Questions
16-1. Identify three advantages of working for Gore. Do you find them appealing?
16-2. What mix of knowledge, skills, and abilities would make you a high-performing Associate
at Gore?
Teaching Tips: Review the PowerPoint slides for Chapter Sixteen and select those you
find most useful for enhancing your lecture and class discussion. For additional visual
summaries of key chapter points, also review the figures in the text. In addition, have
students visit the Web site of J&J, http://www.jnj.com, where they will find a link for “Our
Company.” This Web page provides greater information on the company’s values and credo.
Have students report back what they have found.
CLOSING CASE
Building a Magical Organization at Johnson & Johnson
Headquartered in New Brunswick, New Jersey, Johnson & Johnson (J&J) now lists some 275
operating units in 60 countries. Approximately 55 percent of its $75 billion in sales occurs
outside of the United States. Some, though, believe the intricacy of the company’s
organization, in terms of its decentralized structure, sophisticated coordination and control
systems, and Credo-based culture, anchors its superior performance. Decentralized management
is the heart of J&J’s organization. It allows each of its 275 units to operate with substantial
autonomy. J&J’s successful decentralization attracted talented, bright, and motivated people.
Decentralization enables J&J to respond to local needs but slows the global diffusion of products
and programs. Preserving the magic of decentralization, given the contest between local
autonomy and global integration, spurs tightening coordination and control systems. Pressures to
integrate operations due to market trends, competitors’ moves, and shifting technologies push
J&J to centralize some activities.
Separating J&J from the pack is the primacy of its organizational culture, as embodied in “Our
Credo.” This one-page ethical code of conduct states how J&J fulfills its responsibilities. J&J’s
long list of accomplishments, earned by developing, adjusting, and improving its structure,
systems, and culture, has built an organization that confidently leverages bright ideas, no matter
if global executives or local subsidiary leaders champion them.
Questions
16-3. Would you prefer to work in a decentralized or centralized company? What outlooks and
competencies would make you a high-performing executive in your preferred choice?
16-4. Explain how Johnson & Johnson makes its structure, systems, and culture work in
synchronicity.
ADDITIONAL EXERCISES: The Organization of International Business
Exercise 16.1. A recent trend among MNEs is to replace expatriates in foreign subsidiaries
with local managers. Ask students to debate the implications of that policy from the
standpoints of (a) the development and implementation of global strategies, (b) the control
of foreign subsidiaries, and (c) the development of managers with significant international
experience and expertise. Does it mean decision making will necessarily be decentralized?
(LO: 5, Learning Outcome: Profile the role and characteristics of organizational culture,
AACSB: Multicultural and Diversity Understanding.)
Exercise 16.2. Ask the students to compare the apparent corporate cultures of three MNEs.
Then ask them to propose and defend specific types of organizational structures for each of
the firms, given the nature and extent of their operations. Would decision making be
centralized or decentralized? (LO: 5, Learning Outcome: Profile the role and characteristics
of organizational culture, AACSB: Multicultural and Diversity Understanding.)
Exercise 16.3. Historically, many foreign firms that competed in the European marketplace
established an extensive network of highly autonomous local subsidiaries. However, as
Europe has evolved into a single market via the EU, those same firms have often been
frustrated in their efforts to shift from a multidomestic to a regional (European) strategy. Ask
students to discuss the reasons for this and to suggest mechanisms firms might use to
accomplish the shift. Finally, have the students compare the strategic advantages of a
long-established multidomestic-type organization to a newly established regionally oriented
firm. (LO: 2, Learning Outcome: Describe the features of classical structures, AACSB:
Analytical Skills.)
Exercise 16.4. Ask students if they would be more comfortable working in a hierarchy or
hyperarchy. Divide students into smaller groups having students of both preferences. Have
the students discuss the pros and cons of each organizational mechanism and develop a list
of circumstances in which hierarchy is preferable and another list of conditions in which
hyperarchy is preferable. (LO: 3, Learning Outcome: Describe the features of neoclassical
structures, AACSB: Communication Ability.)