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Organizational Structure, ControlEarly Experiences, Evolution of New Structure

and Performance.

International Business

IIM StudentsOld and New Organization Structure and Control of AIRTEL


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Agenda

Organizational Structure

Control Systems

Organizational Change

Types of Organizational Structures

Evolution and Change in MNC

Bharti Airtel

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Control Systems




Bharti Airtel


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There is no permanent organization chart for the world. . . . It is of

supreme importance to be ready at all times to take advantage of

new opportunities.

-Robert C. Goizueta, (Former) Chairman and CEO, Coca-Cola Company



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Organization is defined by the formal structure, coordination and

control systems, and the organization culture.

Its the formal arrangement of roles, responsibilities andrelationships within an organization.

Its a powerful tool to implement strategy.



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Centralization V/S Decentralization

Vertical Integration: The issue of determining where in the

hierarchy, the authority to make decisions stand.

Centralization is the degree to which high level managers,

usually above the country level, make strategic decisions and

pass them over to lower levels for implementation.

Decisions made at foreign subsidiary level are considered

decentralized, and those made at HQ are considered to becentralized.

Vertical Differentiation


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The Design of the Formal Structure

Horizontal Differentiation: The way a co. designs its formal

structure to perform the following functions

Specify the set of organizational tasks.

Divide these tasks into jobs, departments, subsidiaries and

divisions to get the work done.

Assign authority relationships to get the work done in a way thatsupports co. strategy.

Horizontal Differentiation


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Specialized jobs are grouped according to

traditional business functions.

Ideal for Co. having a narrow product line,sharing similar technology.

Helps maximize economies of scale

Highly efficient.

Functional Structure

CEO

Production

India USA

Marketing

India USA


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Grouping each international business

activity into its own division.

Creates a critical mass of internationalexpertise.

Creates quick response to environmental

changes enabling them to deal with

different markets.

Prevents duplication of activities.

Often struggles to get resources from

domestic divisions.

This structure is suited for multi-domestic

strategies that demand little integration

and standardization between domesticand foreign operations.

Frustrates its ability to exploit economies

of scale.

International division structure.

CEO

Industrial

Division

Automotive

Division

Aerospace

Electronics

Division

International

Division

DieselCompany

(France)

ElectronicsCompany

(France)

BrakeCompany

(Mexico)


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These are popular among international

companies with diverse products.

Similar products are grouped under oneproduct head e.g. Perfumes and

Cosmetics, each focusing on a single

product segment for its global market.

Suited for a global strategy

There may be duplicate functions and

activities among divisions.

No formal means by which one product

division can learn from another

international expertise.

Product Division Structure

CEO

Power Systems

Group

Electric Company

(Belgium)

Meter Company

(Argentina)

Industry And

Defense Group

Elevator

Company

(Belgium)

Construction

Products

Company (Italy)


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These are used when foreign operations

are large and not dominated by a single

country or region. Useful when managers can gain

economies of scale on a regional rather

than on global basis.

Drawback is the potential of duplication of

work among areas as the company

locates similar value activities in several

places rather than consolidating them in

the most efficient place.

Geographic (Area) Division Structure

CEO

Europe and

Latin

America

Division

U.K. Venezuela Italy

North

America and

Pacific

Division

U.S. Japan Canada


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This tries simultaneously to deal with

competing pressures for global integration

and local responsiveness. Institutes overlaps among functional and

divisional forms.

Gives functional, product, and geographic

groups a common focus.

It makes each group share responsibility

for foreign operations and enables each

group exchange information and

resources more willingly.

Drawbacks- Stop championing their

groups unique needs, and therebyeliminate the multiple knowledge-

generating and decision making

relationship that it is supposed to engage.

Matrix Division Structure

Textile

Groups

Agricultural

Products

Group

Europe-Africa

GroupLatin

America

Group

U.K. Mexico

CEO


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Control Systems




Bharti Airtel


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Control Organizational Strategy and Employees

Formal, target-setting, monitoring, evaluation and feedbacksystems that provide managers with information about whetherthe organizations strategy and structure are working efficientlyand effectively.

