Recommendations to Furniture Works on creating a global structure

Multinational Companies

A Multinational Company is defined as an enterprise which is operating in several countries but managed from one home country [] . They have their headquarters in one country but operate on different countries known as host country. Numerous examples of these organizations are Ford, General Motors, Dell, Microsoft, Google, Siemens etc.

There are obvious benefits for companies to expand their business to other countries. Few of them are cost advantages such as cheap labor, reduce transport and distribution cost, constant supplies of raw materials, and avoid any trade barriers [] .

Companies which do business overseas face many challenges. Cultural challenge is one among them. As we have seen from experience companies which tend to do more research and spend time and effort to study and understand the cultural differences is more successful than the companies which don’t do their homework. Let us take an example where Mr. X wants to expand his Pizza business from United States to India. The cultural difference between India and U.S is a huge obstacle which needs to be studied by Hofstede cultural dimensional model. Cost structures, eating habits, trade barriers are few important variables which needs to be studied before setting up an franchise.

One must try to differentiate what are the major differences between U.S and Indian culture? How these differences are going to affect the business? What are the measures need to be taken to avoid these risks? What kind of work ethic do Indian employees follow? Is it different from U.S? In U.S they follow very competitive work ethic which means profitability comes first. Mr. X shouldn’t expect the same level of work ethic from Indian employees. He needs to be patient for the business to grow and yield profits. Next he must work on his brand. In U.S branding and creating a image to a company makes many loyal customers which he needs to work on with the new Indian market which will take time and effort and he should choose his advertisement carefully for Indian culture. Also Indians prefer traditional food so Mr. X should work on how he can market his fast food into the market [] .

The CEO,

Furniture Works,

South London. U.K

REPORT ON RECOMMENDATION AND REFLECTIONS FOR FURNITURE WORKS TO EXPAND ITS PRODUCTION ABROAD GLOBALY:

This report is for Furniture Works, South London, which is proposed to start Internet Sales. The company plans to establish its production function abroad. Initially it is working and conducting business in UK locally but there are future prospects for global expansion plans.

As a Management consultant, my functions involve examining and analyzing alternative organizational and communication system the main idea behind this move is to develop a Virtual ORGANIZATION.

With reference to the above all discussion and my evaluation here are my recommendation for effective Global structure for Furniture Works.

Licensing- My first recommendation in phase of establishing business across the world for furniture works must get Revocable written formal or implied agreement by an authority or proprietor from the host country according to their Law.

Joint Venture- My second recommendation for Furniture Works is to establish a Joint Venture with the local firms in the host country through this Furniture Works can formed to achieve its objectives of a partnership like temporary and permanent arrangement between two or more firms for its business success.

Consortia-My Third recommendation for Furniture Works is Consortia it’s a Japan’s Term which means Cross ownership Agreement between Firms.

For firms such as Furniture Works who want to expand their business internationally, it is inevitable for them to face the cultural challenge. Further I recommend following Business Strategies for Furniture Works:

Globalization Strategy- organization like furniture Works should go through the process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade.

Multi domestic Strategy- Another powerful strategy for Multinational Company like Furniture work is multi domestic Strategy. This means production of business within local community. Production, supply, Research and development and marketing are established nationally where business is done. After the business is moulded and developed locally innovation comes into picture which means there is decentralization which being outsourced locally [] .

Global Challenges- till now the Furniture Work is managing its business in U.K. for going to start business and getting expansion as Virtual Organization the Furniture Works should be ready to face Global Challenges like:

Complexity and differentiation with different cultures and nations.

For making better business environment sometimes big organization have to be ready for integration with local organization at host country.

While establishing business links with different countries the Furniture Works should transfer its knowledge to local employees at host country.

Finally I am recommending to the Management of Furniture Works how to Coordinate with its new companies worldwide.

Global Teams- Furniture Works have to depend on teams working at international boundaries for the improvement of the business. In Multinational organizations such teams at the board level, product-development, and multi-cultural teams from various functions responsible for the global alignment of functional business processes.

Headquarters Planning- Being an International Company the Furniture Works Headquarters must be in London, Which is its homeland country.

Expanded Coordination Roles- Furniture Works should creating a supportive and enabling environment for the implementation its products selling in all those companies around the world.

Bureaucratic Organization- Very large organizations which are well structured and well defined may be termed as bureaucratic organization. The main elements of such as organization is standard use of protocols and procedure to perform a particular task and high degree of control to make sure any particular task is performed to the standards [] . There are two types of bureaucratic organization which are as follows,

Standard bureaucracy :

These type of company normally do standard routine work where large technical staffs led by mid – level managers led by senior management.

Professional bureaucracy:

This type of company also does standard work but relies on efficient performance and complex in nature where the company hierarchy has only few mid-level managers.

Flat Organization: Flat organization tends to have few level of hierarchy which means chain of control is short. This makes high level of employee involvement in decision making which increases team morale and spirit. This structure can be successful only in small organization.

Boundary less Organization: This type of organization is of contemporary approach as they can’t be defined or limited to or draws lines or boundary which is why the name boundary less organization came. Flexible and unstructured approach seems to be successful and many companies have started this approach after Jack Welch of GE coined this term.