (CEIBS)

organizational structure international business case study

“I love teaching  The Army Crew Team  case because it beautifully demonstrates how a team can be so much less than the sum of its parts.

I deliver the case to executives in a nearby state-of-the-art rowing facility that features rowing machines, professional coaches, and shiny red eight-person shells.

After going through the case, they hear testimonies from former members of Chinese national crew teams before carrying their own boat to the river for a test race.

The rich learning environment helps to vividly underscore one of the case’s core messages: competition can be a double-edged sword if not properly managed.

organizational structure international business case study

Executives in Emily Michelle David’s organizational behavior class participate in rowing activities at a nearby facility as part of her case delivery.

Despite working for an elite headhunting firm, the executives in my most recent class were surprised to realize how much they’ve allowed their own team-building responsibilities to lapse. In the MBA pre-course, this case often leads to a rich discussion about common traps that newcomers fall into (for example, trying to do too much, too soon), which helps to poise them to both stand out in the MBA as well as prepare them for the lateral team building they will soon engage in.

Finally, I love that the post-script always gets a good laugh and serves as an early lesson that organizational behavior courses will seldom give you foolproof solutions for specific problems but will, instead, arm you with the ability to think through issues more critically.”

2. ATH Technologies

Devin Shanthikumar, Associate Professor of Accounting, Paul Merage School of Business

organizational structure international business case study

“As a professor at UC Irvine’s Paul Merage School of Business, and before that at Harvard Business School, I have probably taught over 100 cases. I would like to say that my favorite case is my own,   Compass Box Whisky Company . But as fun as that case is, one case beats it:  ATH Technologies  by Robert Simons and Jennifer Packard.

ATH presents a young entrepreneurial company that is bought by a much larger company. As part of the merger, ATH gets an ‘earn-out’ deal—common among high-tech industries. The company, and the class, must decide what to do to achieve the stretch earn-out goals.

ATH captures a scenario we all want to be in at some point in our careers—being part of a young, exciting, growing organization. And a scenario we all will likely face—having stretch goals that seem almost unreachable.

It forces us, as a class, to really struggle with what to do at each stage.

After we read and discuss the A case, we find out what happens next, and discuss the B case, then the C, then D, and even E. At every stage, we can:

see how our decisions play out,

figure out how to build on our successes, and

address our failures.

The case is exciting, the class discussion is dynamic and energetic, and in the end, we all go home with a memorable ‘ah-ha!’ moment.

I have taught many great cases over my career, but none are quite as fun, memorable, and effective as ATH .”

3. Fabritek 1992

Rob Austin, Professor of Information Systems, Ivey Business School

organizational structure international business case study

“This might seem like an odd choice, but my favorite case to teach is an old operations case called  Fabritek 1992 .

The latest version of Fabritek 1992 is dated 2009, but it is my understanding that this is a rewrite of a case that is older (probably much older). There is a Fabritek 1969 in the HBP catalog—same basic case, older dates, and numbers. That 1969 version lists no authors, so I suspect the case goes even further back; the 1969 version is, I’m guessing, a rewrite of an even older version.

There are many things I appreciate about the case. Here are a few:

It operates as a learning opportunity at many levels. At first it looks like a not-very-glamorous production job scheduling case. By the end of the case discussion, though, we’re into (operations) strategy and more. It starts out technical, then explodes into much broader relevance. As I tell participants when I’m teaching HBP's Teaching with Cases seminars —where I often use Fabritek as an example—when people first encounter this case, they almost always underestimate it.

It has great characters—especially Arthur Moreno, who looks like a troublemaker, but who, discussion reveals, might just be the smartest guy in the factory. Alums of the Harvard MBA program have told me that they remember Arthur Moreno many years later.

Almost every word in the case is important. It’s only four and a half pages of text and three pages of exhibits. This economy of words and sparsity of style have always seemed like poetry to me. I should note that this super concise, every-word-matters approach is not the ideal we usually aspire to when we write cases. Often, we include extra or superfluous information because part of our teaching objective is to provide practice in separating what matters from what doesn’t in a case. Fabritek takes a different approach, though, which fits it well.

It has a dramatic structure. It unfolds like a detective story, a sort of whodunnit. Something is wrong. There is a quality problem, and we’re not sure who or what is responsible. One person, Arthur Moreno, looks very guilty (probably too obviously guilty), but as we dig into the situation, there are many more possibilities. We spend in-class time analyzing the data (there’s a bit of math, so it covers that base, too) to determine which hypotheses are best supported by the data. And, realistically, the data doesn’t support any of the hypotheses perfectly, just some of them more than others. Also, there’s a plot twist at the end (I won’t reveal it, but here’s a hint: Arthur Moreno isn’t nearly the biggest problem in the final analysis). I have had students tell me the surprising realization at the end of the discussion gives them ‘goosebumps.’

Finally, through the unexpected plot twist, it imparts what I call a ‘wisdom lesson’ to young managers: not to be too sure of themselves and to regard the experiences of others, especially experts out on the factory floor, with great seriousness.”

4. Lincoln Electric Co.

Karin Schnarr, Assistant Professor of Policy, Wilfrid Laurier University

organizational structure international business case study

“As a strategy professor, my favorite case to teach is the classic 1975 Harvard case  Lincoln Electric Co.  by Norman Berg.

I use it to demonstrate to students the theory linkage between strategy and organizational structure, management processes, and leadership behavior.

This case may be an odd choice for a favorite. It occurs decades before my students were born. It is pages longer than we are told students are now willing to read. It is about manufacturing arc welding equipment in Cleveland, Ohio—a hard sell for a Canadian business classroom.

Yet, I have never come across a case that so perfectly illustrates what I want students to learn about how a company can be designed from an organizational perspective to successfully implement its strategy.

And in a time where so much focus continues to be on how to maximize shareholder value, it is refreshing to be able to discuss a publicly-traded company that is successfully pursuing a strategy that provides a fair value to shareholders while distributing value to employees through a large bonus pool, as well as value to customers by continually lowering prices.

However, to make the case resonate with today’s students, I work to make it relevant to the contemporary business environment. I link the case to multimedia clips about Lincoln Electric’s current manufacturing practices, processes, and leadership practices. My students can then see that a model that has been in place for generations is still viable and highly successful, even in our very different competitive situation.”

5. Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth

Gary Pisano, Professor of Business Administration, Harvard Business School

organizational structure international business case study

“My favorite case to teach these days is  Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth .

I love teaching this case for three reasons:

1. It demonstrates how a company in a super-tough, highly competitive business can do very well by focusing on creating unique operating capabilities. In theory, Pal’s should have no chance against behemoths like McDonalds or Wendy’s—but it thrives because it has built a unique operating system. It’s a great example of a strategic approach to operations in action.

2. The case shows how a strategic approach to human resource and talent development at all levels really matters. This company competes in an industry not known for engaging its front-line workers. The case shows how engaging these workers can really pay off.

3. Finally, Pal’s is really unusual in its approach to growth. Most companies set growth goals (usually arbitrary ones) and then try to figure out how to ‘backfill’ the human resource and talent management gaps. They trust you can always find someone to do the job. Pal’s tackles the growth problem completely the other way around. They rigorously select and train their future managers. Only when they have a manager ready to take on their own store do they open a new one. They pace their growth off their capacity to develop talent. I find this really fascinating and so do the students I teach this case to.”

6. The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron

Francesca Gino, Professor of Business Administration, Harvard Business School

organizational structure international business case study

“My favorite case to teach is  The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron .

The case surprises students because it is about a leader, known in the unit by the nickname Chaos , who inspired his squadron to be innovative and to change in a culture that is all about not rocking the boat, and where there is a deep sense that rules should simply be followed.

For years, I studied ‘rebels,’ people who do not accept the status quo; rather, they approach work with curiosity and produce positive change in their organizations. Chaos is a rebel leader who got the level of cultural change right. Many of the leaders I’ve met over the years complain about the ‘corporate culture,’ or at least point to clear weaknesses of it; but then they throw their hands up in the air and forget about changing what they can.

Chaos is different—he didn’t go after the ‘Air Force’ culture. That would be like boiling the ocean.

Instead, he focused on his unit of control and command: The 99th squadron. He focused on enabling that group to do what it needed to do within the confines of the bigger Air Force culture. In the process, he inspired everyone on his team to be the best they can be at work.

The case leaves the classroom buzzing and inspired to take action.”

7. Warren E. Buffett, 2015

Robert F. Bruner, Professor of Business Administration, Darden School of Business

organizational structure international business case study

“I love teaching   Warren E. Buffett, 2015  because it energizes, exercises, and surprises students.

Buffett looms large in the business firmament and therefore attracts anyone who is eager to learn his secrets for successful investing. This generates the kind of energy that helps to break the ice among students and instructors early in a course and to lay the groundwork for good case discussion practices.

