Structural Design of Multinational Enterprises(MNEs)

Organizational structure gives the framework or lines of communication, authority, responsibility

and accountability. Organizational structure specifies the firm’s reporting relationships,
procedures, controls and authority and decision processes. It is a critical component of effective
strategy implementation process. Organizational structure provides for specialization and interfaces
among specializations for collaborative synergism and competitive dynamism. For Multinational
Enterprises(MNEs) deciding the organization structure is very important because it cannot be the
same for all units and at the same time cannot be just one design for all. Whatever the design, it
must be organic enough to adapt to situations. The structure must have stability to facilitate day to
day activities to go on consistently and flexibility to facilitate taking advantage of opportunities that
environment throws up.

There are some traditional/ classical organizational structures that are followed; besides new
structures are experimented with. Multinational Enterprises(MNEs) are having wide options, for
different geo-locations may suit/dictate different structures. Structural designs are important for
MNEs for they affect cost, control, responsiveness, competitive strength, etc. companies change
structures to gain more and mitigate disadvantages.

Organizational structure is a representation of the formal reporting relationships within an

organization and its affiliating entities. Organizational structure refers to the way that an organization
arranges people and jobs so that its work can be performed and its goals can be met. Organizational
structure is a composite term covering three important aspects namely, differentiation, formalization
and centralization.

Differentiation:

If we take differentiation alone, there are three dimensions, the horizontal, the vertical and the
spatial. Horizontal differentiation arises due to differences in orientation, nature, tasks, skills of the
organizational constituents. Vertical differentiation refers to the depth of the structure and the
number of hierarchical levels.

Spatial differentiation refers to the geographical spread of an organization. A multi-location, multi-

nation organization like an MNE has all the three differentiation. With more locations and distances
among them, spatial differentiation increases. Whatever the type of differentiation be, differentiation
as a structural factor influences organizational style, culture, climate, decision orientation, etc.
Greater the differentiation, greater is the complexity – complexity in communication, conduct,
coordination and control of organizational functions. This complexity complicates flow of work and
relationships. Size and differentiation go together; Task variety and differentiation go together; so do
differentiation and complexity.

Is there a way out? Matrix organization is suggested. The MNE, Johnson & Johnson, USA has
proved to the world that size is not the factor that needs extremely differentiated structure, have
autonomous units around the globe. Instill the value you cherish among those units and let them
have operational freedom. This results in amicable relations and a good performance too. Complex
structures, matrix or otherwise, charges the climate with more heat, than light.

Formalization:

The second structural aspect is formalization which refers to the adherence to set rules and
procedures. Actually, formalization tries to reduce the complexity and confusion resulting from
differentiation referred to above, by prescribing intended behavior on the part of constituents. This
helps in knowing and foreseeing behavior of each by all and thereby helps to tuning up one’s own
behavior. So, formalization brings about understanding, a factor that positively affects organizational
functioning. But, the point is that all organizational functions cannot be formalized; nor such
formalization is desirable. Over-done formalization makes the organization more mechanic/
compartmentalized and less organic or social. So, greater the dose of formalization, lesser the
degree of adaptability to the emerging business order of extended competition.

Organizational events are diverse and therefore require varying authority, practice, procedure and
all, whereas formalization deprives all these and forces only rigidity. Is there a solution? Yes. Instead
of specific rules and procedures, the structure should develop alternative approaches from which
one can choose the right one or develop a mix as circumstances warrant. This sort of structural
pattern gives both direction and freedom and thus creates a congenial climate for the functionaries.

Centralization:

Centralization, namely the degree to which decision making is concentrated at a single or relatively a
few points, is another aspect of structure. In a tight-centralized organization more is the degree of
concentration of decision-making authority. What is the effect of this? Decisions are taken at points
remote to their points of execution. The executives at the task points have to look up for orders and
directions. In this sort of situations, the functionaries are reduced to mere media to carryout things,
they having nothing to do with any aspect of the things carried out. A situational adaptation may be
needed, but there is no way. A kind of ‘militarization or regimental syndrome’ results eventually. In
course of time, a detachment sense would prevail in the whole of organization.

Differentiation, formalization and centralization all no doubt give shape, orderliness and uniformity to
organizations. But these are not all that always wanted. An over dose of any or all of these structural
factors make the structure rigid, mere physical creations devoid of dynamism. If that results,
organizations lose their charm, their synergistic effect and their human side. What can managers do
about this? Managers generally inherit a certain structure from predecessors. If they find that the
structure is rigid the same has to be loosened and if it is too loose it must be tightened a little.
 Customer satisfaction on lofty optical industries

Customer satisfaction is a marketing term that measures how products or services supplied by a
company meet or surpass a customer’s expectation. Customer satisfaction is important because it
provides marketers and business owners with a metric that they can use to manage and improve
their businesse.In a survey of nearly 200 senior marketing managers, 71 percent responded that
they found a customer satisfaction metric very useful in managing and monitoring their
businesses.

The meaning of customer satisfaction has been commonly disputed as companies progressively attempt
to review it. Customer satisfaction can be experienced in a wide range of circumstances and linked with
both products and solutions. It is a highly individual evaluation that is significantly affected by customer
expectations.

Satisfaction also is based on the client’s encounter of both get in touch with the company (the “moment
of truth” as it is called in business literature) and individual results. Some scientists determine a pleased
client within the private industry as “one who gets significant added value” to his/her bottom line—a
meaning that may apply just as well to public services. Customer fulfillment varies with regards to the
situation and the products or solutions.

Here are the top six reasons why customer satisfaction is so important:

 It’s a leading indicator of consumer repurchase intentions and loyalty

 It’s a point of differentiation

 It reduces customer churn

 It increases customer lifetime value

 It reduces negative word of mouth

Objectives
 To measure the consumer satisfaction in lofty optical industries.
 To know the opinions of the customers.
 To find out the level of satisfaction regarding service.
 To study areas to be improved.
 To study the reason for preferring the particular optical industry.
Juli fernandex B

701631/MBA