What different organizational choices can be made in an international business? (Integrating mechanisms)
Integrating mechanisms
These mechanisms are applied when managers find it hard to coordinate on their own, and is therefore a tool which can through formal and informal ways help achieve coordination.
When is coordination necessary? The need is the lowest in firms pursuing a localization strategy and increases from international to global standardization to finally the transnational strategy which requires the most. The reason is that transfer of core competencies requires coordination, as well as dispersing value creation activities to achieve location and experience curve economies → least important in localization strategy and increasingly important until transnational strategy. Impediments to coordination arise from managers and employees not "speaking the same language", literally and practically. It can also be if goals of the firm are pursued differently.
- Formal integrating mechanisms
Direct contact → managers contact each other directly when there is an issue.
Liaison roles → subunits coordinated by two persons with responsibilities.
Teams → when further coordination is necessary, teams are put together to coordinate.
Matrix structures → maximum coordination, geographical areas and product divisions.
- Informal integrating mechanisms
Knowledge network → transmission of information through an informal network based on relationships between managers and employees and includes a lot of trust.