Studying Buffett’s approach to investing helps to introduce and exercise important themes that will resonate throughout a course. The case challenges students to define for themselves what it means to create value. The case discussion can easily be tailored for novices or for more advanced students.

Either way, this is not hero worship: The case affords a critical examination of the financial performance of Buffett’s firm, Berkshire Hathaway, and reveals both triumphs and stumbles. Most importantly, students can critique the purported benefits of Buffett’s conglomeration strategy and the sustainability of his investment record as the size of the firm grows very large.

By the end of the class session, students seem surprised with what they have discovered. They buzz over the paradoxes in Buffett’s philosophy and performance record. And they come away with sober respect for Buffett’s acumen and for the challenges of creating value for investors.

Surely, such sobriety is a meta-message for any mastery of finance.”

More Educator Favorites

CASE TEACHING

Emily Michelle David is an assistant professor of management at China Europe International Business School (CEIBS). Her current research focuses on discovering how to make workplaces more welcoming for people of all backgrounds and personality profiles to maximize performance and avoid employee burnout. David’s work has been published in a number of scholarly journals, and she has worked as an in-house researcher at both NASA and the M.D. Anderson Cancer Center.

organizational structure international business case study

Devin Shanthikumar  is an associate professor and the accounting area coordinator at UCI Paul Merage School of Business. She teaches undergraduate, MBA, and executive-level courses in managerial accounting. Shanthikumar previously served on the faculty at Harvard Business School, where she taught both financial accounting and managerial accounting for MBAs, and wrote cases that are used in accounting courses across the country.

organizational structure international business case study

Robert D. Austin is a professor of information systems at Ivey Business School and an affiliated faculty member at Harvard Medical School. He has published widely, authoring nine books, more than 50 cases and notes, three Harvard online products, and two popular massive open online courses (MOOCs) running on the Coursera platform.

organizational structure international business case study

Karin Schnarr is an assistant professor of policy and the director of the Bachelor of Business Administration (BBA) program at the Lazaridis School of Business & Economics at Wilfrid Laurier University in Waterloo, Ontario, Canada where she teaches strategic management at the undergraduate, graduate, and executive levels. Schnarr has published several award-winning and best-selling cases and regularly presents at international conferences on case writing and scholarship.

organizational structure international business case study

Gary P. Pisano is the Harry E. Figgie, Jr. Professor of Business Administration and senior associate dean of faculty development at Harvard Business School, where he has been on the faculty since 1988. Pisano is an expert in the fields of technology and operations strategy, the management of innovation, and competitive strategy. His research and consulting experience span a range of industries including aerospace, biotechnology, pharmaceuticals, specialty chemicals, health care, nutrition, computers, software, telecommunications, and semiconductors.

organizational structure international business case study

Francesca Gino studies how people can have more productive, creative, and fulfilling lives. She is a professor at Harvard Business School and the author, most recently, of  Rebel Talent: Why It Pays to Break the Rules at Work and in Life . Gino regularly gives keynote speeches, delivers corporate training programs, and serves in advisory roles for firms and not-for-profit organizations across the globe.

organizational structure international business case study

Robert F. Bruner is a university professor at the University of Virginia, distinguished professor of business administration, and dean emeritus of the Darden School of Business. He has also held visiting appointments at Harvard and Columbia universities in the United States, at INSEAD in France, and at IESE in Spain. He is the author, co-author, or editor of more than 20 books on finance, management, and teaching. Currently, he teaches and writes in finance and management.

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14.1 Organizational Structure: The Case of Toyota

Figure 14.1

Toyota dealership

Mike Mozart – Toyota – CC BY 2.0.

Toyota Motor Corporation (TYO: 7203) has often been referred to as the gold standard of the automotive industry. In the first quarter of 2007, Toyota (NYSE: TM) overtook General Motors Corporation in sales for the first time as the top automotive manufacturer in the world. Toyota reached success in part because of its exceptional reputation for quality and customer care. Despite the global recession and the tough economic times that American auto companies such as General Motors and Chrysler faced in 2009, Toyota enjoyed profits of $16.7 billion and sales growth of 6% that year. However, late 2009 and early 2010 witnessed Toyota’s recall of 8 million vehicles due to unintended acceleration. How could this happen to a company known for quality and structured to solve problems as soon as they arise? To examine this further, one has to understand about the Toyota Production System (TPS).

TPS is built on the principles of “just-in-time” production. In other words, raw materials and supplies are delivered to the assembly line exactly at the time they are to be used. This system has little room for slack resources, emphasizes the importance of efficiency on the part of employees, and minimizes wasted resources. TPS gives power to the employees on the front lines. Assembly line workers are empowered to pull a cord and stop the manufacturing line when they see a problem.

However, during the 1990s, Toyota began to experience rapid growth and expansion. With this success, the organization became more defensive and protective of information. Expansion strained resources across the organization and slowed response time. Toyota’s CEO, Akio Toyoda, the grandson of its founder, has conceded, “Quite frankly, I fear the pace at which we have grown may have been too quick.”

Vehicle recalls are not new to Toyota; after defects were found in the company’s Lexus model in 1989, Toyota created teams to solve the issues quickly, and in some cases the company went to customers’ homes to collect the cars. The question on many people’s minds is, how could a company whose success was built on its reputation for quality have had such failures? What is all the more puzzling is that brake problems in vehicles became apparent in 2009, but only after being confronted by United States transportation secretary Ray LaHood did Toyota begin issuing recalls in the United States. And during the early months of the crisis, Toyota’s top leaders were all but missing from public sight.

The organizational structure of Toyota may give us some insight into the handling of this crisis and ideas for the most effective way for Toyota to move forward. A conflict such as this has the ability to paralyze productivity but if dealt with constructively and effectively, can present opportunities for learning and improvement. Companies such as Toyota that have a rigid corporate culture and a hierarchy of seniority are at risk of reacting to external threats slowly. It is not uncommon that individuals feel reluctant to pass bad news up the chain within a family company such as Toyota. Toyota’s board of directors is composed of 29 Japanese men, all of whom are Toyota insiders. As a result of its centralized power structure, authority is not generally delegated within the company; all U.S. executives are assigned a Japanese boss to mentor them, and no Toyota executive in the United States is authorized to issue a recall. Most information flow is one-way, back to Japan where decisions are made.

Will Toyota turn its recall into an opportunity for increased participation for its international manufacturers? Will decentralization and increased transparency occur? Only time will tell.

Based on information from Accelerating into trouble. (2010, February 11). Economist . Retrieved March 8, 2010, from http://www.economist.com/opinion/displaystory.cfm?story_id=15498249 ; Dickson, D. (2010, February 10). Toyota’s bumps began with race for growth. Washington Times , p. 1; Maynard, M., Tabuchi, H., Bradsher, K., & Parris, M. (2010, February 7). Toyota has a pattern of slow response on safety issues. New York Times , p. 1; Simon, B. (2010, February 24). LaHood voices concerns over Toyota culture. Financial Times . Retrieved March 10, 2010, from http://www.ft.com/cms/s/0/11708d7c-20d7-11df-b920-00144feab49a.html ; Werhane, P., & Moriarty, B. (2009). Moral imagination and management decision making. Business Roundtable Institute for Corporate Ethics . Retrieved April 30, 2010, from http://www.corporate-ethics.org/pdf/moral_imagination.pdf ; Atlman, A. (2010, February 24). Congress puts Toyota (and Toyoda) in the hot seat. Time . Retrieved March 11, 2010, from http://www.time.com/time/nation/article/0,8599,1967654,00.html .

Discussion Questions

  • Do you think Toyota’s organizational structure and norms are explicitly formalized in rules, or do the norms seem to be more inherent in the culture of the organization?
  • What are the pros and cons of Toyota’s structure?
  • What elements of business would you suggest remain the same and what elements might need revising?
  • What are the most important elements of Toyota’s organizational structure?

Organizational Behavior Copyright © 2017 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Organizational structure and success of international joint ventures in emerging economies: the case of Spanish–Moroccan SMEs

  • Original Paper
  • Published: 07 December 2012
  • Volume 7 , pages 499–512, ( 2013 )

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  • Eva Argente-Linares 1 ,
  • M. Victoria López-Pérez 1 &
  • Lázaro Rodríguez-Ariza 1  

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One of the most common ways in which SMEs internationalize their business is through the creation of joint ventures; nevertheless, many of these fail. To avoid this risk, it is important to identify the factors that favour the continuity of such enterprises. The aim of this paper is to analyse the factors related to organizational structure that determine the success of international joint ventures between SMEs in emerging economies, taking as the particular area of study the question of joint ventures between Spanish and Moroccan firms, located in Morocco. The research hypotheses were tested using a linear regression model applied to a sample of 210 international joint ventures. The results obtained from a structured survey show that, with respect to the success of the partnership, significant factors include the existence of majority ownership by the foreign partner, management by a local CEO and the effort made by each party to adapt to the management style of the other. This research contributes to the knowledge of the main factors related to the organizational structure of joint ventures that influence the level of success achieved. The value provided by this research lies in the breadth of the sample examined, in its focus on a very common type of partnership between SMEs, on which very little has been previously studied, and in the fact that the results obtained are extensible to other realities, such as partnerships between European companies and those from countries with similar characteristics (located in Africa or in countries where an Arab culture prevails).

