Breaking hierarchies - DiVA Portal

Breaking hierarchies -Bachelorthesis

TuTor;IvoZander

AuThors;AndersNilssonLinusGeorgsson

u ppsAlA u n iversiTyDepartmentofBusinessStudiesSpring2007

ThanksThisthesiswouldn’tbeathesiswithoutthehelpfulpeoplewehavemetthrough-outourwork.Wewouldliketothankthefollowingpersonsfortheirhelpfulness.

ivo Zander patrik Anderssonpontus MeijerFredrik lundqvistDaniel lambornDavid häggströmJohan lundinThe authors of the literature

AbstractOrganizationalstructuresaresurroundingtheentirebusinessesandareessentialforthefunctionalityofanorganization.Theimportanceofastructurethatsatisfiesandencouragesthestaffinthesuccessoftheorganizationtodoagodjobreflectsontheorganization’ssuccess.

Therearemanydifferentkindsofpeopleandbehavioursintheworld,whichmakestheworldweliveinverycomplexanddiversified.Theperceptionsofonehumanbeing,livinginEurope,mostlikelyaren’tthesameastheperceptionsofonepersonlivingontheothersideoftheglobe.Thisdifferencebetweenpeopleallovertheworldalsodiversifiestheorganizations,whichconsistsofthesepeople.Differentbehaviourandorganizationstructuresarepreferredbydifferentorganizations.Thisfactmakesitdifficulttooperateanorganizationthatisexpandingtooperatebe-tweennationalboarders.Thedifficultiesinmovingtonewnationsandmeetingnewculturesleadstomanyproblems.Howwillanorganizationthatoperatesovernationalboardersadopttothedifferentcountriesinvolved?Thisthesiswillexaminethedifficultiesforthesekindsofproblemsandhowtheyshouldminimizepossibleproblemsthatmightoc-curthroughinternationalization.Themainquestioninthisthesiswilllookatexact-lyhowthetransformationtogofromoneorganizationalstructuretoanotherinaMultinationalcorporations.

Forafurtheranalyseoftheproblem,oneorganizationinanexpandingsituationwillbeexamined.TheorganizationthatwillbeanalysedisLGElectronics,whichisaMultinationalEnterpriseorganizationthatoperatesinseveralcountries.TheLGElectronicsisanorganizationfromSouthKoreawhichinSwedenhasanIT-divisionthathasworkedasanexperiment,inanattempttominimizetheproblemsthatmightoccurwhendifferentorganizationculturesstartstoworkwitheachother.Thethesiswillbestrengthenedmainlythroughbackgroundandorganizationalpreferencesinformationaboutdifferencesbetweennationsandthenationsthatactasthehostandthehomecountryfortheorganization,thetwodifferentstruc-turesinvolvedandalistofdifferenttypesofMultinationalorganizations.Toexam-inethesituationinLGElectronicsinterviewswithtwodifferentpurposeswillbedone,onewithinvestigationalpurposeandonewithinformationalpurpose.

Keywords

Culture, organization structure, Multinational enterprises, Matrix structure, hier-archical structure, organizational change, Transformation, host country, home country

ContentsAbsTrACT

1 i nTroDuCTion 11.1 background 11.2 problem 21.3 purpose 21.3.1Questions 31.4 Delimitation 31.5 Disposition 31.6 summary 4

2 Th eory 52.1 national differences 52.2 Globally acting organizations 62.3 Cultural differences 72.4 organizational heritage 92.4.1Europeanorganizations 92.4.2Asianorganizations 102.5 Multinational organizations 102.6 boundaries create problems 122.7 organizational structure of global firms 132.7.1Strategiesconcerninglocalpartsoftheorganization 142.8 organizational structures 152.8.1Verticaldecentralization(hierarchicalstructure) 152.8.2Matrixorganization 162.9 summary 17

3 MeThoD 183.1 introduction 183.2 Methods of the studies 183.2.1Primarydata 193.2.2Secondarydata 193.3 reliability 193.4 validity 203.5 Criticism to sources 213.6 summary 22

4 resu lT 234.1 lG electronics 234.2 empirical studies 234.2.1Whatdoesthecollecteddataconsistsof? 234.2.2Anoverviewofwhathashappenedtothedivision? 244.2.3Whywasthechangedone? 244.2.4Howwasthechangedone? 25

4.2.5Whatwastheresultoftherestructure? 264.3 summary 28

5 DisCussion 295.1 structural change in lG electronics 31

6 ConClusion 35

7 Appen Dix 37

8 i n Dex 54

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1 IntroductionThepurposewiththischapteristogivethereaderanoverviewofthisthesis.Thebackgroundwillinvolveadescriptionofthesubjectorganizationstructures.Thisbackgroundwillendupinaproblem,whichwillhavethefocusinthisthesis.

1.1 bACKGrou n D

Peoplearedifferent,thatisafact,notonlyduetodifferentpersonalities,butalsofactorslikedifferentcultures,economicsandenvironmentsindifferentcountriesmakepeopledifferentfromeachother.Andorganizationsconsistsofpeople,thedifferencebetweenpeoplealsomakeadifferencebetweenorganizations.

Manyorganizationsfromdifferentnationsaretodayworkingwitheachonadailybasis.Whenacompanyexpandstotheinternationalarenathesedifferencesaf-fectstheworkandcommunicationbetweentheemployees.1

Theresultofglobalizationcanprovidebothgoodandbadeffects,dependingondifferentaspectsasearliermentioned.Positiveeffectsforacompanywhenitex-pandstointernationalmarketscanbeawaytoattractvaluableknowledgeandskillseasier,becauseofthateverymarketisdifferent,whichmeansthateverymar-ketalsoneedsitsownmarketingtoattractcustomers.Buttheglobalizationofafirmcanalsobringnegativeeffects;itcanadddiversitytotheworkforce,whichaf-fectstheorganization’sculturenegatively.2

ThisthesiswilltreataMultinationalEnterpriseanditsorganizationandtheglobalproblemsthatoccurwhendifferentstructuresmeeteachother.Thisstudydoesn’tconcerndifferentculturalaspects,buttheyareusedtoexplainthatdifferentor-ganizationstructuresareprefered.ThethesisconcernstheorganizationLGElec-tronicsthatinitsglobalizationtoSwedenhasmeetsomeneedsinrestructuringthelocalorganization.Thewholeorganizationworkswithahierarchicalstructurewhilethislocalpartoftheorganizationhasawishtoworkwithamatrixstructure.Thesetwostructuresandfurtherinformationabouttheorganizationanditschangewillbedescribedfurtheron.

Weareinterestedinhowtheactualchangeisdone,howdoesthetransformationwork?Whatistheprocessandhowisitdone?

1 http://www.wikipedia.org/wiki/golobalisering,[2007-05-16]

2 McShane,Steven.200X.OrganizationalBehaviour,Irwin/McGreaw-Hill

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1.2 probleM

Soonerorlateranorganizationthatisdoingfinanciallywellandexpandingitsor-ganizationalsizewillfaceaninternationalmarket.Thestepfromoperatinginjustonenationtoseveralnationsaddscomplexitytotheorganization.Thistypeofor-ganizations,theoneswhooperateinmorethenjustthehomenationiscalledMul-tinationalEnterprises.3

Differencesbetweenpeoplegeneratesindifferencesbetweenorganizations,whichcancauseseveralproblemsforanorganizationwhenitexpandstonewcountries.Thiscanbederivedfromthefactthatwehavedifferentcultureanddifferentherit-age.Thesearetwofactorsthatcancreatethissortofproblems.Foragoodfunc-tionalityintheorganizationthereisaneedforatleastsomeadaptationtothehostcountryintheirstructuretoavoidproblemslikemiscommunicationandconflicts.4

Theprocesstheorganizationgoesthroughwhenitexpandstonewgeographyandfacestheorganizationofthehostcountriesandtheprocessoftransformationfromonestructuretoanotheristhekeysubjectinthisthesis.Thereisanimpor-tanceinkeepingeveryoneashappyaspossibletogetagoodworkflowintheor-ganization.Thisthesiswilldiscusshowtheproblemscanbeminimizedasmuchaspossible.

Therearepapersthatdiscussesaroundthissubject,buttheyaren’tconcentratingthefactthatorganizationstructureschangeovertimeandhowtheprocessworks.Therehasallthoughbeenwrittenpapersthatsurroundsotherissuesinassocia-tiontotheproblem,papersconcerningthemanagement’sroleinchangesinor-ganizations,thedecision’sprocessinchangingorganizationsandotherprocessesofchangesintheorganization,buthoworganizationsmovefromonetypeofstruc-turetoanotherremainsunderresearchedintheliterature.

1.3 pu rpose

Thepurposewiththisthesisistoseehowtheprocessofchangingfromoneorgani-zationstructuretoanotherworks.Butwearealsogoingtolookatwhyanorganiza-tionisinneedofthisorganizationalchange.Tofulfillthispurpose,wewillexaminehowLGandtheirIT-divisioninSwedenhastransformedtheirstructurefromaHier-archicalstructuretoaMatrixstructure.Theresultwillnotbeusedtogeneralizeor-ganizationalchangeforeveryMultinationalEnterprise.Itwillinsteadgiveanex-ampleofhowoneorganizationhasmadetheirtransformation.

3 Rosenzweig,PhilipM;Singh,JitendraV.1991,OrganizationalEnviromentsandtheMultinationalEnterprise.TheAcademy

ofManagementReview

4 Dunning,JohnH,1992,MultinationalEnterprisesandtheglobaleconomy.Addison-Wesley

1.3.1 Questions

Thesearethemainquestionsthatformsthisthesis:

Whydoesthechangeofastructurethatisfunctionalinaorganizationemerge asaprobleminanotherorganization?

Whataretheissues,whatisimportantinthischangeoforganizationstructure?Howdoesthisprocessconcerningthechangeofstructurework?

Wearealsogoingtodiscussotherissuesandproblems:

Whatcanbetheresultofsuchchange?Howshouldtheconflictsthatmightoccurwhenorganizationsoperatesin

severalcountriesbeminimized?Movingtonewnationsmeansthatdifferentcultureadoptionshavetobemade,

howcanorganisationskeepagoodbalance.

1.4 DeliMiTATion

TherearemanyMultinationalEnterprisesthatexpandtonewmarketsinsocietytoday.It’sverycommonthatcompaniesaregoingintonewmarketsandtheboard-ersbetweennationsaregettinglessimportant.Duetothemanycompaniesinthissituation,wehavechosenonecompanytofocus,thecompanyLGElectronics.LGstarteduponesubsidiaryhereinSwedenacoupleofyearsago.Inthismultination-alorganizationthereexistsonedivision(IT-division),whichworksasanexperimentinachangingprocess.LGoffersaparticularlygoodresearchsolvingbecausetheymadeaorganizationalchangewhichinvolvestwodifferentparties.ThisIT-divisioninSwedenisthedivisionwewillexamine,togetaworkthatcanbeasqualitativeaspossible.5Thisdeliminationmakesitdifficulttosummarizethefindings,al-toughweexpectthattheresultsmaybeofsomegeneralinterestandimportanceinotherfirmsaswell.

1.5 DisposiTion

Thethesisisstructuredinseveralparts,eachpresentingnewrelevantmaterialthattogetherwillcreateacompletepictureoftheproblempresented.

Theintroductiondefinestheproblem,whichwillbeexamined;theproblemwill bedefinedandexplained.

Thetheorypartincludesinformationfromliteraturethatwillextendtheknowl edgesurroundingtheproblem.BackgroundinformationaboutMultinationalEn terprise,theculturaldifferencesandthestructuresinvolvedintheprocesswillbe presented,toexpandtheunderstandingaboutthesubject.

Methodwillmorepreciselyshowhowtheproblemwillbehandledorsolved.It

5 http://www.wikipedia.org/wiki/golobalisering,[2007-05-16]

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willdiscusshowthedataiscollectedandwhattypeofdatathatiscollectedand analysed.Criticismwillbebroughtintothispartconcerningthereliabilityofthe collecteddata.

TheresultpartofthethesisconsistsofinformationcollectedfromLGElectronics andmorepreciselytheIT-division.Interviewsconcerningthechangesandfunc tionalityoftheorganizationareavailable.Resultsumsuptheresultsthatare foundinthethesis.Thedifferentpartsearliermentionedareconnectedtoeach other.

discussiondrawsthemostrelevant,importantandobviousinformationgath eredfromthetheory.ThemainfindingsaretheisolationoftheIT-divisionand thatthestaffisgatheredonthesameplace. Thiswillinvolvethethoughtsofthewritersabouttheinformationgathered throughthethesis.Connectionsandpossiblesolutionswillbediscussed;further researchabouttheareawillbepresented.

Theconclusionwillinvolvethethoughtsofthewritersabouttheinformation gatheredthroughthethesis.Connectionsandpossiblesolutionswillbedis cussed;furtherresearchabouttheareawillbepresented.

1.6 suMMAry

Thischapterhaspresentedthesubjectofthisthesis,whichisorganizationalchange.Thepurposewiththethesisistoseehowatransformationfromonestruc-turetoanotherworks.Theproblemhasbeenpresented,ashowdoesanorganiza-tiongofromonestructuretoanotherassmoothlyastheypossiblycan.LGElectron-icsistheorganizationthatwillbefurtheranalysedtoanswerthisquestion.

