User talk:Ericdeng123

organizational configurations
Administrative Heritage: Today’s companies are faced with strategic tasks emerging from the international operating environment. The ability to respond to those tasks is usually constrained by their internal capabilities, which are shaped by the company’s administrative heritage. The administrative heritage can be defined as “the path by which it developed- its organizational history- and the values, norms, and practices of its management- its management culture.” Every company is influenced by these. It consists of many aspects of a company’s past such as home-country culture, history, and the influence of specific individuals. “Collectively, these factors constitute a company’s administrative heritage.” The administrative heritage has not only an influence on the strategic business and its multinational, global and transnational characteristics but also on the organizational form of a company. It affects the present abilities to respond to the forces driving worldwide competition.

Due to national differences between the worldwide operating companies and the period, in which the companies expanded abroad, a company’s administrative heritage is unique. This uniqueness has led to different business approaches and built very different organization types around distinctive strategies. Three basic types of organizational configuration models have been observed in the past, each characterized by distinct structural configurations, administrative processes, and management mentalities. These are the decentralized federation, the coordinated federation and the centralized hub. The decentralized federation counts to the most widespread types, adopted by many European companies, which expanded in the 1920s and 1930s. “Economic, political and social forces encouraged the companies to decentralize their organizational assets and capabilities to allow foreign operations to respond to the differences that distinguished national markets” even though at that period the barriers among national markets were high. These circumstances resulted in an internationalization which was characterized by self-sufficient national operations. Each national operation was focused on being sensitive and responsive to the particular national environment. In the early postwar decades the coordinated federation became predominant. Contrary to the European companies American companies applied this organization structure and process. “Companies which internationalized in this period faced less pressure to be responsive to national differences due to the fact that the international trading environment had become less restrictive, reducing the need for automous local operations, and massive troop movements and the postwar shortages had a homogenizing effect on local preferences. An even more powerful influence was the companies’ recognition that they could capitalize on knowledge developed in the home market, by managing its transfer to less advanced overseas environments”. The centralized hub allegorizes the third basic type of the organizational configuration models, which were adopted by globally operating companies such as Japanese companies in the era of the 1970s and early 1980s. Those companies faced “a greatly altered external environment and operated with very different internal norms and values”. The centralized hub is characterized by a centralization of assets, resources, and responsibilities. In addition to that “overseas operations are used to reach foreign markets in order to build global scale”.

Centralized Hub
Centralized hub organizational model emphasizes that cost advantages and quality assurance, demanding tight control over product development, procurement, and manufacturing. Also, Centralized hub organizational model focuses on the objective of global efficiency rather than local responsiveness, which means companies increase its output as much as possible, lower the value of its inputs, or achieving both. However, that also means that company may not choose to match the well-established local marketing capabilities, and neglect the localization such as local taste and culture. Moreover, in order to achieve centralized and global scale, centralized hub organizational model encourage MNCs to centralize most key assets and resources, and to operate subsidiaries by centralizing decision making; also, to treat subsidiaries as delivery pipelines to the global market. Furthermore, centralized hub work well with global strategy, which pursues cost reduction, but local involvement minimum. In doing that, MNCs are able to reduce its risks and costs when they enter strange foreign markets.

Advantages of Centralized Hub
Via centralizing decision making, and controlling operation, multinational corporations (MNCs) are able to maintain communication-fluency between headquarter and subsidiaries, and subsidiaries and subsidiaries. In addition, spread of information from headquarter to subsidiaries will be rapid; also it will make subsidiaries more interdependent. Moreover, centralized hub is good at reducing costs and risks.

Disadvantages of Centralized Hub
When a company’s decision-making process and organizational capabilities are concentrated at the center as they are in the global organization’s centralized hub configuration, it is often difficult to respond appropriately to diverse worldwide demands. Being distant from the front-line opportunities and threats, the central group’s ability to act in an effective and timely manner is constrained by its reliance on complex and intensive international communications.. </ref Furthermore, the volume and diversity of demands made on the central group often result in central capabilities being overloaded, particularly where scarce technological or managerial resources are involved.

Examples
Japanese companies prefer to utilize this organizational model on doing international business. For example, Toyota succeeded by developing products and manufacturing the, in centralized, globally scaled facilities in Japan. This approach also is suitable for emerging MNCs from other Asian countries because most of Asian countries are High-context cultures, which is collectivist and centralization. They are more willing to centralize decision-making and do not like to empower to its subsidiaries. Also, most of MNCs of developing countries lack of doing international business, as well they do not have a strong financial capital, compared to MNCs from developed countries. Therefore, centralized hub may fit developing and emerging MNCs better than those in advanced countries, in term of costs and risks reduce.

AfD nomination of Organizational configuration
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