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1 Introduction

As a result of the internationalization of the economy and the existence of a global market, partnerships between companies from different countries are becoming a common means of expanding the geographic areas in which they operate (Levy 2007 ).

Companies based in developed markets are beginning to operate in emerging markets like Central and Eastern Europe, Brazil, Africa, China and India (Jansson 2007 ; Jansson and Sandberg 2008 ) and these markets have acquired particular importance in international trade in recent decades (Cavusgil et al. 2002 ). Emerging economies present significant business opportunities, thanks to their growing integration within the global economy and increasing openness to other markets (Zhang et al. 2007 ).

One way to access these new markets is through cooperation agreements, among which the joint venture is the formula most commonly adopted (Lee and Beamish 1995 ; Prahalad and Hammond 2002 ), as it enables firms to circumvent restrictions on ownership or access to financing. The joint venture is considered as a local business, and thus barriers to entry may be sidestepped (Mohr and Puck 2005 ; Freeman et al. 2006 ) and restrictions on foreign companies avoided. The existence of a local partner provides knowledge of the market, while the local firm may gain access to new technologies (Folta 1998 ; Djankov and Hoekman 2000 ; Buckley and Casson 1998 ), and the costs and risks are shared between the two partners (Barkema and Vermeulen 1997 ; Elg 2000 ).

Most studies of business internationalization have focused on large multinational companies, and the internationalization of SMEs has remained somewhat neglected as a research topic (Coviello and Munro 1997 ; Coviello and McAuley 1999 ; Fillis 2001 ; Hohenthal 2001 ). As SMEs form a significant part of the business sector in most economies, and in view of the growing internationalization of their activities (European Network for SME Research 2004 ), it is important to determine which aspects influence the success of this internationalization.

In Morocco, according to the Organization for Economic Cooperation and Development (OECD 2005 ), SMEs account for 95 % of the business production base. It is therefore important to consider the factors related to the success of this type of business. As observed above, few studies have focused on SMEs, especially those in emerging countries (Lu and Beamisch 2009 ; Kirby and Kaiser 2003 ), and fewer have analysed partnerships between SMEs. According to previous studies, research results for large companies are not transferrable to SMEs (Shuman and Seeger 1986 ; Etemad 2004 ), and so an in-depth examination of international joint ventures (IJVs) between SMEs is necessary in order to determine the factors that most influence their success.

In this study we examine the factors related to organizational structure that determine the success of international joint ventures between SMEs in emerging countries, and especially Spanish–Moroccan SMEs operating in Morocco. The particular contribution of this research is that the conclusions derived may be applicable to other IJVs with similar characteristics, such as partnerships between European companies and those from countries located in Africa or in Arab countries, or partnerships in which similar goals are pursued, such as the use of these countries as a platform to access neighbouring third countries, or those with which the country of one of the partners has trade agreements.

In Morocco, as in other countries, the institutional framework has facilitated the entry of foreign companies, via joint ventures with local partners. As a result of Morocco’s geographic proximity with Spain, the increasing demand for goods and services, existing trade agreements and a strategic location that facilitates access to the Middle East and the rest of Africa (Economic and Commercial Office of Spain in Rabat 2010 ), many Spanish companies have established joint ventures with Moroccan partners (Moroccan Guide 2010 ). Such partnerships are favoured by Morocco’s accession to the World Trade Organization, its agreements with the European Union, its free trade agreements with Turkey and the United States, and the Agadir Agreement, signed with Tunisia, Egypt and Jordan. All these factors could make Morocco a platform for firms wishing to enter new markets, to which direct access may not be possible.

Moreover, IJVs have been widely used by Spanish firms to extend their activities to geographically close countries and, especially to Morocco, which is an area of priority interest following the decades-long history of relationships between the two countries, and in view of the trade agreements signed. Morocco, as an emerging economy, provides characteristics that have enabled Spanish firms to access new markets, principally in Africa.

The main objective of the present study is to contribute to our understanding of IJVs and their success in emerging economies, with particular reference to the Moroccan economy. The rest of the paper is structured as follows: the second section sets out the reasons for focusing on the degree of satisfaction among business partners as a measure of the success of IJVs. Section 3 describes the key factors related to success in Spanish–Moroccan joint ventures, and the fourth presents the research methodology and discusses the results obtained. Finally, the main conclusions are drawn, and some recommendations made for companies wishing to enter an emerging economy through this kind of partnership.

2 Measuring success in international joint ventures between SMEs

The primary goal of a joint venture is to succeed; this concept can refer to achieving a certain level of financial performance or to ensuring the long-term permanence of the partnership, among other possibilities. Most studies of large companies focus on objective measures of financial performance, such as indicators of profitability, growth and costs (Geringer and Hebert 1991 ; Ren et al. 2009 ). However, this type of parameter is difficult to ascertain in joint ventures between SMEs (Ren et al. 2009 ; Oxley 2009 ), and this problem is accentuated in institutional settings such as emerging countries, where there is usually no legal obligation to disclose financial information, as is the case in Morocco.

To compensate for the absence of objective data, and taking into account the need to achieve the objectives proposed (Geringer and Hebert 1991 ; Yan and Zeng 1999 ), subjective measures such as perceptions are often used to evaluate business performance (Anderson 1990 ; Ariño 2003 ; Kraus et al. 2012 ). One measure that is frequently employed is that of satisfaction with the results obtained (Covin and Slevin 1989 ; Ariño 2003 ; Wang and Suh 2009 ). Although this information may have some shortcomings (Ren et al. 2009 ), it is accepted as a valid form of measurement in contexts such as the present (Geringer and Hebert 1991 ; Kale et al. 2002 ).

Therefore, we measure success as the satisfaction of each partner with the results achieved from the IJV, according to the measurement scale proposed by Covin and Slevin ( 1989 ), which reflects the perception of sales, sales growth, cash flows, gross and net profit margin, return on sales and return on investment.

3 Organizational structure as a significant factor in the success of international joint ventures in emerging countries

The main aim of this study is to determine which factors influence the success of joint ventures set up in emerging economies (Kirby and Kaiser 2003 ). According to Agency Theory, one such factor is the possible conflict between principal and agent, and one means of alleviating any problem arising from the existence of divergent goals and interests is through the establishment of control relationships (Denis and McConnell 2003 ; Chernykh 2008 ), incorporated into the firm’s organizational structure. For this reason, we analyse the aspects of organizational structure that may influence business success. The organizational structure of international joint ventures is determined mainly by the form of ownership (Delios and Beamish 1999 ) and by the type of management applied (Das and Kumar 2010 ; Shenkar and Zeira 1992 ).

3.1 Control via ownership

An IJV involves the creation of a new entity by two or more partners from different countries (Desai et al. 2004 ; Geringer and Hebert 1989 ), which in the present case are Spain and Morocco. The presence of partners of different nationalities makes the ownership structure a key element in the agreement (Delios and Beamish 1999 ), as it reflects the ability of each partner to influence the other in deciding upon management methods and decisions (Demsetz 1983 ; Blodgett 1991 , 1992 ). The proportion of share capital held by each partner is a crucial aspect in determining their control of decision making (Geringer and Hebert 1989 ).

The separation of ownership and control can provoke agency problems. One way of alleviating these problems is through the concentration of company ownership. Thus, the majority ownership of shares of the company, which enables decision-making control, is considered to be a mechanism that enables conflicts to be avoided (Chen et al. 2006 ). Majority ownership by one of the partners is associated with an allocation of roles and responsibilities between them, and enables the contributions of each to be clearly identified, thus facilitating the alignment of the IJV’s goals with those of the partners (Das and Teng 1998 , 2000 ). In this case, under agency theory, majority ownership of the share capital enables effective control and reduces potential opportunistic behaviour (Blodgett 1992 ; Killing 1983 ), thereby increasing the IJV’s chances of success. On the basis of these arguments, the following hypothesis is proposed:

Hypothesis 1

There is a positive relationship between majority ownership and the degree of satisfaction of the partners in a joint venture between Spanish and Moroccan SMEs.