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2 Theory

Thischapterwillprovidebackgroundinformationaboutthesubjectinthisthesis.Duetothefactthattheredoesn’texistmuchinformationaboutthetransforma-tionprocessfororganizationwhichisthemainsubjectofthethesis.Thetheorywillgivethereaderinformationabouttheimportancewithorganizationalchange.

2.1 nATionAl Di FFerenC es

Nationshavedifferentculturalpreferences,andthesepreferencesdoesn’texcludeorganizationalstructures.Ifpeopleareverydifferentfromeachotheritcanbehardforthemtoworktogheter,whichwillaffecttheentireorganization.Thesedifferencescanleadtodifficultieswithintheorganizationwhichcreatesaneedofminimizingthenegativeeffectsofthedifferences.WhichiswhattheIT-divisionexaminedinthisthesiswillneedtotakeintoaccountwhentheyarerestructeringtheirdivision.

Ithasbeensaidthatorganizationsindifferentcountriesaregettingcloserinsimi-laritiestoeachother,duetoincreasingtechnologicalknowledge.Butscientistshavealsosaidthattherewillalwaysbedifferencesbetweencountriesinpolitical,socialandculturalaspects.Althoughstudiesoforganizationstructureshaveshownthattherearesimilaritiesandvariationsinorganizationstructuresbetweencountries.Eventhoughsimilaritieshavebeenproveninscientificstudies,thereareareasthatalsomaketheseorganizationsunique.6

Differencesincountriesmightoccurintheaimforcompaniesandtheirproduction,producingqualitativeproducts(higherprice)orquantitativeproducts(lowerprice).Anotheraspectthatcanaffectthestructureissegmentation;afirmthathasdiffer-enttargetsegmentanddifferentapproachestohandlethesesegmentsdoestheworkmorecomplexcomparativetoiftheywouldproduceonlyoneunifiedproduc-tion.Evensmallaspectsliketheleaderofacompanycouldhaveaverybigimpactaswell,sometimesasbigasthehistoricaspectorpossiblyevenbiggerthenhistor-ic.7

Lawsandculturedoesdifferfromonecountrytoanother,whichcanhavebothpos-itiveandnegativeconsequences.Thesefactorscanshapetheorganization,andaslaterwillbedescribedhaveconsequencesforaMultinationalEnterpriseanditsor-ganization.8

6 Rosenzweig,PhilipM;Singh,JitendraV.1991,OrganizationalenviromentsandtheMultinationalenterprise.TheAcad-

emyofManagementReview

7 Dunning,JohnH,1992,Multinationalenterprisesandtheglobaleconomy.Addison-Wesley

8 Rosenzweig,PhilipM;Singh,JitendraV.1991,OrganizationalenviromentsandtheMultinationalenterprise.TheAcad-


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Thereisalwayssomethingthatseparatesoneorganizationfromanother.Noor-ganizationhasaperfectstructurethatfitsfortheentireorganization;everyorgani-zationisuniqueinitsownway.Aorganizationsthatoperatesinseveralcountriescomplicatestheorganization.Inthesedifferentcountriestheorganizationcanbeverydifferentfromonecountrytoanother.Duetothedifferencesinthesecoun-trieswhichaffectstheorganization9Whenanorganizationexpands,sodothecomplexityandthedefinitionsoftasks.Thisfactleadstheorganizationtoneedmoreandmorecontrolandnew/othersys-temsthatcanhandlethenew,biggerorganization.Thebiggertheneedgetsofmorecontrolandsystemsintheorganizations,thebiggertheneedofanorganiza-tionchangegets.Atraditionalorganizationformbasedonaverticalorhorizontalbasehasshowntobeineffectiveintheseorganizations,whichcreatesaneedforaneworganizationstructureastheorganizationcapturesmoregeography.10

2.2 GlobAlly ACTi nG orGAn iZATions

TypicallyMultinationalEnterprisesgrowoutofdifferentenviromentsandthistendtohaveanaffectonthewaytheyoperatetheorganization.

Therearemanydifferentareasofdifferencesbetweennationswhichallcanvaryfromnationtonation.Toclarifythemixedsetofdifferencesintheworldandhowitcanaffectorganizationstherewillbelowbepresentedsomemajorfactorsthatcandiversifyorganizationsandnationsfromeachother.

Lawsandregulations;Regulationsaredifferentindifferentcountriesandcanvaryinformsofpricingpolicies,labourpracticesandothermanagementissues.Thesemightbeoneofthestrongestenvironmentalpressuresfororganizationsandtheyareveryhardtochangeorevenaffect.

Multidomesticandglobalindustries;thecompetitionontheglobalmarketaffectsthecompetitiononthelocalmarket.It’sgettinghardertobeuniqueinonemarketduetotheincreasingamountofcompetitionduetotheglobalization.Andthefactthatorganizationsthatoperateinseveralcountrieshavedifferentresourcesindif-ferentcountriesmakesithardtodoaunifiedoperationoverseveralnations.Re-sourcesdifferindifferentplacesintheworld.11

Sharedtechnology;becominganinternationalfirmmeansabiggeraccesstotech-nology,whichcanbringbigadvantagesagainstthelocalorganizationsthathaven’t

9 Dunning,JohnH,1992,Multinationalenterprisesandtheglobaleconomy.Addison-Wesley

10Dunning,JohnH,1992,Multinationalenterprisesandtheglobaleconomy.Addison-Wesley

11Rosenzweig,PhilipM;Singh,JitendraV.1991,OrganizationalenviromentsandtheMultinationalenterprise.TheAcad-


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gotthesameresources.12

Parentcountryculture;countriesaredifferentinmanyaspects,soisthehomecountryoftheorganization.Thehomecountryfortheorganization’scultureaffectstheglobalorganizationanditsorganizationstructurecanbeseenasthecoreoftheorganization.Thiscouldbringeffectsbetweenlocalpartsindifferentcountriesthantheparentcountryandmorelikelyifthetwocountriesaremuchdifferentfromeachother.13

Compositionoftheworkforce;whenorganizationsmovetodifferentcountriessuchasalocalpartinaforeigncountrytheyalsobringstafffromthecoreorganiza-tion.Mixingpeoplefromdifferentculturesinonelocalorganizationandlettingthemworkonadailybasiswillaffecttheresultofworkintheorganization.14

Culturaldistance;anorganizationthatoperatesinseveralcountrieswillalsogetanorganizationconsistingofseveralcultures.Theculturaldifferenceswillpossiblyleadtomisunderstandingsandmistakeswithintheorganization.15

2.3 Cu lTu rAl Di FFerenC es

Culturaldifferencesplayanimportantroleinshapingpreferedwaysofrunningandorganizingcompanies.

ProfessorGeertHofstedecollectedalargeamountofdatafromtheorganizationIBMbetweentheyears1967and1973,dataconcerningfrommorethen70coun-tries.Hisstudyconcentratedontheculturaldifferencesbetweencountries.Thedataissortedbyfivevariables;Powerdistance,Individualism,Masculinity,Uncer-taintyavoidanceandLong-termorientation.Allthefactorswillbedescribedbelow.16

Powerdistanceindex;thisisanindexthatshowshowthecontrolisspreadamongpeople.Howpeopleacceptandexpectthiscontrolbeingspreadunequally.17Ahighvalueindicatesthattheleadershavemuchpowertomakedecisionsandthattheemployeeshavelesspowerandeffectonpower.Alowvalueindicatestheopposite,









16http://www.geert-hofstede.com,[2007-05-16]


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thatthepeoplewhoaren’tinleadingpositionshaveaneffectonpower.AccordingtoHofstede’sresearchSouthKorea(55)hasavaluethatisalittlehigherthentheworldaverage(52).ComparedtoSweden(28)thatalmosthashalfasmuchPowerdistanceindexthenSouthKorea.18

Individualism;Concernstwodifferenttypesofsocietiescollectivistsandindividual-ists.Ontheindividualistsidethetiesbetweensocietyandtheindividualsarelooseandahighvalueindicatesanindividualsociety.Inanindividualisticsocietyevery-bodyismindingtheirownbusinessandistakingcareofthemselves.Onthecollec-tivisticsidetheoppositesituationoccursandthecollectiveisinfocus,theboundsbetweenpeoplearestrongandeverybodyisprotectingeachother.SouthKorea(13)hasavaluethatismuchlowerthentheworldaverage(40).ComparedtoSwe-den(68)thathasavaluealmostfivetimeshigherthenSouthKoreasvalue.19

Masculinity;thisvariableshowsthatahighvalueindicateshighmasculinityandalowvalueahighvalueoffemininity.Theindextellswhichrangethesocietiesandwhichleadingrolesconsistofmenversuswomen.20Ahighvalueindicatesthatmencontrolmanyoftheleadingpositionsandthatmenhavemuchpowerinthena-tion.Ifthevalueislowtheoppositesituationexists.SouthKorea(33)hasavaluethatisbelowtheworldaverage(48)andcomparedtoSweden(4)thathasavaluethatalmosthasnonMasculinity.21

UncertaintyAvoidanceIndex;referstosituationsrelatedwithtruth,ifpeoplefeeluncomfortableorcomfortableinunnaturalsituations.Unnaturalsituationsorun-structuredsituationsarebyHofstededescribedasnovel,unknown,surprisingordifferentfromusual.Acountrywithahighvalueofuncertaintyavoidancetriestominimizeorstopthesesituationsbylaws,rules,safetyandsecuritymeasures.Andtheoppositesituationoccursinacountrywithlessuncertaintyavoidanceindex.SouthKorea(80)hasavalueabithigherthentheworldaverage(60)comparedtoSweden(25)thathasapproximatelyathirdofSouthKorea’svalue.22

Long-termorientation;concernsastudy,whichwasmadebystudentsinover23countries.InthisstudytheywereusingaquestionnairethatwasdesignedbyChi-nesescholars.Inthistheyfoundthefifthdimension,whichislong-termversusshort-termorientation.Thisstudyshowedthatvaluesassociatedwithlong-termare;thriftandperspective.Valuesassociatedwithshort-termare;respectfortradi-tion,socialobligationsandprotectingone’sface.SouthKorea(70)hasavalueal-mostthedoublecomparedtotheworldaverage(42),Sweden(29)alittlelessthen

18Appendix1

19Appendix1


21Appendix1

22Appendix1

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halfofSouthKorea’svalue.23

2.4 orGAn iZATionAl h eriTAGe

WhileculturaldifferencesbetweenSouthKoreaandSwedensuggestpotentiallydifferentapproachestorunningandorganizatingfirms.Thereareadditionaldiffer-encesoftheheritagethatalsoaffectorganizationalpreferences.

Informationaboutdifferencesbetweenthetwonationsinvolvedinthisthesishasn’tbeentakenintoaccountinearlierstudies.Butstudiesaboutcountriesfromthesamecontinentsasthetwocountriesinvolvedinthisthesishavebeenfound.Thisinformationwilltherebybeusedtoexemplifythedifferencebetweenthetwocontinentsinvolved.Thiswillbedonetoclarifythedifferencesthatexistbetweentheparties.Theinformationisusedtoprovethattherearedifferencesbetweenor-ganizationsandnationsintheworld.Theorganizationisnotjustshapedbyitsexternaltasks,butalsobyitsadministra-tiveheritage.TheimportanceofthisadministrationinacompanycanbestbeenseenbycomparingthedevelopmentofatypicalEuropeanMultinationalEnterpriseandatypicalJapanese-basedcompanythatworkinthesamebusiness.24

2.4.1 european organizations

IntheseventiesmanyEuropeancompaniesfeltthreatenedbylocalcompetitors,becauseoftherisingpricesofpaydutyoncommodity.Todefendtheirownposi-tion,onewaytodothiswastobuildtheirlocalproductionfacilities.Bydevelopingtheirownplants,theywereabletomodifytheirproductsandtheirmarketingsotheycouldmeetuptheirproductsonthedifferentmarkets.Withtheselocalfacili-tiescompaniesfacedpossibilitiestocomeclosertothecustomersbutitalsobuiltupsomebarriers.Barrierswhichmadethetransportationandcommunicationmuchharderforthecentralmanagement-teamandtheirabilitytointerveneinthelocalbusinesses.But,thismadeitpossibletodelegateresponsibilityonamorelo-calplan.ThisfittedwellinwithmanyEuropeancompaniesandtheiringrainedmanagementnorms.Becauseoftheimportantroleofownersandbankersincorporate-leveldecision-making,Europeancompanies,developedaninternalculturethatemphasizedper-sonalrelationshipsratherthanformalstructures,andfinancialcontrolsmorethancoordinationoftechnicaloroperationaldetail.Thisstyleandphilosophyinthemanagementmadethemmorewillingtodelegatemoreindependentdecisionmakingtothesubsidiaries.25

Theresultofthisisanorganization-andamanagementstylethatisloosefedera-tionofindependentnationalsubsidiaries.Thereeachsubsidiaryisconcentrating

23Appendix1

24Porter,ME.1986.Competitioninglobalindustries.HarvardBusinessSchoolPress


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ontheirownlocalmarket.Thismodelisknownas“decentralizedfederation26

2.4.2 Asian organizations

TheAsianpartofthecontinentsinvolvedinthethesiswillbepresentedbyaJapa-neseorganization.ThereareofcoursedifferencesbetweenSouthKoreanorganiza-tionsandJapaneseorganizations,butthisexaminationwillshowgeneraldiffer-encesbetweenthecontinentsinvolved.