Control Systems


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Managers monitor and regulate how efficiently and effectivelyan organization and its members are performing the activities

necessary to achieve organizational goals

Organizational Control


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Market Control

Use external market mechanisms to establish internal

performance benchmarks & standards

Bureaucratic Control Here company uses centralized authority to install rules and

procedures to power broad range of activities

Clan Control

Shared values among employees to idealize the preferred

behavior

Control Methods


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Control Systems




Bharti Airtel


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Internationalization is the process by which a firm gradually changes inresponse to international competition, domestic market saturation, andthe desire for expansion, new markets, and diversification.

Structural Evolution (Stages Model) occurs when managers redesign theorganizational structure to optimize the strategys changes to work,making changes in the firms tasks and relationships and designatingauthority, responsibility, lines of communication, geographic dispersal ofunits and so forth



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A number of basic structures exist that permit an MNC to competeinternationally

Structure must meet the need of both the local market andthe home-office strategy of globalization

Contingency approach Balances the need to respond quickly to local

conditions with the pressures for providingproducts globally

Most MNCs evolve through certain basic structural

arrangements in international operations

Basic Organizational Structures


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Organizational Structures

Pressure for local responsiveness

Pressure

forglobalization

Low

High

Low High

Adapted from Figure 92: Organizational Consequences of Internationalization

Global Structural

Arrangements

Mixed and

Transnational

Structures

Initial Division

Structures International

Division Structures


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Control Systems




Bharti Airtel


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Evolutionary change

gradual, incremental, and narrowly focused

constant attempt to improve, adapt, and adjust strategy and

structure incrementally to accommodate changes in theenvironment

Evolutionary and Revolutionary Change


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Revolutionary change

Rapid, dramatic, and broadly focused

Involves a bold attempt to quickly find ways to be effective

Likely to result in a radical shift in ways of doing things, new

goals, and a new structure for the organization

Evolutionary and Revolutionary Change


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Steps in the Organizational Change Process


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Control Systems




Bharti Airtel


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Bharti Airtel Limited is a leading integrated telecommunications

company with operations in 20 countries across Asia and Africa.

Headquartered in New Delhi, India, the company ranks

amongst the top 5 mobile service providers globally in terms of

subscribers.

In India, the company's product offerings include 2G, 3G and

4G services, fixed line, high speed broadband through DSL,

IPTV, DTH, enterprise services including national &

international long distance services to carriers.

In the rest of the geographies, it offers 2G, 3G mobile services.

Bharti Airtel had over 246 million customers across its

operations at the end of February 2012.

Bharti Airtel


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Background


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Business Divisions


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Bharti Airtel - Country Map

Source: Wikipedia


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Bharti Airtel Overseas Operations

Source: Wikipedia


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Organization Structure After (August 1 2011)

Through this new structure, the

company aims to decentralize

decision making and increase

accountability across all levels of

management.

The new structure, separates the

business to business (B2B) and the

business to consumer (B2C)

segments. The B2C business unit (Headed by

K Srinivas) will service the retail

consumers, homes and small

offices, by combining the erstwhile

business units mobile, telemedia,

digital TV, and other emerging

businesses.

DECENTRALIZED Structure:

International Division Structure



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Organization Structure After Aug 1, 2011

International Division Structure



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The Board of Directors of the Company has an optimum mix of

Executive and Non-Executive Directors, which consists of three

Executive and fifteen Non-Executive Directors.

The Chairman and Managing Director, Mr. Sunil Bharti Mittal, is an

Executive Director and the number of Independent Directors on theBoard is 50% of the total Board strength.

The independence of a Director is determined on the basis that such

director does not have any material pecuniary relationship with the

Company, its promoters or its management, which may affect the

independence of the judgment of a Director.

The Board members possess requisite skills, experience and expertise

required to take decisions, which are in the best interest of the

Company

Board Members:


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B.O.DOrganization Structure (South Asia) AfterAugust 1 2011 B

BOARD OF

DIRECTORS :


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Thank You

Thank You

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