3.2 Management in international joint ventures

As in the case of the ownership structure, the presence of two different cultures is a decisive factor in the management of these partnerships (Shenkar and Zeira 1992 ). The management structure adopted for IJVs is very important, to the extent that management success is related to the characteristics and actions of the company’s management team (Hambrick and Mason 1984 ). Specifically, the CEO is crucial to the success of these companies (Li et al. 1999 ). According to agency theory, the decisions taken by CEOs affect the wealth of the partners in IJVs (Reuer and Miller 1997), which in turn affects the success of these partnerships.

3.2.1 The importance of the local CEO

It is especially important to establish who will be responsible for managing the company (Shenkar and Zeira 1992 ). The first choice to be taken is between appointing a foreign or a local CEO. While the foreigner can provide new knowledge about business management (Li et al. 1999 ; Mohedano-Suanes and Benavides-Espinosa 2012 ), and seek to implement the methods used in his/her country of origin, the existence of a local CEO can help overcome cultural barriers and possible conflicts in everyday management; this latter question is particularly important with respect to countries where cultural barriers are high. Furthermore, management’s knowledge of the local market (business practices and consumer tastes) and institutions, together with the network of country-specific relationships (Choi and Beamish 2004 ; García-Canal 2004 ), are factors that can positively affect the success of the partnership. In this context, the following research hypothesis is proposed:

Hypothesis 2

There is a positive relationship between the existence of a local CEO and the partners’ degree of satisfaction in joint ventures between Spanish and Moroccan SMEs.

3.2.2 Adaptation to the partner’s management style

Notwithstanding the above advantages, the existence of two partners of different nationalities can produce differences in culture and management approaches between the local and foreign partners (Das and Kumar 2010 ; Mohr and Puck 2005 ). These differences may give rise to conflicts and thus affect the success of the IJV (Kandemir et al. 2006 ). Nevertheless, the IJV will be satisfactory to all its members if it incorporates the contributions of each partner (Lin and Germain 1999 ) and reconciles their individual styles and behaviours (Levinson and Asahi 1995 ), thus creating an organizational culture that is specific to the new entity.

Accordingly, each partner should seek to understand the organizational culture of the other, and perhaps even integrate elements of this other culture into its own (Lin and Germain 1999 ). The local partner may learn novel management approaches (Li et al. 1999 ) or obtain resources such as advanced technology (Robertson and Gatignon 1998 ; García-Canal 2004 ), while the foreign partner can thus overcome the barriers arising from its lack of specific knowledge of the market, the institutional environment or the know-how in the local context, which in our case is Morocco (Hitt et al. 2000 ; Chand and Katou 2012 ). The existence of continuous feedback makes it possible to resolve differences between the partners and thus improve the success of the relationship and of the joint venture. Taking into account these considerations, the following research hypothesis is proposed:

Hypothesis 3

In joint ventures between Spanish and Moroccan SMEs, there is a positive relationship between the adaptation of each partner’s management style to that of the other and the degree of satisfaction achieved.

4 Research methodology

This study examines international capital joint ventures to which each partner contributes capital, and shares in the returns obtained (Geringer 1988 ), with particular reference to IJVs between Spanish and Moroccan SMEs operating in Morocco.

4.1 Sample profile

According to the Moroccan Ministry of Foreign Trade, in September 2009, 720 companies were involved in Spanish–Moroccan IJVs. After eliminating those which had ceased trading or whose contact details were incorrect, the final population for this study was 645 valid companies, operating in diverse economic sectors.

We addressed a structured survey to the CEOs of these IJVs, on issues related to the partners’ satisfaction with the results obtained (Covin and Slevin 1989 ), the distribution of ownership between partners, the composition of the management team, the adaptation of each partner to the other (Lin and Germain 1999 ), and the reasons for entering the Moroccan market. We also compiled data on the age of the partnership, its size, the sector in which it was operating and the existence of previous experiences in joint ventures.

The final sample population was constituted of 210 valid questionnaires returned, of which 65 % corresponded to small businesses and 35 % to medium sized ones. In this study, we used the definition of SMEs proposed by the European Commission, i.e., a company that employs fewer than 250 employees (Commission Recommendation 2003 /361/EC). The 210 answers received, equivalent to a response rate of 32.5 %, of the population was considered satisfactory. The confidence level was 95 % and the sampling error was 5.6 %.

4.2 Variables and scales used in the study

4.2.1 dependent variable.

Satisfaction of the company : This parameter was measured using the Covin and Slevin ( 1989 ) scale, based on the following variables for financial performance: perception of sales, sales growth, cash flow, gross and net profit margin, return on sales and return on investment. The mean of the variable was 11.94 and the standard deviation was 3.75. The internal consistency of the variable was tested with Cronbach’s alpha, producing a score of 0.942.

4.2.2 Independent variables

Ownership by Spanish partners : This is a categorical variable that measures the percentage of ownership of the joint venture held by the Spanish partners. The percentage is scored as follows: 1 = Minimal (0–5 %), 2 = Low (5–20 %), 3 = Medium (20–50 %), 4 = High (>50 %).

Ownership by Moroccan partners : This is a categorical variable that measures the percentage of ownership of the joint venture held by the Moroccan partners. The percentage is scored as follows: 1 = Minimal (0–5 %), 2 = Low (5–20 %), 3 = Medium (20–50 %), 4 = High (>50 %).

Spanish Management : This is a discrete variable that measures the number of Spanish managers in the IJV.

Moroccan Management : This is a discrete variable that measures the number of Moroccan managers in the IJV.

Adaptation to the partner’s management style : This variable measures each partner’s degree of cultural adaptation. Following the scale proposed by Lin and Germain ( 1999 ), this is defined with respect to two issues related to learning the other partner’s management style within an IJV and the adaptation to the other partner’s way of doing business. The value, in both cases, ranges from 5 (full alignment) to 1 (no adjustment), on a 5-point Likert scale. The internal consistency of the variable was tested with Cronbach’s alpha value, and produced a result of 0.856.

To characterize the degree of cultural adaptation, these two questions were subjected to an exploratory factor analysis. The principal component analysis provided a single factor with a value greater than one (1.75), thus proving that the variable does measure the adaptation effect in question.

4.2.3 Control variables

In addition to the above, we included four control variables related to IJVs: the experience, industry sector, age and size of each firm. Experience was measured by a dichotomous variable taking the value 1 if the members had participated in IJVs before and the value 0 otherwise (Chen et al. 2009 ; Teng and Das 2008 ). Industry sector was measured using a discrete variable taking values from 1 to 13, in accordance with the CNAE classification of business sectors, taking into account that the initial values refer to more labour intensive sectors (agriculture, manufacturing, etc.) and the final ones to less labour intensive activities (administration, education, etc.). The age of the IJV was measured according to the number of years the company had been operating since its establishment (Chen et al. 2009 ; Pak et al. 2009 ). The size of the IJV was measured by the number of full-time employees (Muthusamy et al. 2005).

4.3 Results analysis

Table  1 shows the descriptive statistics for the variables, and Table  2 presents the correlations between these variables.

With respect to the correlations between the variables, we observed significant relations between the degree of satisfaction and Spanish ownership, the presence of Moroccan managers in the firm, the adaptation to the partner’s style, the age of the partnership and the size of the firm. These relations are examined in detail below, in our analysis of the regression results.

A majority ownership by the Spanish partner was significantly negatively correlated with the age of the partnership, i.e., the longer the partnership has been established, the lower the level of foreign ownership. This situation is coherent with the fact that this form of business relationship is used to access a new market (Prahalad and Hammond 2002 ), but once the new firm is up and running, the relation between the partners will often change.

We also observed a significant positive correlation between Spanish majority ownership and the presence of Moroccan managers, which could mean that foreign partners often prefer local managers, who have greater knowledge of market conditions and local institutions (Choi and Beamish 2004 ).

The variable reflecting majority Moroccan ownership of the firm is positively related with the presence of Moroccan managers and with the age of the firm. In this type of company, foreign partners often contribute technology and knowledge (Li et al. 1999 ), while the majority ownership and management remain in Moroccan hands (García-Canal 2004 ). There was also a positive relation between Moroccan ownership and the age of the firm, i.e., the level of Moroccan ownership tends to rise as the firm becomes longer established, which is coherent with the result obtained for the ‘ownership’ variable with respect to the Spanish partners.

The variable ‘Spanish management’ is significantly and positively correlated with previous IJV experience, i.e. when there are Spanish managers in the partnership, its members are more likely to have been involved in a previous joint venture. Such past experience provides knowledge on how to address new situations (Chen et al. 2009 ) and there is less need to have local managers.