TheJapanese-basedcompanieshadanotherstrategy;theychoosenottomatchtheEuropeanmodel,withsubsidiariesindifferentcountries.HowevermanyJapa-nesecompanieshadanewefficientproductionplants,whichwasbuilttoserveitsexpandingnewmarkets.Atthesametimethedecreasingpricesofpaydutyoncommoditytheywereabletoexpandintotheglobalenvironment.Thecompetitivestrategiestheydevelopedwerefocusedoncostadvantageandqualityassurance.Theyalsorequiredacentralcontrolinthewholemanufacturingline;productde-velopment,procurementandmanufacturing.ThisapproachwasalsosuitablewiththewholeJapaneseculturebackgroundandtheirorganizationalheritagevalues.Theseculturalvalueswerealsooneofthemainmotivationsdrivingtheinterna-tionalizationofJapaneseMultinationalEnterprise.AsthegrowthinJapanwasstartingtofallandbecamecompetitivethesecompaniesneedednewsourcesofgrowthsotheycouldcontinuetoattractandpromotetheiremployees.Thisledtolifetimeemploymentthatwaswhatmadetheirorganizationvital,andself-renew-al.Thisalsoledtothestrengthofbiaswithanexport-basedstrategymanagingfromthecentre.Bykeepingallthedecision-makingandallthecontrolcentralized,theywereabletoretaintheirculturallydependentmanagementstyle.27Thisstruc-turalandmanagementstyleadoptedbythesecompaniesiscalled“centralizedhub”28

2.5 Mu lTi nATionAl orGAn iZATions

ThispartofthetheoryisprovidedtogivefurtherinformationaboutwhataMuti-nationalorganizationisandhowitoperates.Theinformationisneededtogetaperspectiveoverthecomplexityofactingovernationalboarders.Thisinformationisneededtounderstandhowdiversifiedtheorganizationbecomeswhenitex-pandsitsgeography.Thebalancebetweenthelocaldivisionandtheglobalorgani-zationisemphasedforanunderstandingofthecomplexrelationship,andhowitaffectsthereorganization.

AMultinationalEnterpriseisdefinedasanorganizationthatworkssimultaneouslyinseveralcountries.Theyworkwithtwodifferentforces,thelocaldepartmentand

26Appendix2


28Appendix2

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theglobal,whichshouldmaintaintheorganization.29

Becauseofthisthecompanyhastoadoptandtrytomakebothopinionsheard,whichcanbedifficult.Theworldeconomyisgettingbiggerandbiggerandmorecountriesareenteringtheinternationalmarket.Moreorganizationsarenowoper-atinginmorethanonecountrythentheyweredoingearlier.AMultinationalEnterprisecanbedefinedbothasasingleorganization(andanin-ternationalorganization)thathastheinternationalmarketasitsmainmarket.Tobeainternationalorganizationitneedstooperateinseveralnations,andwithinthesenationsthereexistsmanylocaldepartmentswhichtogethercreatestheMul-tinationalorganization.Tomaintainanorganizationithastoadapttoitsexternalparties,whichitiscompletelydependenton.Theenvironmentisalsoaffectingthestructureanddecision-making.Thisenvironmentisn’tthesameinallthecountriesthatthecompanyoperatesin;therebytheorganizationfacesdifferentenviron-ments,whichplayanimportantroleinsucceedingasacompany.30

Resourcesareapartoftheenvironment;thedependencyofresourcescouldbeincapital,skilledlabour,leadershipexpertiseandadvancedtechnology.Thesere-sourcesdifferinthesecountrieswheresomecountriescanhavegoodresourcesandothercountriesmighthavenone.Thesealsomakethedifferentgovernmentsimportantwheresomenationscantransportresourcesbetweentheboardersmoreeasilythanotherswhereitmightbealmosttotallyrestricted.31

Theseareforcesthatshaptheorganization.Legalandculturalfactorsoftendifferfromcountrytocountrywhichmeansthattheorganizationcan’thaveauniformwaytohandlebusinessovertheglobalworld.32

Aneworganizationstructureneedhasemergedduetotheaspectthatcountriesdifferinculture,politics,economicsystems,andlanguageideologies,legalandbusinessinfrastructure.Butalsodifferentkindsofneedsliketechnological,ordi-naryneedsandthefactthatcountriesalsodevelopdifferently.Thesedifferencesmakeaneedofaneworganizationformintheorganizations.33

MultinationalEnterprisesareseenasopensystemsthatexchangeresourcesbe-tweendifferentenvironments.Ifthiswouldnotbeawaytohandlethebusinessestheworldwouldinsteadbeseenasaglobalcompetitivemarket,aglobalpoliticaldomain,aglobalsocialdomainandaglobaltechnologicaldomain.Thiswayofob-servingtheworldwouldnotbeaveryrealisticwayofhandlingyourbusinesswhere









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lotsofdifferentfactorsaremeasuredbetweencountriesandcontinents,whichwillbeshownlater.34

Anotherviewistoseedifferentcountriesasabusinessportfolio,andhavedifferentsolutionsfordifferentnations.Thiswayofoperatingtheorganizationgivesalmosttotallyfreedomtothehostnation,andtheycanoperatetheirdivision,astheywantto.AthirdwayofoperatingaMultinationalEnterpriseistoinsteadofoperatingtheorganizationasoneunititoperatesasachainofstructuresandorganizationslinkedtogether.Thisstructureononehandconsistsofstructuresbelowthesestructures.Thisistheapproachthatwillbeusedinthisthesis.35

2.6 bou n DAri es C reATe probleMs

Nationalboundariesaffectmanypartsoftheorganization,whichinsomecasescancausenegativeeffectsanproblemsasfirmsexpandinternationally.Exampleofdifficultiescanbelegalandculturalfeatures.Partsoftheorganizationthataccord-ingtoexperienceandearlierstudiesdoesn’thavethesameeffectaretechnologyandeconomiccompetitionduetothefactthatitisn’tascommittedtothenationastheearliermentionedfactorstheyareinsteaddependentontheglobalenviron-ment.36

Therecanbeanidentifiedconflictbetweenthelocalpartsoftheorganizationsver-sustheglobalorganization.It’shardertogetthelocalorganizationtoworkastheentireorganizationduetothedifferencesbetweencountriesthathasbeenmen-tionedearlier.Atthesametimeasthelocalpartoftheorganizationhastofollowtherulesandwaysoflivinginitshomecountryitalsohastofollowandoperatebytheglobalorganization’srules,thiscanmanytimescreateaconflictorahardwaytooperatetheorganizationcorrectly.37

Duetotheaspectthattheworldisbecomingamoreglobalareaconcerningpress,educationalinstitutions,professionalaccreditationandinternationalconsultingfirmsaregettingclosertogetherandareoperatingrathergloballythannationally.Whentheseareasareworkingclosertogetheritalsoaffectstheinternationalenvi-ronment,nationalboardersarebecomingunclear.Theseaspectsaretwoconse-quencesthatareaneffectoftheglobalizationandtheyareinneedofafunctional









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organization.38

Tostartwith,theorganizationhastokeepitscultureunitedtokeeptheorganiza-tionasonebigunitbuttheorganizationalsoneedstoadapttothelocalpartsoftheorganization,whichisdifferentineverycountry.Thesetwoforcescaninsomeorganizationsworkintwototallydifferentdirectionswhichcanleadtoseriouscon-sequences.Buttheycanalsobeasimilarorganizationgloballyaswellaslocallywhichwouldn’thaveasbigimpactastheearliercase.Adaptationofthesechangesmayvaryduetothedifferencesbetweennationsinmanydifferentareas.39

Thesedifferencesmakeitharderfortheorganizationtoworkasaunifiedorganiza-tion,whenyou’readaptingtodifferentviewsforexamplecultureinsteadofjustadaptingtoonecountry’sculture.

2.7 orGAn iZATionAl sTruCTu re oF GlobAl Fi rMs

Fromastrategicpointofviewtheorganizationalstructureofglobalfirmsplaysanimportantroleforoveralleffectivness.

WhichorganizationstructureafirmisgoingtousehasapowerfulinfluenceonthemanagementprocessinaMultinationalEnterprise.Thereforemanymanagersfo-cusontofindoutwhichformalstructureshouldprovidethebestresultforeachMultinationalEnterprise.40JohnStepford,andhisresearchonthe187largestU.S-basedMultinationalEnterprises,touchesthissubjectandtheseissues.Hisworkre-sultedin“stage-model”41,thismodelshowedoutwhichstructureshouldaMulti-nationalEnterpriseshouldtransformtogetthebestconditionsfortheirstructure.

Whenafirmgrowsandthegeographyfortheorganizationisgettingbiggerthestructureoftheorganizationshouldbechanged.Themoreglobalanorganizationbecomesthemorelikelyitistoadoptahierarchicstructure.TheMultinationalEn-terprisefacesabalancebetweentworoads.Thebalanceachievingthebenefitsofcross-borderintegrationandthoseoftheresponsivenessofindividualMultination-alEnterpriseaffiliatestonationalcapabilityandneed.Thesecondbalanceisthatwhichtriestoachievetheadvantages,butnotthedisadvantages,ofageographicalandproduct-basedorganizationalstructure.ThegreatertheroleplayedbyforeignaffiliatesintheglobalsuccessofanMultinationalEnterprise,themorelikelyintra-firmdecisiontakingwillbecomelateralandmultidimensional.42






41Appendix9


13

TherehasbeenanexaminationofthelargestandmostdifferentMultinationalEn-terprise.Buteventhoughtheyaredifferentfromeachothertheyhavesomefea-turesincommon.Allofthemseemtoformactivitiesinthelocalparts,adaptingtogeographicdifferences.Thiscanbeseenpeculiarintechnologicalinfluencedor-ganizations.Wherethedecisionprocesscanbedescribedashierarchicalratherthanfluent.43

2.7.1 strategies concerning local parts of the organization

AMultinationalEnterprisecantakefourdifferentmainapproachesconcerningtheconnectionbetweenlocalandglobalpartsoftheorganization.Belowtherewillbeashortbriefaboutthedifferenttypesofstrategicapproaches.44

Ethnocentricfirm;thefirmcanbecomparedwithhomecountriesanditscolonieswherethereoccurlittledecentralizationofdecisiontaking.Whendecisionsarede-centralizedtheyareensuredtofulfilthewishesofthehomecountry.Theneedofthehome-countrycustomersandorganizationstructureislikelytobehierarchical.TheR&Ddepartmentoftheorganizationishandledinthehomecountryandalit-tleamountofpowerisinthehandsofthehostcountry.45

Polycentricfirm;thisisaalmostcompletlydecentralizedfirm,whichoperatesaftertherulesofthecountryinwhichitoperates.Thehostcountryisgivenabigamountoffreedomtodeveloptheirorganizationlocally.46

Regiocentricfirm;thisfirmtriestoblenditsownstrategieswiththesubsidiaries.Thegovernanceismutuallynegotiatingwithheadquartersandregionalofficestogetthebestadvantages.Marketingiscommonlystandardizedwithintheregionbutnotacrossboarders.Thematrixstructureoccursmostcommonlyintheseor-ganizationapproaches.47

Geocentricfirm;thistriestoadoptaglobalapproachindecisionmaking.Theyaremostlyadoptingamixedstrategy,whichdependsonthelocationofthedecisiontakers.Technicalfactorsoftheorganizationarecentralizedduetothefactthatdis-cussionismadebetweenthedifferentunitsoftheorganization.Personalrecruit-mentandpurchasingaredecentralized;themaininformationbetweencustomersorpeopleinthehostcountryisdoneonthatlevel.Organizationstructuresarelikelytobehierarchicalratherthanfluent.Theinfluencefromthehostcountryonthis






14

typeoforganizationismuchlesstheninthefirstcase.48

2.8 orGAn iZATionAl sTruCTu res

ThispartofthetheoryisprovidedforthereadertoshowthetypesofstructurestheIT-divisionhadbeforethestructuralchangeandthestructureithasafterthetrans-formationasdescribedintheliterature.Thisisprovidedforthereadertogiveaviewofwhathadtobedonefortheorganizationalchange.

2.8.1 vertical decentralization (hierarchical structure)

Inverticaldecentralizedorhierarchicalorganizationsmostofthedecision-makingisdelegateddownwardsanditisquitedifficulttotransferthepowerupinthehier-archy.Thedecision-makingislargelyconcentratedtotheoperatingcore,wherealargenumberofmembersofprofessionalsworkcoordinatedbythestandardiza-tionsofskills.Itisfocusedonaformalpowertomakechoicesandauthorizethemwhichistheoppositeofthemoreinformalpowerwhereitrisesfromadvisingandexecuting.Theorganizationisstronglydecentralizedinverticaldimensionbecausethispowerrestsatthebottomofhierarchy.Inaverticaldecentralizationtherearethreemainquestionsthatarise.Andthesequestionsaretightlyintertwined.49

•Whatdecisionpowersshouldbedelegateddownthechainofauthority?•Howfardownthechainshouldtheybedelegated?•Howshouldtheirusebecoordinatedorbecontrolled?

