Harvard Business Review Reflection
Course name: Introduction to International Business
Subject matter: HBR Reflection Details
Article Title: Have You Restructured for Global Success?
Author: Nirmalya Kumar and Phanish Puranam
Journal: Harvard Busniss Review
Date of publication: October 2011 BHM
Have You Restructured for Global Success? Introduction The article at hand ‘Have You Restructured For Global Success?’ written by Nirmalya Kumar, professor of marketing and Phanish Puranam, professor of strategy and entrepreneurship, at London Business School.
The authors of this article, who are also the codirectors of the school’s Aditya Birla India centre and the coauthors of India Inside: The Emerging Innovation Challenge to the West published in the Harvard Business Review in October 2011, argue that companies should adopt a new structure called the T-shaped country organization structure. According to them, existing structures are inadequate for fully harnessing emerging markets’ potential. In essence, due to substantial growth in emerging markets during the first decade of the 21st century, multinational corporations were keen on formulating new strategies.
The authors argue that the current front-end/back-end structures, matrix structures, and transnational structures are insufficient to fully utilize the potential of emerging markets. This is due to three reasons: First, China and India have emerged as major demand sources with unique consumer needs. The existing structures no longer effectively meet these needs in these two markets. Second, China and India are also becoming significant talent sources for innovation, creating a self-perpetuating effect. Lastly, as China and India become a company’s largest market and primary source of innovation, companies must ensure their top management is “Asianizated.” There are also gaps between companies’ goals and accomplishments in emerging markets. To address this issue, the authors propose a new structure called the T-shaped country organization. This structure acknowledges that emerging markets serve not only as lead markets but also as lead talent pools.
The T-shaped structure is formed by a dual approach, representing linkages across countries horizontally. Companies should utilize emerging markets for globally segmented innovation, manufacturing, and offshore services. The vertical stroke emphasizes the importance of depth within a country, where front-end operations should become highly localized. This requires each country to specialize in its own area of expertise, with all areas being essential for the development of new products and services.
Research has shown that companies have two complementary approaches to coordinate processes across geographies: separation and integration. The article provides three recommendations for managers. The authors point out that companies are not adjusting their structures sufficiently to fully exploit developing markets, which is an important observation in today’s business world. Moreover, the authors offer compelling observations and recommendations.
In terms of the author’s observation, it is noted that in China and India, subsidiaries often express dissatisfaction with the lack of dedication from top management towards their markets, which we find to be a valuable point. Additionally, the article presents an interesting scheme titled ‘What Kind of Multinational Structure Fits Your Company?’ that allows managers to playfully assess the current state of their company. However, there are certain criticisms regarding the introduction and structure of the article, as the authors’ approach remains somewhat unclear.
The article lacks a clear introduction, body, and conclusion, making it difficult to follow and understand the overall concept. The story of Frits van Paaschen, CEO of Starwood Hotels, at the beginning of the article is interesting but seems unrelated to the rest of the content. It would have been helpful to have a clear statement of the article’s purpose and structure in the introduction. Additionally, while the section titled ‘Falling into the Gaps’ raises valid points, its connection to the main idea remains unclear.
Despite the comprehensive description of the article, the T-shaped country organization structure remains relatively vague, making it difficult to visualize. Adding a diagram or schema could significantly enhance understanding, as images can convey more information than words. Additionally, it is unclear what the authors’ ideas are based on. Did they conduct research or investigate specific aspects?
According to this article, the main question examined was which companies are not tapping into the full potential of developing markets using existing structures. The authors suggest that these companies should follow the example of a few others who are showing the way and rethink their approach to structures. The article reveals that R&D can be segmented both vertically and horizontally, and can also be geographically fragmented. It is highlighted that R&D has evolved from being a non-transferable FSA to an internationally cooperative and transferable FSA.
The article in lecture 2 discussed the concept of companies being “international projectors.” These companies seek to benefit from global research and development in their back-end operations, while still catering to their home country in their front-end operations. This article aims to provide managers with a fresh viewpoint on organizational structure and presents some ideas and guidelines. The last section of the article focuses on challenges faced by top teams, showcasing different consequences for companies. However, it is crucial to note that this article only provides a general overview of these topics and lacks an in-depth analysis.
The article provided is applicable to the “Introduction to International Business” course as it addresses the growing challenges faced by multinational corporations in terms of their organizational structures. This course delves into the issue of where to allocate various activities and the repercussions on both the company and its surroundings. The article specifically focuses on scrutinizing the placement of activities like research and development. Questions for the author encompass: 1) How can a clothing manufacturer, aiming for triumph in a developing nation such as China, effectively employ the T-shaped structure? 2) Are there any companies currently utilizing the T-shaped structure with success? If so, what are some instances and reasons behind their achievements? 3) Was any research conducted for this article? If yes, what were the primary research inquiries, investigation scope, and any constraints? Pertinent references include an article titled “Have you restructured for global success?” (2011) by Kumar and Puranam from Harvard Business Review, along with a lecture delivered by Professor Dr. S. Beugelsdijk on competitiveness within firms and countries (2012).