Finally, the variable ‘adaptation’ is significantly and positively correlated with prior experience and company size. Prior experience provides specific management knowledge enabling the creation of an organizational culture different from that of each partner within the joint venture. This relationship also shows that when companies are larger and have more resources and a greater ability to diversify functions, they tend to create a new organizational culture, specific to the joint venture firm (Levinson and Asahi 1995 ).

To assess the degree of multicollinearity, the variance inflation factor (VIF) of all the variables was analyzed and, in all cases, no such problem was found. Specifically, while VIF values below 10 are acceptable (Gujarati 2004) and, in general, the existing literature recommends values below 5 (Hair et al. 1999), in the sample, all these values are below 2.

To test the hypotheses, we propose the following linear regression model; the results for this are shown in Table  3 .

In relation to the ownership of IJVs, the results show that there is a positive and statistically significant relationship between ownership by the Spanish partner and the firm’s success. These results verify hypothesis 2 and are consistent with those obtained by previous studies (Blodgett 1992 ; Killing 1983 ). As discussed in previous sections, the proportion of capital held by each of the partners is relevant to determining the control of the firm (Geringer and Hebert 1989 ). Thus, majority ownership by the foreign (Spanish) partner makes opportunistic behaviour less likely and reduces potential conflicts (Blodgett 1991 , 1992 ; Killing 1983 ). Moreover, the distribution of functions and responsibilities clarifies the contributions to be made by each partner, and so the firm’s objectives can be matched to those of the partners (Das and Teng 2001), with a positive impact on the degree of success achieved.

The CEO of the firm may be either Spanish or Moroccan. The presence of Moroccan managers was found to be a statistically significant variable, and constituted a factor influencing the success of IJVs (Hambrick and Mason 1984 ; Li et al. 1999 ). Therefore, hypothesis 3 is accepted. A (Spanish) CEO might attempt to apply the management procedures followed in his/her own country to the firm located in the emerging country, and conflict might thus arise; in addition, he/she might not possess the know-how to manage specific aspects of the local market. However, if management responsibilities are undertaken by local (Moroccan) personnel with specific knowledge of the market, the institutional environment and the functioning of the workforce, the firm’s results, measured through the perception of each partner, tend to be enhanced (García-Canal 2004 ).

Regarding the adaptation to the other partner’s management style, it is important to consider the important role played by cultural barriers within a country, especially when an IJV is located in an emerging economy. According to the results obtained, cultural adaptation is positively and significantly related to the success of an IJV, and therefore hypothesis 4 is accepted. In agreement with previous studies (Lin and Germain 1999 ; Levinson and Asahi 1995 ) we found that the adaptation of each partner to the management style and behaviour of the other is crucial to achieving a successful partnership and has a positive influence on the satisfaction of both parties (Lin and Germain 1999 ).

Two of the control variables, the business sector and the size of the IJV, were found to be statistically significant. Thus, the firms that achieve most success, measured by the degree of satisfaction produced, tend to be small and to belong to sectors that are less labour intensive. In other words, the larger the IJV, the lower the degree of satisfaction among its partners, perhaps due to the existence of serious conflicts or difficulties in controlling the firm.

5 Conclusions and implications for further study

As a result of geographic proximity and a decades-long tradition of business relations between Spain and Morocco, a significant proportion of the joint ventures located in Morocco include the participation of Spanish companies. These partnerships facilitate access to new markets.

The results obtained in this study highlight the factors to which most attention should be paid in Spanish–Moroccan joint ventures between SMEs in order to maximise the possibilities of their success.

These results can be extended to other IJVs with similar characteristics, such as those involving European companies, on the one hand, and those from Arab-culture or African countries, on the other, or partnerships in which similar goals are pursued, such as access to new markets or the use of these countries as a platform to access neighbouring third countries, or those with which the country of one of the partners have trade agreements.

Our study shows there is a relationship between the partners’ degree of satisfaction and certain factors related to organizational structure. Thus, the satisfaction achieved is influenced by each partner’s level of adaptation to the other’s management style. The size, and therefore the existence of greater resources and capabilities to diversify the firm’s functions, affects the creation of an organizational culture that is specific to the new entity. Furthermore, the degree of satisfaction is influenced by whether or not the foreign partner has the control, through majority ownership, and by whether management of the firm is exercised by a local CEO with greater knowledge of the market and institutions. Hence, there is a significant and positive correlation between the local management of the IJV being exercised by a Moroccan CEO and the existence of majority ownership, whether Spanish or Moroccan. Nevertheless, when the Spanish partner has previous experience of participation in an IJV that has provided it with knowledge of how to handle new environments, the partnership does not usually have a local CEO. All these factors influence the members’ degree of satisfaction with the results achieved, and thus the long-term continuity of the IJV.

This subject is of considerable and continuing interest, and hence further study is needed on the relationship between organizational structure and the success of IJVs between companies from different countries. Specifically, such research could investigate the success achieved by the IJV members considering variables that may indirectly mediate the relationship between organizational structure and the success of the IJV (e.g. trust in the relationship or the incidence of cultural factors).

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Acknowledgments

This study was funded by the Spanish Agency for International Development, in its Programme for Inter-University Cooperation and Scientific Research between Spain and Algeria, Egypt, Jordan, Morocco and Tunisia (PCI-Mediterranean). Project No. A/021477/08.

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Argente-Linares, E., López-Pérez, M.V. & Rodríguez-Ariza, L. Organizational structure and success of international joint ventures in emerging economies: the case of Spanish–Moroccan SMEs. Rev Manag Sci 7 , 499–512 (2013). https://doi.org/10.1007/s11846-012-0097-6

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Org Strategy , Org structure

How to Structure an International Organization

In these days of globalized business, organizations are faced with international competitors in their domestic markets, as well as competitive forces when operating abroad.

Being able to handle country-specific market differences, cultures and staff is going to be critical if a company’s international operations are to be effective.

In this article, when we use the term ‘ international organization ’ we are referring to a company operating across multiple national borders , as distinct from an ‘international institution’.

Confusingly, the latter can also be known as an international organization, but is better described as an 'intergovernmental organization'. These are set up to establish a common set of rules between countries. Examples include the United Nations, the World Health Organization, OECD, INTERPOL and NATO.

So, we are not talking about the UN or the WHO here, we are talking about companies that have broad international operations, selling products and services across multiple countries .

Going International is Not Easy

The way a company organizes itself can have dramatic effects on its overall performance, and getting this piece right when going international is critically important.

Sadly, it is not usually done well. In a recent McKinsey survey of more than 300 executives, only 44% said they felt their organizational structure created clear accountabilities. (1)

“Global companies find structure difficult because there are no simple solutions,” said the McKinsey report, “Most global structural options create challenges as well as benefits.”

For example, many international organizations have strong, set rules laid down for how their products and services should be branded, sold and distributed across the world.

A McDonald’s Big Mac is the same Big Mac wherever it is bought, the world over. However, some global companies are finding problems with this approach, with the standardization producing limitations on certain markets, reducing the ability to respond to local customer needs.

Despite being a global franchise brand, McDonald’s has not gone down well in the Caribbean. Despite opening 11 outlets in Jamaica in the mid-1990's, the last store closed in 2005.

Reasons included a sluggish economy and the relative high cost price of the franchise and its training requirements. Fundamentally though, it was the product itself. The locals felt the burgers and meals were not big enough to quench the appetite, and tasted bland. Even an attempt to introduce a local Jamaican 'jerk chicken burger' with spicy sauce fell flat.

In Barbados, the Golden Arches only lasted one year; and they pulled out of Trinidad and Tobago altogether in 2003.

Former_McDonalds,_Barbados

Look familiar? A former McDonald's outlet in Barbados now houses a finance company. Photo by CaribDigita, Public domain, via Wikimedia Commons

Functional International Organizational Structure

When a company commences international operations, it might start by exporting to those markets from a home base.

Assuming the company organizes itself in a traditional functional sense, then these exports may be covered by the sales department, possibly with an additional department to the domestic market sales:

International Exports Structure

Exports Divisional Structure

The exports department might be headed up by a VP of International Sales or a Manager of Exports.

As the foreign operations grow, you might see a change in organizational structure, with a whole international division being created. A Head of the International Division may have several country line managers reporting to them, with each subsidiary country having its own operations, finance, marketing and sales departments within in:

International Divisional Structure

International Divisional Structure

The final stage of internationalization will be when the organization is operating across the world, on several continents (America, Europe and Asia, for example), and moves to a global divisional structure, also by function.

Here, the company may best be described as a Multinational Corporation (MNC), with the independence of decision-making driven down to the country-specific level, albeit across the top of an overall organizational mission for the entire company.