AccordingtoMintzbergcorporationstendtodelegatepowerofmanufacturingandmarketingdecisionsfartherdownthechainofauthoritythantheydowithpower,financeandlegaldecisions.Andthatthepowerinadecisionprocessrestsatthelevelwherethenecessaryknowledgebestcouldbeaccumulated.Thesefindingsdescribetheworkconstellationsintheorganization.Andeachoftheseconstella-tionsexistsatthelevelofhierarchywheretheinformationconcerningthedeci-sionsofafunctionalareacanbeaccumulatedmosteffectively.Thisresultedinthefollowingfigure.50Inthisfiguretheycameupwith4mainconstellations,financeatthetop,manufacturingbelow,thenamarketingconstellation,andfinallythere-searchanddevelopment.Butthisselectivedecentralizationleavessomequestions.Howshouldtheycoordinateandcontrolthis?Onesuggestionisdirectsupervision.Buttogreatrelianceonthisformofcoordinationwouldbethesameastorecen-tralizingthedecisionprocessandtherebycancellingtheadvantagesofselectivedecentralization.51


49MintzbergH.1992.StructureinFives;DesigningEffectiveOrganizations.PrenticeHall

50Appendix3

51MintzbergH.1992.StructureinFives;DesigningEffectiveOrganizations.PrenticeHall

15

2.8.2 Matrix organization

Thistypeoforganizationstructureissignificantwithamultipleleadership.Thepeopleinthestructurehavetwodifferentleadersintwodifferentstructures.Whereoneleaderisafunctionalleaderwhiletheotherisaleaderduetotheaspectthathe/sheisanexpertinthearea.52

Amatrixorganizationcouldbedescribedasaflexibleandadoptablesystemcon-sistingofresearchersandprocedurestoachievecurtaingoals.53Thedifferencefromtraditionalmodelsdoesnotlieinachievingsatisfyingresultsbutinsteadhowtheresultsareachieved.Areaslikeauthority,responsibilityandtheaccountabilityareimportantiftheorganizationwantstoperformagoodresult.54

Thistypeofstructuredoesn’tfiteveryorganisation,dependingonwhatbusinessesthecompanyareindifferentstructuresareapplied.Amassproductionwithstand-ardizedproductsthatdoesn’tchangealotcouldbebetteroffwithdifferentstruc-tures.Theworkcanflowcontinuallyinthesebusinesseswhereeachgroupaddsad-ditionalvaluetotheprocess.Butthisdoesnotsaythatadivisioninthesetypesoforganizationdoesnotneedamatrixorganization.Differentdepartmentsofthecompanycouldgaingoodopportunitiestousethemodel,likeasalesapartmentthatdoesn’tcombinewiththeproductionapartment.55

Themodelisworkingwellwhentheorganizationisworkingwithspecificprojects,wherenewgroupscouldbeformedwhennewcontractshavebeensigned.Thesegroups’changesconstantlyasnewcontractsareformed;whenprojectsareaban-donedordonenewproductsaremade.Matrixorganizationsarebuiltaroundspe-cificprojectswhereleadersaregivenauthority,responsibilityandaccountabilitytofulfilprojects.Projectleadershaveagroupofpeoplewithdifferentqualifications,whichwillworkasateam.Theprojectleaderisgivencurtainauthoritytoreward,promoteandraisesalarytothepersonalbutalsoreleasepersonaltogetagoodgroup.56

Thisleader’sresponsibilitycouldenhancethepowerandtheefficiencyofthegroup,makingagoodgroupthatworksonasatisfyinglevel.Matrixorganizationscanbeseenasawebofrelationsratherthenalineofstaffandworkperformance.Thewebsmissionsistostartandfinishprojectsastheyar-rive,alsotosetprioritiesbetweendifferentprojectsdependingontheimportanceoftheproject,wheretheenvironmentischangingduetotechnology,information,productplansandcontrolsystems.Onenegativeaspectswiththematrixorganiza-tionisifthepersonnelwithinthegroupisn’ttrainedandeducatedtoworkinthe

52http://en.wikipedia.org/wiki/Matrix_organization#Matrix_organization,[2007-06-01]

53Appendix4

54Knight,K.1976.Matrixorganizationsareview.Thejournalofmanagementstudies



16

developingorganisationfrustration,emotionaldisturbanceandloweringmotiva-tioncanoccur.57

Toworkinanenvironmentcharacterizedofchangebecauseprojectsstartandfin-ish,theenvironmentisconstantlychanging.Thismakestheworkplacelesssafeandsecure,asitwouldbeinastableorganizationthatworksonthesameideasallthetime.Peoplecangetconfusedanddon’treallyknowwhattheyaresupposeddointheirassignments.58

2.9 suMMAry

ThischapterhasprovidedbackgroundinformationaboutorganizationsthatactsgloballyasLGElectronicsdoes.Examplesofdifferencesbetweennationsandfactsthathighlightensthatpeopleandorganizationsaredifferentfromeachotherallovertheworldisprovided.ThisdifferencehasbeenappliedinstudyofGeertHofst-ede,whichhasanalysedthedifferencesbetweenthehostnationandthehomena-tion.ThebigdifferencebetweenSwedenandSouthKoreacouldexplainthetwoverydifferentorganizationstructureseachofthecountryprefer.Thesetwodiffer-entorganizationstructureshasbeentakenintoaccounttoletthereaderseethebigdifferencesinpreferenceoforganizationstructureforthenations.Ithasalsobeenshownthatstructuraldifferencesbecomeanimportantissuewhenfirmsexpandacrossnationalboarders.Yetthereislittleinformationinthelitteratureaboutfirmswhenthemovebetweenorganizationalstructures.



17

3 Method

Thischapterwillpresentthemethodthatwereusedforthestudiesinthisthesis.Themethodsstrengthsandweaknesseswillbeanalysedanddiscussedfurtheron.Thisisimportanttogivereliabilitytothethesis.

3.1 i nTroDuCTion

Themethodgivesinformationabouthowtheinformationthatisneededtosolvetheprobleminthethesiswascollectedandfurtheranalysedanddiscussed.Theproblemcanmanytimesbehandledandsolvedwithseveralsolutions.Buttogetaqualitativeresultinthethesisandmakethesolutionnarroweranddeeperfewermethodsareoftenapreferredsolutiontofindtherightinformation.Theresearchprocessshouldbedoneinawaytodevelopandverifyathesis.Theverificationwillhopefullycomefromthemethodthathasbeenchoseninthethesis.59Scientificmodelscombinedwithinterviewswillleadtoaroadthatintheendresultsinaval-uableresult.

3.2 MeThoDs oF Th e sTu Di es

Togetabroaderresultandstrengthinthetheorychapterwecollectedbackgroundinformationaboutthesubjecttothethesis.Wecollectedthebackgroundinforma-tionfromliteratureandnameditsecondarydataanditisdefinedanddiscussedbelow.Informationabouttransformationofanorganizationalstructurefromonestructuretoanotherstructurewasn’tfound.Duetothefactthatwetheexistingliteraturedidn’tknowmuchaboutthesubjectwechoseaqualitativemethodthatprovideduswithinformationaboutthesubject.

Thequalitativemethodweusedwereacasestudywhichfulfilledthepurpose.Incasestudies,whichareacommon,analysemethodatqualitativestudies,oneorseveralcasesareanalysedonthedeeptogetanunderstandingforacomplexphe-nomenon.Duetothefactthatcasestudiesonlyanalysesoneortwocasestherecan’tbeanygenerallyconclusionsmadefromthestudies.Thestudyonlyfocusesongivingadeeperoverviewandfindnewareasofresearchareasforthesubject.60

Thereareadvantagesanddisadvantageswiththeuseofacasestudy.Advantagesarethatthatthetheoriesthatarefoundareeasytofollowupwithquantitativere-search.Casestudiesarenotdependentofearlierliteratureandaretherebyusedonstudieswherelittleresearchhasbeendone.Itisalsousedinstudieswherethefo-cusisongivinganoverviewofthesubject.61

59Lundahl,U;Skärvad,P-H.1999.Utredningsmetodikförsamhällsvetareochekonomer.StudentlitteraturAB

60Yin,R.K.2003.CaseStudyResearch:DesignandMethods.ThousandOaks

61Eisenhardt,K.1989.BuildingTheoriesfromCaseStudyResearch.AcademyofmanagementReview

18

Anegativeaspectwithcasestudiesisthattheauthorsmanytimessumsupthere-sultandthatitcanbehardtoobserveaaiminthestudy.Whichcanleadtoanun-structuredworkwithmanytheories.62

3.2.1 primary data

Qualitativeanalysiswasgatheredthroughpersonalinterviews,whichwillfocusonpeopleinsideofontheorganizationandmainlythedivisionthatisunderchange.Thecollectionofdatawasgatheredforaninterviewfacetofacebetweentheinter-viewerandtherespondents.Questionswereaskedtofillagapofunknownknowl-edgefromtheinterviewers’perspective.63Twodifferenttypesofinterviewsareusedthroughthisthesis,structuredandfreeinterviews.Thestructuredinterviewswillprovidebasicinformationabouttheorganization.Freeinterviewsisnotonlyinfor-mationbaseditisalsopre-oriented.Adialogisstimulatedtoleadintounidentifiedareasfortheinterviewerandlettherespondentsharetheirpointofview.64

Inthisthesiswedidthreedifferentinterviews.TwostructuredinterviewsweredonewithpeoplefromtheIT-division.Theseinterviewstookabout20-30minuteseach.Ourthirdinterviewwasafreeinterview,thisinterviewwasmadewiththepersonwhowasinleadofthetransformation,andtheinterviewlastedapproxi-matelyonehour.TheinterviewstookplaceatLGElectronicsinStockholm.

3.2.2 secondary data

Datahasbeencollectedfromalreadyexistingdatafromliteraturethatsurroundsthesubject.Thedatacanworkasbasicinformation,whichstrengthensorweakensthereaders’opinions.Thisdataisnotnewresearchmaterialbutratherbackgroundinformation.Theinformationhasbeengatheredfrombooks,articles,documentsandresearchstudies.65

Informationforsecondarydatainthisthesisisbasedonarticlesandbookssur-roundingMultinationalEnterprisesandtheirorganizations,andinformationsur-roundingthedifferenttypesoforganizationstructures.Theinformationfromsec-ondarydatadoesn’tconcerntheprocessduetothefactthatthisinformationisnotavailable.Thesecondarydatainthisthesisgivesgrounddataaboutthedifferencesbetweennations,strategiestoapproachintonewmarkets,culturedifferences,or-ganizationsinthispositionandthestructuresinvolvedinthesechanges.

3.3 reliAbi liTy

Toreducethechanceofgettingamisleadinganswerthecollecteddatawillbeana-lysedthroughtwovariablesreliabilityandvalidity.Astrongvalueinthesetwovari-

62Eisenhardt,K.1989.BuildingTheoriesfromCaseStudyResearch.AcademyofmanagementReview

63Backman,J.1998.Rapporterochuppsatser.StudentlitteraturAB

64Backman,J.1998.Rapporterochuppsatser.StudentlitteraturAB

65Lundahl,U;Skärvad,P-H.1999.Utredningsmetodikförsamhällsvetareochekonomer.StudentlitteraturAB

19

ablesmakesthecredibilityofthethesisstronger.Reliabilityshouldanswerthreequestions;

Willthemeasuresyieldthesameresultsonotheroccasions?Willotherobserversreachsimilarobservations?Istheretransparencyinhowsensewasmadefromtherawdata?

Themainpointwiththereliabilityisthatthecollectedmaterialshouldbeaffectedaslittleaspossiblebyexternalfactors;forexamplewhatdayoftheweektheinter-viewsaremadeandthatthereflectedopinionisn’ttheinterviewer’sownopinion.Theseareonlyexampleoffactorsthatcancreateanimpactontheinterviews;thereareseveralaspectsthatcanaffecttheresultexceptthesetwoexamples.66

Duetotheaspectthatthisisathesisthatisbuildaroundaqualitativemeasure,personalmoodorotherexternaleffects,whichwouldresultinmisleadinganswers,canaffectthereliability.Thethreequestionscanbeansweredinthefollowingwayincontradictiontothemeasurements.Itishardtosayifthemeasurewillyieldthesameresultonotheroccasions,duetotheseveralaspectsinvolved.Thepartiesin-volvedinthisthesisarefromtwodifferentcountrieswithtwodifferentvalues.Changingtotwoothercountriescouldyieldinacompletelydifferentresult.Otherobserverswouldmostlikelyreachsimilarobservationsaswell,duetothefactthatthecollectedinformationiscollectedfrompeoplewithintheorganiza-tion.Thesepeoplewouldmostlikelygivethesameanswerstootherobservers.Thematerialusedinthethesisisallincludedandisessentialfortheresultofthethesis.

Webelievethatthereliabilityisrelativelyhighinthisthesis.Theonlythingthatcouldbequestionedisourinterviews.Didweasksensitivequestionsthatcouldaf-fecttheanswerswegotfromthestaff?Itispossiblethattheywantedtheiran-swerstobeareflectionofwhatthefirmwantedthemtosay.Webelievethatthisisnotanissueforthisthesisduetothefactthattheanswerwegotfromtheinter-viewswassimilar.Thisstrengthensthereliabilitybecausetheemployeesthatwereintervieweddidnotgetachanceoflookatthequestionsinbeforehand.Andwouldn’tthereforebeabletodiscussthequestionstogether.

3.4 vAli DiTy

Validityconcernsthefindingsinthethesisandthetruthfulnesswiththesefind-ings.Themainquestionthatshouldbeansweredis,isthematerialthatiscollectedmeasuredrelevantlyfortheproblem.Thevalidityinthisthesiscouldbeconsideredstrong;thepersonsthatareinterviewedhavebeenincludedinthetransformation,whichstrengthensthevalidity.Informationalinterviewsaboutthechangeofthestructureareaskedtothepersonthathasdevelopedthechange.Thiswouldstrengthenthevalidityduetothefactthattheinformationisgivenfromthedevel-

66Lewis,P;Saunders,M;Thornhill,A.2003.Researchmethodsforbusinessstudents.PrenticeHall

•••

20

operofthechange.67

Thevalidityinthisthesiscouldbeconsideredsatisfying.Butonethingthatcan’tbeconsideredstrongistheexternalvalidity.Thisshouldnotbeaproblem,becausethatisnotthemainpurposewiththisthesis.

