Assignment:
The video made it pretty clear that business manager's doubt, uncertainty, and fear limits organizations from developing into an international business. As businesses grow they must change organizational policies and structure to better match international strategies. For example, domestic firms that employ a centralized decision making process will have to transition to more of a decentralized approach for several business activities. Organizational architecture must be consistent throughout the firm, fit the international strategy being developed, and support competitive conditions (Hill & Hult, 2017).
As the organization transforms, management must decide which primary/support activities should remain centralized and which ones that should become decentralized. These decisions should be tied to the firm's overall strategy (Hill & Hult, 2017). Management must carefully consider which activities should be transformed because there are advantages and disadvantage to centralization and decentralization. Centralization is great at facilitating coordination and ensures decisions are aligned with organizational objective (Hill & Hult, 2017).
While, decentralization fosters an environment of greater flexibility, increased control and unburdens top leaders so they can focus on vital organizational issues (Hill & Hult, 2017). The firm's strategic strategy, financial objectives and legal issues are often centralized at a headquarters while other tactical activities such as marketing, human resource management may be considered decentralized. These calculated factors can impact an organization in other ways. Researchers suggest, "For a better competition in the market, it is essential that all the participants are free to optimize their own profits.
Hence, a decentralized decision making based methodology can play a vital role in market competition" (Singh, Mahanty & Singh, 2015). The end goal of top management and primary/support activities should focus on increasing the organization's overall value.
References Hill, C. W. L. & Hult, G. T. M. (2017). International Business; Competing in the Global Marketplace (11th ed.). New York, NY: McGraw-Hill Education. Singh, B., Mahanty, R., & Singh, S.P. (2015). Centralized and decentralized optimal decision support for congestion management. International Journal of Electrical Power & Energy Systems. 64, 250-259.