Advantages of Global Functional Organization

  • Specialization of functional expertise at country level
  • Centralized control at global headquarters
  • International focus at top management level
  • Plenty of opportunity for progression within company
  • Strong breeding ground for future CEOs, from among country Heads

Disadvantages of Global Functional Organization

  • Difficulties in managing cross-country coordination of mission
  • Complexities of various product lines
  • Cultural differences between countries
  • Separates domestic and international managers
  • Other International Organization Structures

Global Product Organizational Structure

There are many other ways of organizing international organizations: one is the global product structure. In this organization, the main functions (marketing, finance, HR…) remain at the global headquarters, with the company separated into various product departments, spread around the world:

Global Product Structure

Global Product Structure

Advantages of Global Product Organization

  • Specialization of in-country product knowledge
  • Effective in carrying out product modifications for different markets
  • Close coordination between technology and marketing
  • International and domestic management operate at the same level

Disadvantages of Global Product Organization

  • Replication of functional tasks for each territory
  • Less attention paid to worldwide strategy
  • Sales in mature markets have most focus, with less invested in R&D
  • Can be a costlier structure to manage, compared to functional

Other options for global organizations include a geographical structure, or some combination of more than one dimension such as a matrix structure.

Alphabet, the company formerly known as Google , arranges itself with one large department working on the core product, Google, with others doing ‘other bets’ such as Google X, AI or cloud operations. It also blends in a functional aspect, creating cross-functional teams that allow the company to ‘feel flat’.

At Google, there is more of an emphasis on intelligence than seniority, with staff working in teams responsible for various products. From the outside looking in, this looks very much like a matrix structure ...

Interactive Org Chart - use tools to zoom, view job details, etc... ©Functionly

Google (Alphabet) uses a cross-functional team-based organizational structure, like a matrix: functionally based, product-orientated and relatively flat. Source Material: 4-week MBA.

: Functionly can help!

The best organizations will define where their organization is now, but also envision where the organization needs to go in the future. Such as going international.

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  • Structuring your organization to meet global aspirations (Report) , S Haywood & R Katz, McKinsey, 2012
  • International Organizational Structures , Dhruv Jaiswal, Your Article Library

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International Business Strategy

Due to increasing globalisation the past decades, even smaller companies have been able to cross national borders and do business abroad. Consequently, many terms have been given to companies operating in multiple countries: multinationals, global businesses, transnational companies, international firms et cetera. The aim of this article is to clearly define these different terms and see how they differ from each other, because they do differ! An often used framework to distinguish multiple forms of internationally operating businesses is the Bartlett & Ghoshal Matrix (1989). Bartlett and Ghoshal clustered these businesses based on two criteria: global integration and local responsiveness . Businesses that are highly globally integrated have the objective to reduce costs as much as possible by creating economies of scale through a more standarized product offering worldwide. Business that are highly locally responsive have as extra objective to adapt products and services to specific local needs. It seems that these strategic options are mutually exclusive, but there are companies trying to be both globally integrated and locally responsive as can be seen in some examples below. Together these two factors generate four types of strategies that internationally operating businesses can pursue: Multidomestic , Global , Transnational and International  strategies.

Figure 1: Bartlett and Ghoshal’s Typology of Multinational Companies: Global, Transnational, International and Multidomestic Strategy

Multidomestic: Low Integration and High Responsiveness

Companies with a multidomestic strategy have as aim to meet the needs and requirements of the local markets worldwide by customizing and tailoring their products and services extensively. In addition, they have little pressure for global integration. Consequently, multidomestic firms often have a very decentralized and loosely coupled structure where subsidiaries worldwide are operating relatively autonomously and independent from the headquarter. A great example of a multidomestic company is Nestlé. Nestlé uses a unique marketing and sales approach for each of the markets in which it operates. Furthermore, it adapts its products to local tastes by offering different products in different markets.

organizational structure international business case study

Global: High Integration and Low Responsiveness

Global companies are the opposite of multidomestic companies. They offer a standarized product worldwide and have the goal to maximize efficiencies in order to recude costs as much as possible. Global companies are highly centralized and subsidiaries are often very dependent on the HQ. Their main role is to implement the parent company’s decisions and to act as pipelines of products and strategies. This model is also known as the hub-and-spoke model. Pharmaceutical companies such as Pfizer can be considered global companies.

Pfizer | Medische Informatie | Netherlands

Transnational: High Integration and High Responsiveness

The transnational company has characteristics of both the global and multidomestic firm. Its aim is to maximize local responsiveness but also to gain benefits from global integration. Even though this seems impossible, it is actually perfectly doable when taking the whole value chain into considerations. Transnational companies often try to create economies of scale more upstream in the value chain and be more flexible and locally adaptive in downstream activities such as marketing and sales. In terms of organizational design, a transnational company is characterised by an integrated and interdependent network of subsidiaries all over the world. These subsidiaries have strategic roles and act as centres of excellence. Due to efficient knowledge and expertise exchange between subsidiaries, the company in general is able to meet both strategic objectives. A great example of a transnational company is Unilever.

Unilever logo

International: Low Integration and Low Responsiveness

Bartlett and Ghoshal originally didn’t include this type in their typologies. Other authors on the other hand have attributed the name to the lower left corner of the matrix. An international company therefore has little need for local adaption and global integration. The majority of the value chain activities will be maintained at the headquarter. This strategy is also often referred to as an exporting strategy. Products are produced in the company’s home country and send to customers all over the world. Subsidiaries, if any, are functioning in this case more like local channels through which the products are being sold to the end-consumer. Large wine producers from countries such as France and Italy are great examples of international companies.

Figure 2: Organizational structures of the Bartlett and Ghoshal’s MNC Typology: Global, Transnational, International and Multidomestic Strategy

Table 1: Characteristics of MNC Types (Multidomestic, Global, Transnational) – Bartlett and Ghoshal

MNE Archetypes of Administrative Heritage

Bartlett and Ghoshal are not the only academics who have been trying to classify internationally operating companies. Verbeke (2013) has looked at a large number of multinational enterprises (MNE’s) and their administrative heritage, and distinguished four archetypes of MNE’s: Centralized Exporter, International Projector, International Coordinator and the Multi-centred MNE. Each will be elaborated on below.

Centralized Exporter

The centralized exporter is a home-country managed firm that trades and sells products internationally. In this case, most production facilities are located in the home country and foreign subsidiaries, if any, are functioning largely as facilitators for efficient home country production. Products are standarized and only minor customer-oriented activities are done abroad. The centralized exporter is very close to an international or global company in Bartlett and Ghoshal’s typology.

International Projector

The second archetype is the international projector. These kind of companies build upon a tradition of transferring its proprietary knowledge, which was developed in the home country, to foreign subsidiaries across the globe. These subsidiaries are essentially clones of the home operations, since the business model and its success recipe are simply copied and pasted abroad. The automotive company Ford is known for this strategy in its early days in the 1900s. Disneyland is another great example of a successful business model that has been copied all over the world.

International Coordinator

The international coordinator does not only rely on knowledge and resources from its home country as could be seen in the two archetypes above. Instead the international coordinator manages international operations both upstream and downstream the value chain through a tightly-controlled but still flexible logistics function. They tap into location advantages from multiple countries in order to form an efficient vertical value chain across borders. It is therefore perfectly possible that the raw materials are bought and manufactured in multiple countries and that the product is being assembled elsewhere where labor is cheapest. A good example of an international coordinator is Apple. The components of Apple’s flagship product, the iPhone, are bought from multiple suppliers all over the world and are finally assembled in China. Design and marketing on the other hand are still largely done in California where Apple is headquartered.

Apple logo

Multicentred MNE

Finally, the multicentred MNE consist of a set of entrepreneurial subsidiaries abroad. Local responsiveness is the foundation of this company’s strategy. The only thing that holds these firms together are the shared financial governance and the identity and interests of the founding fathers and owners of the company. Ultimately the multicentred MNE should be viewed as a portfolio of largely autonomous and independent businesses. Bartlett and Ghoshal’s multidomestic strategy is most closely associated with this archetype. Philips is known for using this approach in the early years of its existance.

Philips logo

Figure 3: MNE Archetypes of Administrative Heritage (Verbeke, 2013): Centralized Exporter, International Projector, International Coordinator and Multi-centred MNE

International Business In Sum

Taken this all together, there are many ways in which companies can do business abroad. When a firm has economic operations located in at least two countries, they are often referred to as multinational enterprises or companies (MNE’s or MNC’s). But the way in which they do business abroad determines whether we can call it an international, global or transnational company for instance. By being aware of these different types of multinationals, you will be better able to structure your own strategic options when going global. In case you want to know more about foreign market entry options, you might want to read more about the  OLI paradigm .