3.5 CriTiCisM To sou rC es

Criticismofsourcesconcernsthesourcesthatareusedforthegatheredinforma-tioninathesisandthecredibilityofthesesources.Togetathesisthatisascredibleaspossiblethesourceshastobechosenwithregards.Somesourcesareconsideredmorereliablethanothersthesearedoctorthesis,bookswrittenbywellknownsci-entistsandrapportspublishedbyUniversitiesareallsourcesthatareconsideredreliable.68

Forasatisfyingandtruthfulthesisacriticalviewonthesourcesthatareusedinthethesisisneeded.Therearethreeguidelinesconcerningthecriticsofsourcesthattogethermeasurethecriticismtothesources,tendencycritics,dependencecriticsandcontemporaryperiodcritics.69

Tendencycritics;Thereisapossibilitythatthewritersopinionaffectstheresultoftheresearch.Thewritermightchoosesourcesthatrepresentthemselves,whichrepresentthescientificviewtheypossess,whichwouldleadtoamisleadingthesis.Thesourcesthathavebeenusedinthisthesisismostlydoctors’thesisandprofes-sors’works,thesetwoarebothtrustworthysources,butthereisalwaysariskwhenthegatheredinformationiscollectedbyexternalpersons.70

Dependencecritics;tominimizethecriticsofthesources,theinformationthatiscollectedforthethesisshouldbeindependentofeachother.Materialfromonesourceshouldn’tbeaffectedbyanothersource,thentherecouldbeariskthatoneopinioncouldcolourtheresearch.Mostoftheinformationthatisgatheredforthisthesisistakenfromstudiesthatarebasedononepersonsownresearchandisthereforebasedoninformationcollectedonlyonetime.71

Contemporaryperiodcritics;Thetimebetweentherelevantoccasionsthatarein-cludedinthethesisshouldbeascloseaspossibleintimetominimizethepossibil-ityoflosinginformationthatpeoplekeepintheirminds.Memorieschangeandperceptionschangeovertime,whichinaninterviewcouldresultinadifferentan-swerafteraperiodoftime.InthisthesisthechangethatLGElectronicshasmadeintheirorganizationwasstartedjustacoupleofmonthsagoandisstillgoingon.So



69Nyberg,R.2000.Skrivvetenskapligauppsatserochavhandlingar.StudentlitteraturAB



21

thecontemporaryperiodisveryrelevantand“uptodate”inthisthesis.72

3.6 suMMAry

Themethodusedinthethesiswillconsistedofagatheringbothsecondaryandpri-marydata.Thesecondarydatawasgatheredfromliteraturesurroundingdifferenc-esbetweennationsandcultures,thetwoorganizationstructuresandinformationaboutmultinationalorganizations.Theprimarydataisgatheredthroughinter-viewsfromtheanalysedorganizationLGElectronics.ThisinformationwillprovideinformationabouttheprocessthedivisionwentthroughwhenitchangedtheIT-division.


22

4 Result

Inthischapterthedatacollectedconcerningtheorganizationinthisthesiswillbepresented.Thedataisbasedoninterviewsandwillbothshowtheemployeesopin-ionsaboutthetransformationbutalsogivefurtherinformationaboutthestruc-turalchange.

4.1 lG eleCTron iCs

LGElectronicswasestablishedin1958inSeoulandtheywerepioneersindevelop-ingoneofthefirstradiotransmittersinSouthKorea.InthattimeLGwasashorten-ingforLuckyGoldstar(LuckyGeumseonginSouthKorea)Butin1995theychangedtheirnametoLG(Life’sGood)atthesametimetheyalsostartedtodevelopaTV,mainlyforthehomemarket.TodayLGElectronicshasgrownandtodaytheysellallkindsofproducts;homeElectronics,householdproducts,ITandmobilephones.LGdiffersfromtheircompetitorsinoneway.Intheirproductionlinetheymaketheirowncomponents.73

TodayLGElectronicshaveover82thousandemployeesallovertheworldin120companies,theyalsohave80subsidiaryaroundtheworld.In2006thesaleswere38,6billionsUSD.In1999-2000LGstartedupasubsidiaryinScandinavia.TheirheadquarterinScandinavialiesinStockholmandtheyhaveabout110employees,buttheyalsohavesalesofficeinHelsinki,CopenhagenandOslo.Thetotalamountofpeoplewhoworkherearearound150people.WhenLGstartedupinScandina-viathesalesforyear2000was45millionUSD.In2006thesaleshasincreasedto500millionUSD.74

LGElectronicshasgrownintoaworld-classcompanyinITproductsandindigitalappliances.LGElectronicsPC-divisionestablishedin1982andtheyaretodayoper-atingin160countries.InSwedentheirIT-divisionhasabout13employees.IntheirIT-divisiontheyhavetwodifferentsalesdepartments,onefornotebooksandoneforIT/monitors.Theyalsohaveanorder-intakedepartment,onedepartmentfortherelogistics,peoplewhoworkwiththeirmarketing,technicalengineerandtheirproductinformation.75

4.2 eMpi riCAl sTu Di es

4.2.1 What does the collected data consists of?

Theinformationcollectedfortheempiricalstudiesiscollectedthroughthreeinter-

73http://sv.wikipedia.org/wiki/LG_Electronics,[2007-05-16]

74http://nordic.lge.com/sv/about/corporate/company_overview.jsp,[2007-05-16]

75Appendix5

23

viewsfromthreedifferentpersonswithintheLGorganization.ThepersonsthatarestudiedwithintheorganizationbelongtotheIT-division,whichtotallyconsistsofthirteenemployees.TheinterviewobjectsarePatrikAndersson,FredrikLundqvistandPontusMeijer.PatrikAnderssonissalesleaderoftheIT-divisionandhestartedtheorganizationalchange.FredrikLundqvistworkswithproductioninformation,pressandeducation.PontusMeijerworksasasalespersonforLG.76

4.2.2 An overview of what has happened to the division?

TheIT-divisioninLGhasbeenthroughanorganizationalchange.Theorganiza tionstructurehasgonefromahierarchicalstructuretoamatrixstructure.The pictureinappendix7showshowthestructurelookslikeafteritstransformation fromahierarchicalstructuretothestructureithastoday

Reportshavebeenmorecommonandpeoplehavegotmorepeopletoreportto, regularmeetingswithinthedivisionhavestarted.

BeforethechangethemainlanguagespokenandusedatworkwasEnglish,but Swedishhasbeenbroughtintothemeetings,becausethatwouldminimizethe riskofmisunderstandingsandthatpeoplewerequietatthemeetingsbecause theywereafraidtotalkinalanguagetheydidn’tcontrol.

TheentireIT-divisionhasbeenassembledononefloor,beforetheywerespread ondifferentfloors.

Morepeoplehavebeenhiredtoworkforthedivisionsotheycanfillthegapnow whentheyhaveanewstructure.77

4.2.3 Why was the change done?

Thefirstsignofanewnecessaryorganizationalstructureoccurredwhenemploy-eesfromthesalesdivisionswereleavingtheirpositionsatLGElectronics.Patrikisnotsureifthatdependedonthestressoftheirworkorifitjustdependedonthefactthattheyfoundbetterjobs,itishardtosay.78Thisfactorgaveroomforachangeintheorganization,andintheautumn/winterof06twoimportantper-sonsfromthesalesforcequit,whichmadeitimpossiblefortheirdivisiontokeeponinthesameway.Thefactthatthesaleforceswereoverloadedwithworkandcouldnothandlealltheinformationinagoodwaywasoneotherfactorthatshowedthatthedivisionhadtodosomething.Theydidtasksthatweren’tmeantforthesalespeopleanywayandtheydidn’treallyhavetherightinformationforallthetaskstheyweremeanttodo.79

Anotherfactorwasthatpeopledidn’tseemtobesatisfiedattheirjobsandtheydidn’tseemtobemotivatedtogotowork.Throughthehierarchicalstructurepeo-

76Appendix6

77Appendix6.1

78Appendix6.1

79Appendix6.1

•

•

•

•

•

24

plewithintheorganizationwereisolatedfromeachotherandtheydidn’tseemtoenjoydoingtheirwork.80

Patrikfeltthatthecomplexorganizationstructuretheywereusingmadeithardfortheemployeestoknowwhatwashappeningintheorganization.Forexample,ifashipmentofphoneswasdelayed,thesalesforcecouldgiveapromiseofadeliverydate,buttheydidn’tknowthatthephonesweredelayed.Thiscouldhappenbe-causetheyhadn’tspokenwiththepeopleonthelogisticsdepartment.Thiscom-municationproblemwasahugeproblemforthedivision,whenthesaleforcescouldnotgivethecustomersgoodinformation.81

4.2.4 how was the change done?

PatrikAnderssonmanagerofIT-divisionmadeapropositiontothemanageroftheLGNordicdivisionaboutanorganizationalstructuralchange.Patrikthoughthatthebestwaytostartwastofirstdiscusswithhisco-workersofwhattheywanted.ThisgavePatrikapictureofhowthedivisionshouldlooklikeandhowtheywouldliketoworktogether.Hisvisionwasthathewantedthestafftoworkmoretogeth-er,andiftheyhadaproblem,theywouldn’tjustgototheirsuperior,butinsteadtheycouldgotothepersontheythoughtcouldhelpthemtosolvetheirproblem.Anotherfactorhetookinmindwasthathewantedthestafftoworkmoreinternalwhichwouldgenerateabettercommunicationintheentiredivision.Beforethechange,thestaffjustsawthepurchaseorder,andtheyjustdidtheirjob,thestaffdidn’tnoticethatiftheywoulddoabetterjobtheywouldhelpthenextpersonwhowouldworkwiththeorder.82

Withthisinformationhecreatedastructurethathasthelookofamatrixstructurethatcanbeseeninappendix7.Throughthisneworganizationstructureheneededtofillemptyplacesinthestructure.Theorganizationfilledthesepositionsfromwithinthecompanyandthroughexternalworkforce.Therewhereaneedoftotallyeightnewemployeestofillemptypositionsinthedivision,allexceptonepositionhadbeenfilledwhentheinterviewsweredone.83

Hisfirstactionwastoasembletheentirestaffonthesamefloor.WhyhedidthischangewasbecauseofthattheIT-divisonhadacommunicationproblemfromthestart,thiswasbecausetheywerespreadoutovertheentireofficeandintheentirebuilding.Sohisfirstprioritywastogatherthedivisiononthesamefloor.Butnotjustintoonefloor,hewantedthemtoworkascloseaspossible.Sotheyre-struc-turedthedesignoftheirworkplace.Thismightsoundlikeahugeproject,butitwasjustamatterofmovingofficessothattheywouldmatcheachother.Afterthathe

80Appendix6.1

81Appendix6.1

82Appendix6.1

83Appendix6.1

25

26

justlookedathispaperofhowtheorganizationwouldlooklikeandheorganizedhisstaffingroupsthathethoughtwouldmatcheachotherandhavesimilarday-to-daywork.Andbecausemostofthestaffjusthadworkedinourdivisionforacoupleofmonth,hethoughtthattheywouldn’ttakesomuchharmofthesechanges.84

Byassemblingthestaffinonefloortheyalsocoulddiscussproblemsandissuesbe-tweenthemselvesduringcoffeebreaksandlunches.Workforceshavebeenin-volvedtoworkwithmoreproducts.Andinsteadofjusthaveoneleadertoreportto,Patrik,appointedaleadertoeveryteamthatthestaffcouldreportto,thiscouldbebothpositiveandnegative.Theriskwasthatitcouldbeconfusingforthestaffwithseveralleaders.Andalsosomecommunicationproblemcouldoccur.Atthebegin-ningtherewassomeconfusionforthestafftowhichtheyshouldreport.Butac-cordingtothestafftheyjustthinkitmakesthingsclearer.85

TheneworganizationstructurewasmadewithaminimalchanceofinteractionfromtheSouthKoreanworkforceintheorganization.Thiswasmadetominimizetherisksofconflictsbetweenthedifferentculturesandtominimizetheriskofmis-understandingsbetweenthepartiesinvolved.Theco-operationbetweenthepar-tiesisneededtogetagoodjobdonebutitismadeexternaltotheorganizationstructure.86

4.2.5 What was the result of the restructure?

ThroughtheinterviewthestaffmembersandtheirmanagerPatrikAnderssonwithregardstothestructuralchangehaveemphasizedmostlypositivereactions.SincetherestructureoftheorganizationthesalesforLG’sIT-divisionhasneverbeenashighasitisatthetimeoftheinterview.ComparedtoPhilipsLG’sITdivisionhassold50%moreproductsinthefirstquarteroftheyearcomparedtoPhilipslosswith40%.Thiscan’tbeconnectedwiththeorganizationalchangeoftheIT-divisionbutitcoulddefinitelybeafactor.87

Thebiggestchangehasemergedinthesalesdepartment,whichnowisinvolvedinsellingmoreproducts.Theyhavebecomemoreflexibleintheirworkandcanworkwithseveraldifferenttaskscomparedtotheirearlierworkresponsibilities.88

