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Challenges of Global Organization

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In sum, numerous forces affecting structural design create a knotty mix of challenges and tensions. It is not simply a matter of deciding whether we should be centralized like McDonald's and Amazon or decentralized like Harvard and Zappos. Many organizations find that they have to do both and somehow accommodate the competing structural tensions.

Two electronics giants, Panasonic (formerly Matsushita) in Japan and Philips in the Netherlands, have competed with one another around the globe for more than half a century. Historically, Panasonic developed a strong headquarters, while Philips was more decentralized, with strong units in different countries. The pressures of global competition pushed both to become more alike. Philips struggled to match Panasonic's efficiencies derived from selling the same products around the world. Meanwhile, Panasonic gradually discovered,

No company can operate effectively on a global scale by centralizing all key decisions and then farming them out for implementation. It doesn't work … No matter how good they are, no matter how well supported analytically, the decision‐makers at the center are too far removed from individual markets and the needs of local customers. (Ohmae, 1990, p. 87)

Reframing Organizations

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