Further Reading:

  • Bartlett, C.A. & Ghoshal, S. (1989). Managing Across Borders. The Transnational Solution. Boston: Harvard Business School Press.
  • Harzing, A.W. (2000). An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies. Journal of International Business Studies.
  • Verbeke, A. (2013). International Business Strategy. Cambridge University Press.

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4 thoughts on “ International Business Strategy ”

GOOD ENOUGH FOR YOUNG BUSINESS MEN AS ME

Well done and informative. This helped me understand the terms better. Thanks.

Amazing article, brought clarity to all sub types, along with examples. Thank you for this.

The content was very informative and understandable. The examples used made it practical. Nice piece!

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IBM’s Organizational Structure & Its Characteristics: An Analysis

IBM organizational structure design, information technology corporate structure divisions, departments, company hierarchy, business analysis case study

IBM (International Business Machines Corporation) uses its organizational structure as a strategic means to streamline its product development and delivery in the information technology market. Structural characteristics enable the alignment between various aspects of the business and the strategic objectives of IBM’s mission statement and vision statement . A firm’s organizational structure or corporate structure defines the makeup of the business, in terms of form, systems of interaction among components, and the design that influences processes. For example, IBM’s corporate structure determines how its regional offices communicate with each other. The structural features are also key factors that influence the interactions among the company’s employees, who are called IBMers. These conditions affect managers’ decisions at IBM’s headquarters, especially in terms of how strategies are implemented throughout the company structure’s hierarchy. Such business impact and significance put IBM’s organizational structure as one of the basic variables that dictate the performance of the business and its ability to effectively respond to challenges in the industry.

Known as Big Blue, IBM has an organizational structure that reflects the priorities of the business in its organizational design. For example, emphasis on continuous innovation and product development is represented through the company’s main structural characteristic that considers the management of various product types. Such innovation and product development mirror the priorities in IBM’s strategies for growth and expansion in international operations. Also, employees fulfill their job requirements and make decisions within their limits based on the corporate structure. These effects are an indication of the significance of structural features in facilitating IBM’s success in the global information technology industry.

IBM’s Organizational Structure Type & Characteristics

IBM has a product-type divisional organizational structure . The main characteristic of this type of organizational structure is the representation of business processes involved in managing the development, production, distribution, and sale of products. For example, product-type divisions or segments are a primary structural feature that determines how the business hierarchy addresses opportunities in the information technology market. Thus, the business structure supports strategies and tactics that push for competitive products. The following characteristics define IBM’s corporate structure:

  • Product-type segments
  • Function-based departments
  • Geographic divisions

Product-Type Segments . The product-type segments in the organizational structure represent the core business offerings of IBM. These segments are recognized as reportable segments in the company’s annual filings with the U.S. Securities and Exchange Commission. This primary structural attribute is based on efforts to focus on the firm’s core businesses that match the transformation of the industry and market. For example, through the Infrastructure Segment, the company addresses an increasing market demand for cloud-based solutions. IBM’s corporate structure has the following product-type segments:

  • Infrastructure

Function-Based Departments . This secondary characteristic of IBM’s organizational structure focuses on key functions that support the global information technology business. The main objective of having this structural feature is to provide organization-wide support for each of the product-type divisions. For example, in terms of sales and marketing, the company’s Communications Department supports all the product-type divisions. The Research Department contributes to the company’s competitiveness despite significant competition involving other technology firms, like Intel , Google (Alphabet) , Amazon , and Microsoft , as illustrated in the Five Forces analysis of IBM . For instance, significant R&D investment in the department ensures that the company continues developing and offering competitive products in the global market. The following are the function-based departments or offices in IBM’s corporate structure:

  • Communications
  • Human Resources
  • Privacy and Trust

Geographic Divisions . This characteristic of IBM’s corporate structure is based on the need to effectively manage the global business despite differences among regional markets. For example, the company has a geographic division to address the market issues specific to the Asia Pacific region. This structural element also provides support for strategies and tactics in implementing IBM’s marketing mix or 4Ps in different regional markets for information technology products. Thus, geographic divisions facilitate effective business management despite the complexity of market-based variables. IBM’s organizational structure has the following geographic divisions:

  • Europe, Middle East, and Africa
  • Asia Pacific

IBM’s Organizational Structure: Advantages & Disadvantages, Recommendations

A major advantage of IBM’s organizational structure is its alignment with the company’s aims for continued business growth based on innovation. For example, the corporate structure enables the business to prioritize efforts to develop products that match market demand and emerging trends in the information technology industry. Such product development efforts are aligned with IBM’s generic competitive strategy and intensive growth strategies . Another advantage of the organizational structure is the integrative effects of the function-based departments on the company’s global operations. For instance, in spite of the priorities for product management, the structural characteristic of function-based departments ensures organization-wide support for all product-based segments, with consideration for IBM’s corporate goals.

A disadvantage of IBM’s corporate structure is its limitation in addressing imitation in the global market for information technologies. In using a cost-leadership strategy with reduced emphasis on product uniqueness, the company’s advanced and high-quality technological products are imitable. This threat is identified in the SWOT analysis of IBM . Another disadvantage is the organizational structure’s limited support for diversification. Diversification is seen as a potential growth factor for the company, especially because of the rapid and radical technological advances happening in different industries and markets. A more integrated company structure can address this issue. For example, additional structural elements that support universal strategic positioning in the global market can promote managerial and corporate decisions that lead to diversification and related business growth. Thus, the following are the recommendations for improving IBM’s corporate structure:

  • Shift the organizational structure to one based on function-type groups or teams to further emphasize research and development efforts that address the threat of imitation.
  • Create a new structural division that addresses opportunities for diversification based on the trend of technological integration in various industries and markets.
  • Split current geographic divisions into multiple smaller ones to account for significant differences among regional markets, such as differences between the European market and the market in the Middle East.
  • International Business Machines Corporation (IBM) – Annual Report .
  • International Business Machines Corporation (IBM) – Form 10-K .
  • International Business Machines Corporation (IBM) – Senior Leadership .
  • Junge, S., Luger, J., & Mammen, J. (2023). The role of organizational structure in senior managers’ selective information processing. Journal of Management Studies, 60 (5), 1178-1204.
  • U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry .
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  • Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

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Hertz CEO Kathryn Marinello with CFO Jamere Jackson and other members of the executive team in 2017

Top 40 Most Popular Case Studies of 2021

Two cases about Hertz claimed top spots in 2021's Top 40 Most Popular Case Studies

Two cases on the uses of debt and equity at Hertz claimed top spots in the CRDT’s (Case Research and Development Team) 2021 top 40 review of cases.

Hertz (A) took the top spot. The case details the financial structure of the rental car company through the end of 2019. Hertz (B), which ranked third in CRDT’s list, describes the company’s struggles during the early part of the COVID pandemic and its eventual need to enter Chapter 11 bankruptcy. 

The success of the Hertz cases was unprecedented for the top 40 list. Usually, cases take a number of years to gain popularity, but the Hertz cases claimed top spots in their first year of release. Hertz (A) also became the first ‘cooked’ case to top the annual review, as all of the other winners had been web-based ‘raw’ cases.

Besides introducing students to the complicated financing required to maintain an enormous fleet of cars, the Hertz cases also expanded the diversity of case protagonists. Kathyrn Marinello was the CEO of Hertz during this period and the CFO, Jamere Jackson is black.

Sandwiched between the two Hertz cases, Coffee 2016, a perennial best seller, finished second. “Glory, Glory, Man United!” a case about an English football team’s IPO made a surprise move to number four.  Cases on search fund boards, the future of malls,  Norway’s Sovereign Wealth fund, Prodigy Finance, the Mayo Clinic, and Cadbury rounded out the top ten.

Other year-end data for 2021 showed:

  • Online “raw” case usage remained steady as compared to 2020 with over 35K users from 170 countries and all 50 U.S. states interacting with 196 cases.
  • Fifty four percent of raw case users came from outside the U.S..
  • The Yale School of Management (SOM) case study directory pages received over 160K page views from 177 countries with approximately a third originating in India followed by the U.S. and the Philippines.
  • Twenty-six of the cases in the list are raw cases.
  • A third of the cases feature a woman protagonist.
  • Orders for Yale SOM case studies increased by almost 50% compared to 2020.
  • The top 40 cases were supervised by 19 different Yale SOM faculty members, several supervising multiple cases.

CRDT compiled the Top 40 list by combining data from its case store, Google Analytics, and other measures of interest and adoption.

All of this year’s Top 40 cases are available for purchase from the Yale Management Media store .