Everyemployeeinthedivisionhasgotanewleadertoreportto,whichcanhavebothpositiveandnegativeeffects.Onemoreleaderhasbroughtalittleconfusionbutalsoaclearerwayofworkinginthedivision.Thefactthatanewleaderhas

84Appendix6.1

85Appendix6.3

86Appendix6.1

87Appendix6.1

88Appendix6.2

emergedhasn’tchangedcommunicationwithhisoldmanageraccordingtotheempolyess.89

Beforethetransformation,theyhadmajorproblemstogathertheirwholedivisionformeetings.Todaywhentheyaregatheredonthesamefloortheycanhavethesemeetings,onceeveryfortnight,thisworksoutfinefortheentiredivision,becauseofthefactthateverybodyknowsaboutthemeetingsinadvance,everyonecangetthere.Thesemeetingsareveryrelaxedandtheyhavebeenabletoholdthesemeet-ingsinSwedish,eventhoughtheyhaveacoupleofSouth-Koreanmanagersinthedivision.PatrikwantedtoholdthesemeetingsinSwedishbecausethentheriskformisunderstandingswouldbeminimized.Andbecausehewantedthestafftotalkopenly,PatrikknewfromexperiencethatmeetingsinEnglishmakepeoplemorequitethantheyreallyare.Thenewmeetingshasn’tstolenanytimefromthequal-ityofworkeither;theyhaveinsteadbroughtaclearerviewofwhattasksaremeantfordufferentpositions.90

Asaresultfromtherestructureoftheorganizationmoreproductshavebeenbroughtintothedifferentpositions.Thishasbroadenedtheknowledgeofotherpeople’sworkandknowledgeinthedivision.Thishasresultedinthatthecoopera-tionhasincreasedbetweenthestaffmembers.Thestaffhasbeenmoreinvolvedinwhatthewholedepartmentdoesandintheirwork.Thishasledthestafftobemorecooperativetohelpeachotherifsomeonegetsaproblem.Thishasalsomadeitpossibleforthedivisiontoreducetheoverloadofworkwhichwasamajorprob-lemwiththesalesforce.Todaypeopleknowtowhomtheycansendtheircustom-ers,iftheyhaveaproblemthatthesaleforcecan’tsolve.91

AnotherthingthatPatrikthinkhaschangedisthatthestaffisworkingmoreeffi-ciently.Andthatthestaffisinabettermoodwhichalsohassolvedthecommunica-tionproblem.Whythishasworkedoutsowell,inPatriksopinion,isthatseveralpersonsinthisdivisionisrelativelynewandthereforehaven’tgotstuckinplanningtheirwork.InthesefewmonthsPatrikhavealsoseenthatthestaffhasshownmoreengagementintheirtasks.92

ThisquartertheIT-divisionhasincreasedtheirsaleswith50%comparedtolastyear.Ifthisdependsonournewstructureishardtosay,butPatrikbelievesthatwithoutthisre-structuretheycouldneverhavebeenabletoincreasetheirsalesthismuch.93

Thefactthateveryoneknowsmoreabouteachother’srolesintheorganization

89Appendix6.3

90Appendix6.2

91Appendix6.1

92Appendix6.1

93Appendix6.1

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makesapossibilitytofilleachother’spositionswhenpeopleareawayfromwork.Anegativeaspectduetothisrestructureoftheorganizationisthatithasstolensometimefromwork,duetothefactthatrestructuringanorganizationtakestime.94

Onaccountofthischangeintheorganizationstructureitiseasythatthestaffgetsinsecureoftheirworkandiftheydoagoodjob.ThereforePatrikthinkitisimpor-tanttoencouragethestaffiftheydoagoodjob.Itisn’tthatbigdeal,aclapontheshoulderourjustalittlegiftthatshowsthemthatLGcaresabouttheiremployees.AndforPatrikasamanageritissomucheasiertodaytogivethestafffeedbackontheirwork.Whentheysittogetherhecantakepartintheirwork.95

4.3 suMMAry

ResultconsistsoffirstbackgroundinformationabouttheglobalorganizationLGElectronics.FurtherontheresultpresentsthematerialcollectedfromLGElectron-icsIT-division,thisinformationfocusesonthechange,whichhasemergedwithintheIT-division.Overall,theresultssuggestthatgatherthestafftoonefloorcanbehelpful,isolatethethedivisonfromtherestofthecompanysotheycanoperateintheirpreferredstructure.

94Appendix6.1

95Appendix6.1

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5 DiscussionThischapterwillconnecttheresultwiththetheoryofthethesis.Thediscussionwillbemadeonourpointofviewandwillconnectthedifferentchaptersofthethesis.

Thetheoryhasproventhattherearedifferencesbetweencountriesinseveralas-pects.Althoughtheglobalizationissaidtobringnationsclosertoeachotherinsimilaritiestherewillstillalwaysbeadifference.Aspectsliketechnicalmattersarebringingnationsclosertogetherbutpolitical,socialandculturaldifferenceswillal-waysoccur.Thesedifferencesaffectthewaypeoplehandleandactindifferentsitu-ations;italsoinfluenceshowtheyprefertowork.

Globallyactingcanbringbothdifficultiesandadvantagesforaorganization.ThefactthatLGElectronicshasbecomeaglobalfirmhasenhancedtheirknowledgeinforinstancetechnologybutithasalsobroughtacomplexitytothefirm.Thecom-positionoftheworkforceatLGElectronicshasbecomemorecomplexwhenithasexpandedtodifferentnations.Swedenisnotanexceptionofthisfact;thereisablendofbothSouthKoreanandSwedishworkforceinthisorganization.Bymixingpeoplefromdifferentculturesinonelocalorganizationandletthemworktogetheronadailybasiswillaffecttheresultsofworkintheorganization.Webelievethatthiscanaffecttheworkbothinapositiveandanegativeway.Anewwayofthink-ingcanopenupformanyopportunities.

ThedifferencesbetweenSouthKoreaandSwedenhavebeenseeninculturalas-pectsbyGeertHofstede,therehasalsobeenananalysisbetweenthetwodifferentcontinentswherethesetwonationslie.Thelastmentionedwouldbasicallyprovethatthereisadifferencewhiletheculturalanalysishasshownhowbigthediffer-encesare.

GeertHofstede’sstudythatconcernsculturaldifferencesbetweennationsshowsusthatthedifferencesbetweenSouthKoreaandSwedenarehugeinsomeareas.Thedistancebetweenthenationswasseendifferentlyfromeachotherinindividu-alismandpowerdistanceindex.ThefactthatpeoplefromSwedenaremoreindi-vidualisticthanpeoplefromSouthKoreashowsthatpeoplefromSwedenliketobemoreindependentandthattheyprefertolookafterthemselves.TheothermajorvariablethatwasseenasverydifferentbetweenthetwonationsinHofstede’sstudywasthepowerdistanceindex.Hofstede’sstudyshowedthatSouthKoreahasahighvalueonpowerdistanceandthatSwedenhasalowvalue.ThismeansthattheleadersfromSouthKoreaaccordingtothisstudyhasmuchpowertomakedeci-sionsandthatemployeeshavelesspowerandlesseffectonpower.InSweden,peo-plewhoaren’tinleadingpositionsinsteadhaveaneffectonthepowersituationintheirworkplaceseventhoughtheyaren’tinleadingpositions.Thesedifferentvari-ablescouldbetheorigintothefactthatdifferentcountriespreferdifferentorgani-zationstructure.

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LGElectronicshasaMultinationalorganization,whichactssimultaneouslyinsev-eralnations.Thisfactcreatesaproblemfortheorganization.Twodifferentforcesarestandingagainsteachother,theentireglobalorganizationagainsteachlocaldivisionintheorganization.Thesetwoforcesstandingagainsteachothercanei-therbeverydifferentfromeachotherorverysimilartoeachother.Iftheyaresimi-lartoeachotheritmightpossiblynotcreateabigproblem,butiftheyaremuchdi-versifiedfromeachothertheycancreateabigconflict,thatcouldleadtomiscom-municationintheorganization.Thedifferencesbetweenthelocalandtheentireorganizationcanbeinfactorsasdifferentaccessofcapital,differentlevelsofskilledlabour,differencesinleaderialexpertiseanddifferencesinadvancedtech-nology.Thisforcemakesithardfortheorganizationtoworkasaunifiedorganiza-tion,whichcanbeseeninthisthesisandthecaseofLGElectronics.ThiscouldalsobeonefactortowhyPatrikAnderssonwantedtochangethestructureintheirdivi-son.

Anotherfactorthatcouldaffectisthedifferencesbetweentheculturalandtheher-itageofthetwocountries.ThefactthatSouthKoreanwayofworkisveryfamiliarwiththehierarchicalstructurewithdirectreporttooneleader,whilethemostpre-ferredSwedishorganizationstructureisthematrixwithaflexiblewayofwork.Thesetwodifferentorganizationalstructuresarequitedifferentfromeachotherandcouldcauseconflictsbetweenthetwopartiesinvolved.Inamorehierarchicalstructurepeoplearenotgivensomuchroomforindividualwork.Peoplewhoarecreativeandindividualcanfeelcontrolledandtherebyitispossiblethattheydon’tperformtheirfullcapacity.Inamatrixstructurethereisroomformoreindividual-ismandtherebyalsopossibilitiesforcreativeness.Forexample,SouthKorealikestoimplicateahieraticalstructureandthatSwedenlikestouseamorematrixstruc-ture.Allthesedifferencesintheculturecanleadtothefactthatwhenthedifferentculturesblend,itcanleadtoproblemslikemiscommunication,misunderstandingsetc.Allthesefactorscanhaveseriousconsequencesforthefunctionalityoftheor-ganization.

AMultinationalEnterpriseshouldnothaveaunifiedstructureoverthewholeor-ganizationandneedstoadoptafterthelocalpartstogetafunctionalandsuccess-fulorganization.Thefocuswhenthechangesinorganizationalstructuresoccuristominimizeconflictsbetweencultures.Thiscanbedoneeitherbycommunicatingwitheachothertolearnfromeachother.Thiscouldbeveryexpensiveandtakelongtime;culturescan’tbechangedbutadopted.AMultinationalEnterprisecouldinsteadadoptlocallyandworkasseveralorganizationswithintheorganization.Ifthelocalorganizationreportstotheglobalorganization,thiswayallthedifferentregionsoftheMultinationalEnterprisewouldbeadoptedtothewayofworkinginthehostcountry.Butindependenceshouldnotbetoodecentralized,iftheMultina-tionalEnterprisewouldlooseitstrademark.TherebywithinthelocalorganizationthereshouldalsobesomekindofcommunicationondailybasiswiththehomecountryoftheMultinationalEnterprise.

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5.1 sTruCTu rAl C hAnGe i n lG eleCTron iCs

LGElectronics,bothintheworldandinSwedenworksafterahierarchicalstruc-ture,mostoftenpreferredinSouthKoreawhileSwedishorganizationsratherworkafteramatrixorganizationform.ThetransformationoftheIT-divisioninLGElec-tronicsinSwedenfromahierarchicalviewtoamatrixstructurewasdonethroughseveralsteps.BeforethechangetheIT-divisonwasspreadoutandaroundtheen-tirebuilding,whichcausedmiscommunication,thefirstthoughtwastoassembletheemployees,whichwouldbeinvolvedintheIT-divisionononefloor.Secondlyamatrixstructureinappendix7waspresented,thisstructurewasthecoreoftheIT-divisionandPatrikAnderssonwasworkingtofillthisschedule.Thismadeiteasierfortheentiredivisontocommunicatewitheachotherandpeoplehavesincethen,accordingtotheinterviewedstaffbecomemoresatisfiedandcommunicationalwitheachother.Thestepsintransforminganorganizationfromahierarchicalstructuretoamatrixstructureistogatherpeopleandmakeaclearunifiedsched-uleofpeoplethatareneededtobeinvolvedintheorganization.

DifferentstrategicapproachescanbeusedforaMultinationalEnterpriseconcern-ingthebalancebetweenthelocalpartsoftheorganizationandtheglobalorgani-zation.WebelievethattheglobalorganizationLGElectronicsisanethnocentricfirm,whichhasbeendescribedearlierasahandlingofthelocalpartsoftheorgani-zation,whichissimilartohomenationandtheirorganization.DuetothefactthatLGElectronicsinSwedenseemedtohaveasimilarorganizationstructureastheoneusedintheorganizationshomecountryandheadquarter.AnotherfactorthatstrengthensthismodelisthatSouthKoreahasthroughtheirestablishmenttotheSwedishmarketbroughtstafffromtheheadquarterinSouthKoreatomanymajorworkplaces.AlsothattheR&DforLGElectronicsisbasedmainlyinSouthKorea,whichisasignofanorganizationthatisdescribedasanethnocentricfirm.Anethnocentricfirmtriestokeepitsstructureaslongaspossibleasthesamestructurethatthehomecountryuses,whichcancreateproblemsbetweenthedif-ferentnationsinvolved.ThefactthattheIT-divisionhasbeengivenfreedomtotransformitsstructuretoamatrixstructurecanbeasignofmovingfromthiseth-nocentricapproach.Asearliermentionedtherehastobeabalancebetweenthehomecountriespowerandthehostcountriespowerofmakingdecisions.

