1- Discuss the organizational structure differences between Intel and Nike. Inte
ID: 1131023 • Letter: 1
Question
1- Discuss the organizational structure differences between Intel and Nike. Intel owns the overseas facilities.On the other hand there are more than 40 factories all over the world producing shoes and apparel for Nike. Yet, Nike owns none of them. Write down 2 reasons why frms choose these two different organizational structure and discuss.
2- "Horizontal FDI is driven by comparative advantage differences between countries". True or False? If false, rewrite the correct force behind horizontal FDI decision. What is the tradeoff firms face when they want to engage in horizontal FDI .
Explanation / Answer
Answer 1. Different firms choose the type of organisational structure as per their needs and types. So, the structure adopted by Intel is Matrix and cross funtional organisation structure. In such structures the individuals have more than one reporting line and also different people with different functional units work together to achieve some common goal of the organisation. While the organisational structure followed by nike is a flat organisational structure. In such a flat organisational structure the firms have very less or almost no middle level staff.
Intel being one of the finest IT companies has facilities all over the world from where it gets it's work done. As from one country it gets it's parts made and from another it gets those parts assembled etc. Thus Intel has done Vertical FDI's ie., it has made connections with suppliers and buyers of other countries. While Nike has followed horixontal FDI system and thus gets it job done from various countries. In the case of Nike the company has given factory outlets to prople of other countries on franchise and thus Nike doesn't own any of them while this is not the case with Intel where it owns most of the facilities situated abroad.
Firms choose different organisation structure based on the type of business they are in and the most cost efeective as well as efficient structure the firms can have.It also depends how the firm would like to make their channel of communication and the whole hierarchical structure. Also other factors that affect the organisational structure are as follows-
Answer 2. The given statement is partially false as Horizontal FDI is mostly driven by company expanding it current business from one merket to another. The main reason for companies to go for Horizontal FDI is
If any firm wants to engage itself in a horizontal FDI then it has to undergo the whole organisational change as it is either expanding as a merger or is making an acquisition. The firms also have to give a share of profit to the executives working in other countires.
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