And the Top 40 cases studies of 2021 are:

1.   Hertz Global Holdings (A): Uses of Debt and Equity

2.   Coffee 2016

3.   Hertz Global Holdings (B): Uses of Debt and Equity 2020

4.   Glory, Glory Man United!

5.   Search Fund Company Boards: How CEOs Can Build Boards to Help Them Thrive

6.   The Future of Malls: Was Decline Inevitable?

7.   Strategy for Norway's Pension Fund Global

8.   Prodigy Finance

9.   Design at Mayo

10. Cadbury

11. City Hospital Emergency Room

13. Volkswagen

14. Marina Bay Sands

15. Shake Shack IPO

16. Mastercard

17. Netflix

18. Ant Financial

19. AXA: Creating the New CR Metrics

20. IBM Corporate Service Corps

21. Business Leadership in South Africa's 1994 Reforms

22. Alternative Meat Industry

23. Children's Premier

24. Khalil Tawil and Umi (A)

25. Palm Oil 2016

26. Teach For All: Designing a Global Network

27. What's Next? Search Fund Entrepreneurs Reflect on Life After Exit

28. Searching for a Search Fund Structure: A Student Takes a Tour of Various Options

30. Project Sammaan

31. Commonfund ESG

32. Polaroid

33. Connecticut Green Bank 2018: After the Raid

34. FieldFresh Foods

35. The Alibaba Group

36. 360 State Street: Real Options

37. Herman Miller

38. AgBiome

39. Nathan Cummings Foundation

40. Toyota 2010

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International Business Across Borders: A Case Study of McDonald's

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International Business - Internship : Organizational design/structure

  • Mission & Vision
  • Organizational design/structure
  • Business Models for organisations
  • Value proposition

The organisational design describes the creation of structures, processes, and roles so that the goals and objectives of an organization can be realized.

An organization chart is a schematic representation of an organization.

Organizational design/structure books

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  • Next: Business Models for organisations >>
  • Last Updated: Dec 14, 2023 8:07 PM
  • URL: https://avans.libguides.com/IB-Internship

IMAGES

  1. How to Structure an International Organization

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  2. Gbm unit-08 (organizational structure in international business)

    organizational structure international business case study

  3. Netflix Inc.’s Organizational Structure & Its Strategic Implications

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  4. International Business Case Study

    organizational structure international business case study

  5. ENT300 Case Study Assignment

    organizational structure international business case study

  6. Goldman Sachs' Organizational Structure

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COMMENTS

  1. Structuring Your Organization to Meet Global Aspirations

    business as well as by country. Be clear on the logic for regional structures. A traditional rationale for regional structures was the need for a "span breaker" within a global organization, to gather information from local organizations and pass it to the corporate center. As communication and travel across

  2. 7 Favorite Business Case Studies to Teach—and Why

    The resulting list of case study favorites ranges in topics from operations management and organizational structure to rebel leaders and whodunnit dramas. 1. The Army Crew Team. Emily Michelle David, Assistant Professor of Management, China Europe International Business School (CEIBS)

  3. 14.1 Organizational Structure: The Case of Toyota

    And during the early months of the crisis, Toyota's top leaders were all but missing from public sight. The organizational structure of Toyota may give us some insight into the handling of this crisis and ideas for the most effective way for Toyota to move forward. A conflict such as this has the ability to paralyze productivity but if dealt ...

  4. How Apple Is Organized for Innovation

    Summary. When Steve Jobs returned to Apple, in 1997, it had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities.

  5. GOOGLE: a reflection of culture, leader, and management

    This paper provides a viewpoint of the culture and subcultures at Google Inc., which is a famous global company, and has a huge engineering staff and many talented leaders. Through its history of development, it has had positive impacts on society; however; there have been management challenges. The Board of Directors (BoDs) developed and implemented a way to measure the abilities of their ...

  6. Organizational Structure: Articles, Research, & Case Studies on

    Both the design and identity of the FBI changed greatly in the wake of the September 11, 2001 terrorist attacks. This study tracing the co-evolution of the Bureau's organizational design and identity before the 9/11 attacks and through three subsequent phases finds that successful changes to organizational identity are likely to be delayed after a radical external shock: Management is likely ...

  7. Organizational strategy and its implications for strategic studies: A

    In this review essay, we want to capitalise on this opportunity by (1) providing a review of organisational strategy literature and (2) bringing it to bear on strategic and security studies. We suggest that organisational strategy has developed a range of concepts and understandings of how strategy works.

  8. Organizational Structure from Interaction: Evidence from Corporate

    How activities are organized in new issue domains is a central and enduring question in organization theory. The structuring of organizational activities was a key concern of Max Weber's theory of bureaucracy and early organization theorists (Selznick, 1949; Gouldner, 1954; Chandler, 1962; Thompson, 1967).Formal and informal structures organize tasks and allocate decision-making authority ...

  9. Organizational structure and success of international joint ...

    For this reason, we analyse the aspects of organizational structure that may influence business success. The organizational structure of international joint ventures is determined mainly by the form of ownership (Delios and Beamish 1999) and by the type of management applied (Das and Kumar 2010; Shenkar and Zeira 1992). 3.1 Control via ownership

  10. How to Structure an International Organization

    Functional International Organizational Structure. When a company commences international operations, it might start by exporting to those markets from a home base. Assuming the company organizes itself in a traditional functional sense, then these exports may be covered by the sales department, possibly with an additional department to the ...

  11. The Top 20 Business Transformations of the Last Decade

    Summary. The strategic impulse to identify a higher-purpose mission that galvanizes the organization—is a common thread among the Transformation 20, a new study by Innosight of the world's ...

  12. Business Case Study: Toyota's Organizational Structure

    Centralized Decision Making. For most of its existence, Toyota's organizational structure was based on a traditional Japanese business hierarchy in which the most senior executives make all of the ...

  13. Culture and International business research: A review and research

    Over time, the critiques of cultural studies in international business have presented a strong case for exploring cultural studies in international business. ... (Tröster & Van Knippenberg, 2012); organization structure (Huang et al., 2011) Cluster 8: Interaction: Dependent variable: exchange performance (Abdi & Aulakh, 2012) Independent variable:

  14. International Business Strategy EXPLAINED with EXAMPLES

    Together these two factors generate four types of strategies that internationally operating businesses can pursue: Multidomestic, Global, Transnational and International strategies. Figure 1: Bartlett and Ghoshal's Typology of Multinational Companies: Global, Transnational, International and Multidomestic Strategy.

  15. Organizational Structure

    By: Susanna Gallani, Mary Witkowski, Elena Corsi and Nikolina Jonsson. The case study examines the journey toward value-based healthcare at Karolinska University Hospital. The hospital's ambitious shift to a patient-centered care delivery model, accompanied by the construction of a new facility, encountered challenges such as high costs,...

  16. HBS Case Selections

    800.988.0886 (U.S./Canada) 617.783.7500 (International) [email protected] No thanks, take me back to Case Selections Take me back, I want to start over. Partner Center

  17. Organizational Design: Articles, Research, & Case Studies on

    Both the design and identity of the FBI changed greatly in the wake of the September 11, 2001 terrorist attacks. This study tracing the co-evolution of the Bureau's organizational design and identity before the 9/11 attacks and through three subsequent phases finds that successful changes to organizational identity are likely to be delayed after a radical external shock: Management is likely ...

  18. IBM's Organizational Structure & Its Characteristics: An Analysis

    A firm's organizational structure or corporate structure defines the makeup of the business, in terms of form, systems of interaction among components, and the design that influences processes. For example, IBM's corporate structure determines how its regional offices communicate with each other. The structural features are also key factors ...

  19. 7 Organizational Structure Types (With Examples)

    Functional/Role-Based Structure. A functional—or role-based—structure is one of the most common organizational structures. This structure has centralized leadership and the vertical ...

  20. Library Guides: International Business: Case studies

    Case Study Research for Business. Publication Date: 2012. The Case Study Handbook. Publication Date: 2007. Case study skills: How to analyse problems in case studies. Publication Date: 2011. Doing case study research: a practical guide for beginning researchers. 4th edition. ISBN: 0807779822. Publication Date: 2021.

  21. Top 40 Most Popular Case Studies of 2021

    The Yale School of Management (SOM) case study directory pages received over 160K page views from 177 countries with approximately a third originating in India followed by the U.S. and the Philippines. Twenty-six of the cases in the list are raw cases. A third of the cases feature a woman protagonist.

  22. McDonald's International Business Case Study

    This case study analyzes McDonald's international business strategy, organizational structure, supply chain management, and more. The company's cost leadership, focused differentiation, and intensive growth strategies are discussed. The 'think global and act local' strategy, localization, and franchise strategies are also examined.

  23. Organizational design/structure

    Sources International Business students can use during their internship in block 4, grouped by week. ... Designing Organizations: Strategy, Structure, and Process at the Business Unit and Enterprise Levels. Everything you want to know about Agile: How to get Agile results in a less-than-agile organization ... At Xplora you will find all the ...