Iftheglobalindustryinsteadrestrictsthefreedomforthelocalpartstheorganiza-tioncaninsteadgotoastrongerEthnocentricapproach.Lessfreedomcouldmeandecreasingcreativity,andaswefoundoutthroughourstudiesatLGIT-divisionthiswasnotagoodapproach.Thehostcountrycanthennotoperatewithitspreferredstructureandcouldgetinhibitedbytheaspect.Apositiveaspectcouldbethateve-rypartoftheorganizationworksinaunifiedstructure,whichmakesaunifiedor-ganization.EasierunderstandingforlocalpartsoftheorganizationindifferentcountriescanbeseenanditcouldbeeasiertosendemployeestodifferentpartsoftheMultinationalEnterprise.

Thesetwodifferentapproachesbothhaveitspositiveandnegativeaspects.The

31

positiveaspectsinonemodelarethenegativeaspectintheothermodel.Whichmakesithardtofindamodelthatfitstheentireorganization.Freedomisimpor-tantfortheorganizationsworkandontheotherhandfreedomcandiversifytheor-ganization.Thebalanceshouldaccordingtousbebetweenthetwoapproaches.It’simportantthattheemployeescanworkwiththeirpreferredstructurewhichtheLGElectronicsstudyhasprovenbuttheystillneedtohaveconnectionswiththeheadoffice.

Throughourstudywehavegottheopinionthatmultinationalorganizationsshouldgivethelocalorganizationsasmuchfreedomastheypossiblycanwithoutharmingtheentireorganization.Differentorganizationstructuresarepreferredbydifferentculturesandheritage,andifthepersonnelinthesedifferentnationscanworkwithpreferredstructuresitwouldstrengthentheworkoftheorganization.WhichalsocanbestrengthenedthroughthefactthatthestaffofLGElectronicsIT-divisionwasn’thappyorsatisfiedwhentheywhereoperatinginanorganizationstructurethattheydidn’tlike.

PatrikAnderssonwasgivenfreedomtotransformhisdivisionatLGElectronics,whichhedidbytransformingtheearlierhieraticalstructuretoamatrixstructure,whichcanbeexemplifiedinappendix8.Thereasonwhyhechoseamatrixstruc-tureisthatitispreferredbytheSwedishcultureandtherebytheSwedishstaffofLGElectronics.ThefactthatSwedishandSouthKoreancultureandheritagearesodifferentfromeachotherandcouldcauseseveralproblemsandmiscommunica-tionintheorganization.

ThewaytheIT-divisionhandledthisproblemwastoisolatetheSouthKoreanwork-forcefromtheneworganizationstructure,whichbettersuitedtheSwedishwork-force.Eventhoughitisareferredtoasanisolationithasn’tcompletelyisolatedthestaffmembersfromtheirearliertasks;theywouldstillbeinvolvedinthedecisionstaken.Inthiswaytwodifferentstructurespreferredbythetwopartiescouldbothbeusedandmajorconflictscouldbeavoided.ThisisolationalsoledtothefactthattheIT-divisioncouldstarttohavetheirmeetingsinSwedish.FromexperiencePatrikAnderssonknowsthatmeetingsinEnglishmaketheemployeesmorequiteandthattheydon’tdiscussopenlyiftheyhaveaproblemorasolutiontoaprob-lem.PatrikbelievesthatbyhavingmeetingsinSwedishtheemployeeswouldspeakupmore.96

ByisolatingtheIT-divisionfromtherestoftheorganizationtherewasariskthatthecommunicationwiththerestoftheorganizationwouldstop.Butintheinter-viewswefoundthatsowasnotthecase.Thefactisinsteadthattheemployeesbe-lievedthatthecommunicationhadincreased.97

Oneofthethingsthatcapturedusmostisthefacthowthechangewasdone,withthiswemeanhowthetransformationwasdone,andparticularlythattheIT-divi-

96Appendix6.1

97Appendix6.2

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sionisolatedthedivisionfromtherestoftheorganization.Webelievethatthisiso-lationisagoodwaytoavoidconflictsbetweenthepartieswithdifferencesinbe-haviourandperceptionsintheorganization.Itcreatesabetterflowintheorganiza-tionandtodayeverybodyinthedivisionknowswhattheirco-workersdo,whichtheydidn’tbeforethetransformation.Todayanemployeefromthesaleforceknowswhereandtowhomhe/sheissupposedtoturnwhenaproblemoranissueoccurs.AnotherfactorthatstrengthensthesethoughtsinfavourofisolationisthefactthattheIT-divisionhasincreasedtheirsaleswithover50%sincethetransfor-mationofthedivision.

Theisolationcouldalsocauseproblems;isolatingpartieswithdifferentpercep-tionsintheorganizationcouldalsoincreasethegapbetweenthedifferentculturesinvolved.Thiscouldleadtoevenbiggersegregationanddifficultiesinthehandlingoftheorganization.Butthesedifferencesareforthemomentdifficulttomeasure,duetothefactthatthetransformationtookplacejustacoupleofmonthsago.

WhenwestartedthisworkwiththethesisweweresurethatLGandtheirIT-divi-sionwasrestructuringtheirorganization,whichtheyhavedefinitelydone.Butthesubjectcanbeobservedinanotherway,whichwefirstsawfirstafterallthemate-rialwascollected.Theprocessdoesn’tnecessarilymeanthattheIT-divisionhasn’tbeenchangingtheirIT-divisionsstructure.WhentheisolationoftheIT-divisionoc-curredtous,westartedtothinkontheprocessLGIT-divisionhadmadewithothereyes.Maybeitisn’tamatterofastructuralchange;maybeitisaprocessofavoid-ingconflicts.Themainfactorthattheorganizationalstructurechangedidwasn’tthechange;itwasratheraprocessofkeepingpersonsfromeachother.Thereisariskwhenpeo-plewithdifferentpreferencesworkstogether,throughthestructuralchangetheIT-divisionhaveavoidedtheserisksbetter.

Andifweobservethechangeinaisolationbetweenpartieswithintheorganiza-tion.Thechangecouldbeobservedasanegativephenomenon.Toisolatepeoplefromeachothercouldcausenegativeeffects.Isolatingpartieswithdifferentper-ceptionsintheorganizationcouldalsoincreasethegapbetweenthedifferentcul-turesinvolved.Thiscouldleadtoevenbiggersegregationanddifficultiesinthehandlingoftheorganization.Butthesedifferencesareforthemomentdifficulttomeasure,duetothefactthatthetransformationtookplacejustacoupleofmonthsago.Apossibleaspectcouldbethatseveralpartsoftheglobalindustryaregivenfreedomtotransformtheirdivision,whichcouldleadtofurthersegregation.Ifthiscouldbeanaspecttheorganizationwouldgofromitsethnocentricperspec-tivetoaRegiocentricperspective.Ifmorecontrolandfreedomaregiventothelocaldivisionstheglobalfirmcanbecomemorediversifiedwhichcanleadtoevenmoreconflictsbetweendifferentpartsoftheorganization.

AnotherthingthatcaptureduswasthefactthatthecommunicationwassobadintheIT-divisionbeforethetransformation.Thislackofcommunicationwasaccord-ingtotheinterviewsduetothatthedivisionwasspreadoutondifferentfloors.

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Andbecauseofthistheemployeesdidn’tknowtowhomtheyshouldtalktoiftheygotsomesortofproblemorissue.Thismajorcommunicationproblemdisappearedwhentheybroughtthedivisiontothesamefloor.Throughthischange,thestaffbeguntobeawareoftheirco-workersandwhattheydid.Thisalsomadeitpossibleforthemtohelpeachotherinabetterway.

Thistransformationdidn’tinterferewiththeemployeessomuch,andhasworkedoutverywell.WebelievethatbecauseofthefactthatseveralemployeeshadquitintheIT-divisionandmanynewhadjustbegunintheorganizationthenewem-ployeeshadn’tsettleddownjet,andbecauseofthisPatrikAnderssonhadanop-portunitytoformthenewstaffintheneworganizationinasmoothway.Webe-lievethatthissmoothtransformationwouldn’thavebeensoeasilydoneifthestaffhadbeenolderandhadbeenworkinginonespecificorganizationalwayforlong.Justbecauseofthefactthatmankinddoesnotlikechanges.

Thestudiesinthisthesishaveshownthatorganizationaladoptionisessentialforthefunctionalityofanorganization.Togatherpeoplewhoworkwitheachotheronadailybasisinanorganizationcangetasmoothercommunicationandbythisgetabetterorganization.Thestudyhasshownasuggestionofanallocationthatpeo-plewhohaveapreferredorganizationalstructurewouldworkcloselytogether.Thesepeoplecanmaketheorganizationworksmotherandmoreefficientlyiftheycanworkinastructurethatissimilartotheirculturalandheritagebackground.

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6 ConclusionThischapterwilltogetherwiththematerialpresentedinthethesisandtheopin-ionsofthewriters,givefurtherinformationabouttheirpointofviewconcerningthesubjectofthethesis.Adiscussionconcerningfurtherstudieswillbeprovided.

TheMultinationalEnterpriseandtheirorganizationconcernedinthisthesisisus-ingahierarchicalstructureglobally,basedonthetheorytherecanbedifferentstructurespreferredindifferentorganizations.Thetheoryhasalsoshownthatthereshouldn’tbejustonestructureinanorganization,differentcountrieshavedifferentculturesandheritageandpreferesdifferentstructures.Apreferredstruc-tureinonecountryshouldn’tbeputasidejustduetothefactthattheMultination-alEnterprisehasanothermainstructure.Thelocalpartsoftheorganizationwouldfunctionbetteriftheycouldworkwithastructuretheyprefer.

ThepreferredstructurecanbecombinedwiththemainstructureoftheMultina-tionalEnterprise.InLGElectronicstheyisolatedtheIT-divisionsothattheycouldworkinternallywiththepreferredmatrixstructureandexternallyintheSouthKo-reanpartiesusethehierarchicalstructure.Isolationisakeyfactorinthecomplexorganizationwithdifferentstructures.Eventhoughtheisolationoccursitdoesn’tharmtheMultinationalEnterprise,thesignificantwayofwork(hierarchicalstruc-ture)stillcapturestheworkersattention.

TheisolationinLGElectronicsIT-divisionwasdonebycollectingthestaffonthesamefloor.Thisisnecessaryfortheworkonadailybasis.Communicationisstrengthenedbetweenthepartiesthatneedinformationfromeachotheronadai-lybasis.Throughthis,engagedinformationexchange,moreknowledgeofeachothersworkandassignmenthasevolved.

Thestudiesinthisthesishaveshownthatorganizationaladoptionisessentialforthefunctionalityofanorganization.Togetasmootherflowintheorganization,gatheringthepeoplewhoworkswitheachotheronadailybasisoftheorganiza-tioncanbedone.Thestudieshaveshowedasuggestionofanallocationofthepeo-plewhohasapreferredorganizationstructuretogether.Thepeoplecouldmaketheorganizationworksmotherandmoreeffectiveiftheycouldoperatewithapreferredstructure.Butthesepartsoftheorganizationshouldstillbeconnectedtotheotherpartsoftheculture,whichdoesn’tpreferthesamestructure.Thisisarelationshipthatcouldbeexaminedfurther,howcanthisrela-tionshipworkassmoothaspossibleandwhatcanbedonetominimizepossibleproblemslikeforexamplemiscommunication.Anotherfurtherstudythatcouldbeanalysedistherelationbetweenthestructures,thehierarchicalandthematrixor-ganization.

Anotherareaofresearchistheamountoffreedomortherestrictedfreedomthatis

35

giventothelocalpartsoftheorganization.Thesetwoverydifferentaspectscouldbefurtheranalysed.Howshouldtheglobalorganizationadoptaccordingtothesetwodifferentapproachesandwhatcantheeffectsbemorepreciselyiftheyadapttooneapproach?Thisareaisinterestingtoanalysebecauseitcanmakeahugedif-ferentfortheorganization.ThetransformationoftheIT-divisioncouldpossiblybeasuccess,butitishardtomeasure.Butifithasgainitssalesduetotherestructure,thenrestructurescanbeveryimportantforotherorganizationsaswell.

Wehavestudiedtherestructuringfromahierarchicalstructuretoamatrixstruc-ture.Theotherwayaroundwouldbeainterestingareaofstudy,fromamatrixor-ganizationalstructuretoanhierarchicalstructure.Wouldthisstudyyieldinthesameresultandwouldtherestructuringworkinthesameway?Comparingthisstudywiththestudywehavedonecouldbeainterestingcomparison.

Furtherstudiesconcerningthisareaofstudycouldalsotrytomeasureifthelocallyincreasedfreedomincreasesthegaptothehomecountry.

Howthebalanceshouldbehandledandbediscussedcanbemajorfactorforsev-eralorganizationsbecausethatmanycompaniestodaybecomeMultinationalEn-terprises,andthereforeitisaveryup-to-datequestion.

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7 Appendix

Appen Dix 1 GeerT- hoFsTeDe 38Appendix 1.1 Culture sweden 38Appendix 1.2 Culture south Korea 39Appendix 1.3 Culture World average 40

Appen Dix 2 orGAn iZATions 41Appendix 2.1 Decentralized organizations 41Appendix 2.2 Centralized organizations 42

Appen Dix 3 h i erArCh iCAl sTruCTu re 43

Appen Dix 4 MATrix orGAn iZATion 44

Appen Dix 5 lG- iT-Division i n ForMATion 45

Appen Dix 6 i nTervi eWs 46Appendix 6.1 patrik Andersson 46Appendix 6.2 pontus Meijer 49Appendix 6.3 Fredrik lundqvist 50

Appen Dix 7 orGAn iZATion, lG iT-Division 51

Appen Dix 8 CoMbi n eD sTruCTu re 52

Appen Dix 9 sTAGe MoDel 53

3737

Appendix1.1Geert-HofstedeSweden

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Appendix1.2Geert-HofstedeSouth-Korea

39

Appendix1.3Geert-HofstedeWorldaverage

40

Appendix2.1DecentralizedOrganization

41

Appendix2.2CentralizedOrganization

42

Appendix3HierarchicalStructure

43

Appendix4MatrixOrganization

44

Appendix5LG-IT-divisionInformation

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Appendix6.1InterviewPatrikAnderssson

Why hAs Th is re-sTruCTu re TAKen plACe?

Ifeltthatthecomplexorganizationstructureweusedmadeithardfortheemploy-eestoknowwhatwashappeningintheorganization.Forexample,ifashipmentofphoneswasdelayed,thesalespeoplecouldgiveapromiseofadeliverydate,buttheydidn’tknowthatthephonesweredelayed.Thiscouldhappenedbecausetheyhadn’tspokenwiththepeopleonthelogisticsdepartment.Thiscommunicationproblemwasahugeproblemforus,whenthesaleforcescouldnotgivethecus-tomersgoodinformation.Anotherproblemforuswasthatthesaleforceswereoverloadedwithworkandcouldnothandlealltheinformationinagoodway.Andatthesametimeseveralemployeesfromourdepartmentquittheirjobs.Ifthisde-pendedonthestressoftheirworkorifitjustdependedonthefactthattheyfoundbetterjobsisdifficulttosay.Thisfactorgaveroomforachangeintheorganization.Andintheautumn/winterof06twoimportantpersonsfromthesalesforcequit,whichmadeitimpossibleforourdepartmenttokeeponinthesameway.Withthere-structuremypurposewastomakethestafftakecontrolofthecommu-nicationproblems.Thiswouldleadtobettercommunicationwithintheorganiza-tionandalsobetterexternalcommunicationtowardsthecustomers.Anditwouldalsolessentheburdenofworkforthepersonswithintheorganization. WhAT hAve you Don e WiTh Th e Division? AsIsaidearlierourorganizationstructurewasverycomplex.SoIactuallydiscusseditwithmyco-workersanddiscussedhowtheyandIwantedtoworkinourdivision.AfterthatIjustsatdownanddrewupmyownorganizationstructurefrommyheadanddrewitfrommyandmyco-workersvision.Thisgavemeapictureofhowthedivisionshouldlooklikeandhowwewouldliketoworktogether.Mygroundvi-sionwasthatIwantedthestafftoworkmoretogether,andiftheyhadaproblem,theywouldn’tjustgototheirsuperior,butinsteadtheycouldgotothepersontheythoughtcouldhelpthemtosolvetheirproblem.AnotherfactorItookinmindwasthatIwantedthestafftoworkmoreinternalwhichwouldgenerateabettercom-municationintheentiredivision.Beforethischange,thestaffjustsawthepur-chaseorder,andtheyjustdidtheirjob,thestaffdidn’tnoticethatiftheywoulddoabetterjobtheywouldhelpthenextpersonwhowouldworkwiththeorder.

Afterthisworkwithmynewstructureonthepaperandinmyhead,itwastimetogetintoaction.Whywehadacommunicationproblemfromthestartinourdivi-sionwasbecausewewerespreadoutovertheentireofficeandintheentirebuild-ing.Somyfirstprioritywastogatherour(IT)divisiononthesamefloor.Butnotjustintoonefloor,Iwantedthemtoworkascloseaspossible.Sowere-structuredthedesignofthebuilding.Thismightsoundlikeahugeproject,butitwasjustamatterofmovingofficessothattheywouldmatcheachother.AfterthatIjustlookedatmypaperofhowtheorganizationwouldlooklikeandIorganizedmystaffingroupsthatIthoughtwouldmatcheachotherandhavesimilarday-to-daywork.Andbecausemostofourstaffjusthadworkedinourdivisionforacoupleofmonth,Ithoughtthattheywouldn’ttakesomuchharmofthesechanges.

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Ialsoappointedaleadertoeveryteamthatthestaffcouldreportto;thiscouldbebothpositiveandnegative.Theriskwasthatitcouldbeeconfusingforthestaffwithseveralleaders.Andalsosomecommunicationproblemcouldoccur.Atthebeginningtherewassomeconfusionforthestafftowhomtheyshouldreport.Butaccordingtothestafftheyjustthinkitmakesthingsclearer.

WhAT Are Th e eFFeCTs oF Th is re-sTruCTu re?

TheeffectsthatIhaveseenfromthisnewstructure,eventhoughjustacoupleofmonthshavepassedsincetheimplications,arethatthestaffisworkingmoreeffi-ciently.Andthatthestaffisinabettermoodwhichalsohassolvedthecommunica-tionproblem.Whythishasworkedoutsowell,inmyopinion,isthatseveralper-sonsinthisdivisionisrelativelynewandthereforehaven’tgotstuckinplanningtheirwork.Inthesefewmonthswehavealsoseenthatthestaffhasshownmoreengagementintheirtasks.

Wehavealsoseenthatthecooperationhasincreasedbetweentheworkers.Thestaffhasbeenmoreinvolvedinwhatthewholedepartmentdoesandintheirwork.Thishasledthestafftobemorecooperativetohelpeachotherifsomeonegetsaproblem.Thishasalsomadeitpossibleforustoreducetheoverloadofworkwhichwasamajorproblemwiththesalesforce.Todaypeopleknowtowhomtheycansendtheircustomers,iftheyhaveaproblemthatthesaleforcecan’tsolve.

Thisquarterourdivisionhasincreasedoursaleswith50%comparedtolastyear.Ifthisdependsonournewstructureishardtosay,butIbelievethatwithoutthisre-structurewecouldneverhavebeenabletoincreaseoursalesthismuch.

WhAT else hAve you C hAnGeD?

Beforetheimplication,wehadmajorproblemtogatherourwholedivisionformeetings.Buttodaywhenwearegatheredatthesamefloorandtogetherwehavebeenmanagedformeetings,oneineverytwoweeks.Thisworksfineforallofus,andbecauseofeverybodyknowsaboutitinadvanceeverybodycouldgetthere.ThesemeetingsareveryrelaxedandIhavebeenabletogetsthismeetingsInSwedish,eventhoughwehaveacouplesouth-koreansmanagersinourdivision.WhyIwantedtogetthesemeetingsinSwedishisbecauseofthatinthatway,thereisnoriskformisunderstandings.Andalsothateverybodydarestotalkopen,be-causeIknowfromexperiencethatmeetingsinEnglishmakespeoplemorequitethanthatthereallyare.Whywedonothavemoremeetingsisthatbecauseweallworktogetherinthesameplaneandinthesameoffice,thestaffareabletotalkandventilatetheirissuesandproblemswitheachotheroncoffeebreaksandlunchesandsoon.Ithinkthisisabetterwaytodiscussproblemsthatcanaccurse.WehawalsobeenabletobuildupourinternalintranetsothateverybodycanseewhatishappeninginLGinthefuturebutalsowhathashappenedinthepast.

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Onaccountofthischangeintheorganizationstructureitiseasythatthestaffgetsinsecureoftheirworkandiftheydoagoodjob.ThereforeIthinkitisimportanttoencouragethestaffiftheydoagoodjob.Itisn’tthatbigdeal,aclapontheshoulderourjustalittlegiftthatshowsthemthatLGcaresabouttheiremployees.Andformeasamanageritissomucheasiertodaytogivethestafffeedbackontheirwork.WhenweallsittogetherIcantakepartintheirwork.

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Appendix6.2InterviewPontusMeijer

hoW hAs you r role i n lG eleCTron iCs ChAnGeD si nCe Th e re-sTruCTu re?

Myroleaftertheimplicationhasincreased,todayIworkwithalotmoreproductsthenbefore,becausewehavespreadourworkbyoursaleforce.ThishasmadememorecomfortableandithasgivenmemoreinternalbutalsoexternalinformationaboutourproductsandifthereisaprobleminourproductionlineIamawareofitatanearlierstagethenbefore.ThenIcanreporttoourcustomersatanearlierstage.Thisnewstructurehasalsogivenourstafftheopportunitiestohelpeachother,soifoneofusissickoronleave,westillcanworkefficientlyandnotbethatdependentoneachother,whenweareawareoftheotheremployeestasks.e.

WhAT CAn you sAy AbouT Th e ChAnGe?

Before,everydepartmentworkedbythemselvesanditwassomekindofmind-your-ownbusinessinouroffice.Today,weworktogetherasagroupandateam,be-causenowweallseethatifI’mdoingagoodjob,Icanmaketheworkformyco-workereasier.Butthischangehasn’tbeenentirelypositive.Fromthebeginningthechangestolelotsoftimefromme,andeverybodyelse.Thisdependedonthattheemployeesdidn’tfeelsecureintheirnewsituationandtheyweren’tsureofwhomtheyshouldtalkto.Butnowafteracoupleofmonthswiththisnewstruc-tureIcanseethatthiswillspareuslotsoftimeinstead.Anotherpositivethingisourmeetings,beforewedidnothaveanymeetingsatall,buttodaywehaveonemeetingeveryfortnight.Thisgivesusinformationaboutthecompanyandhowwearedoing,butwecanalsodiscussproblemsandotherimportantissues.Butitisn’ttheformalmeetingsthataremostimportant,insteaditisourinformalmeetings,oncoffeebreaksandduringthelunches,whenwecandiscussproblemswithco-workers,thisgivesthestafflotsofgoodinformation,whenweallknowfromwhomwecangetjusttheinformationweareinterestedin.Beforethechange,itwascommonthatifyouhadaproblemyoufirstaskedyoumanager,andthenhe/shetalkedwiththepersonhethoughtwasthebestforjustthatproblem,andthenthemanagerreportedbacktoyou.Thiscouldtaketimeandsoon.Todaywedon’thavethisproblemanymore.

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Appendix6.3InterviewFredrikLundqvist

hoW hAs you r role i n lG eleCTron iCs ChAnGeD si nCe Th e re-sTruCTu re?

Myrolehasn’tchangedsomuchafterthisstructurechange.Themajordifferenceisthatbecauseofinvolvedinworkingwiththechangewehaveassembledallourstaffonthesamefloorandnowourworkforceismoreproducts.So,forme,whoamworkingwithproductinformation,pressandeducation,myrollisthesameasbefore.But,todayIhavemoreproductstokeepupwithandIhavetoplanalittlemoreforeducationofthestaff.

WhAT CAn you sAy AbouT Th e ChAnGe?

AsIsaidbeforenowwehaveassembledthestaffonthesamefloor.Thischangemadeiteasierforustodiscussproblemsandissuesconcerningourwork.Italsomadeiteasiertoknowtowhomtoturnifyouhadanideaoraproblem.Anotherthingthathaschangedisthereporting.Beforethechangeyoujustreportedtoonemanager.TodayIhavetoreporttoseveralmanagerswhichIcanreporttoThischangecanbothhavepositiveandnegativeeffects.Onemoremanagerhasbroughtsomeconfusionbutalsoaclearerwayofworking.Thischangehasalsobroughtaclearerviewofwhattasksaremeantforwhichpositions.

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Appendix7OrganizationLG,IT-division

51

Appendix8CombinedStructures

52

Appendix9Stagemodel

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8 IndexBooks & Articles

Backman,J.1998.Rapporterochuppsatser.StudentlitteraturAB

Dunning,JohnH,1992,MultinationalEnterprisesandtheglobaleconomy.Addi-son-Wesley

Eisenhardt,K.1989.BuildingTheoriesfromCaseStudyResearch.Academyofman-agementReview

Knight,K.1976.Matrixorganizationsareview.Thejournalofmanagementstudies

Lewis,P;Saunders,M;Thornhill,A.2003.Researchmethodsforbusinessstudents.PrenticeHallLundahl,U;Skärvad,P-H.1999.Utredningsmetodikförsamhällsvetareochekono-mer.StudentlitteraturAB

McShane,Steven.200X.OrganizationalBehaviour,Irwin/McGreaw-HillMintzbergH.1992.StructureinFives;DesigningEffectiveOrganizations.PrenticeHall

Nyberg,R.2000.Skrivvetenskapligauppsatserochavhandlingar.StudentlitteraturAB

Porter,ME.1986.Competitioninglobalindustries.HarvardBusinessSchoolPress

Rosenzweig,PhilipM;Singh,JitendraV.1991,OrganizationalEnviromentsandtheMultinationalEnterprise.TheAcademyofManagementReview

Yin,R.K.2003.CaseStudyResearch:DesignandMethods.ThousandOaks

Webbpages

http://nordic.lge.com/sv/about/corporate/company_overview.jsp,[2007-05-16]

http://sv.wikipedia.org/wiki/LG_Electronics,[2007-05-16]

http://www.geert-hofstede.com,[2007-05-16]

http://www.wikipedia.org/wiki/golobalisering,[2007-05-16]

http://en.wikipedia.org/wiki/Matrix_organization#Matrix_organization,[2007-06-01]

Interviews

PatrikAndersson,Appendix6.1,LGElectronics,10May.time;13.00-14.00

PontusMeijer,Appendix6.2,LGElectronics,10May.time;14.00-14.30

FredrikLundqvist,Appendix6.3,LGElectronics,10May.time;14.30-15.00

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Documents

Breaking hierarchies - DiVA Portal