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Multinational organizations expanding into global markets
Home-office leaders need to decide how much autonomy they should give their local teams to expand into international markets.
Depending on several factors, managers can determine which overseas divisions will benefit from a more centralized structure and which will be better off making decisions more independently. Holding too tight control over your overseas divisions can interfere with their ability to operate efficiently. Giving them too much autonomy can lead to quality issues, inconsistencies, or duplicated work.
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Consider the pace your business sector is growing
Executives should analyse the pace of the specific industry in which their businesses operate.
Fast-paced sectors often require faster decision-making to respond to evolving opportunities and threats. As a result, teams in these sectors may benefit from greater autonomy.
Sectors such as chemical engineering and traditional manufacturing grow slower and expect fewer changes, making it better to centralise decision-making to streamline operations and avoid costs.
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Consider the extent a business depends on local assets
A global company that relies heavily on capabilities like local procurement, production, and sales should consider decentralisation.
For businesses that depend less on local assets, a higher degree of centralisation may make more sense. Some brands rely heavily on the strong, centralised brand of the parent company, making it necessary to integrate their regional teams closely with their headquarters.
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Consider how strong your relationship is with local leadership
Consider how much you trust your local counterparts. The more trust and the stronger your relationship, the better it is to give local teams more autonomy.
There are different ways trust can develop. Time is sometimes all that is needed. In other cases, organisations can build trust into their company culture through intentional efforts.
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Effective implementation takes planning and communication
Figuring out how much autonomy to provide your international teams. Then create a plan to implement these different levels and types of autonomy around the world.
- Work with different departments to specify exactly where and how autonomy should be granted. Describe the categories of decisions that will likely be encountered and determine who will be responsible for making them.
- Home office managers can work with their counterparts on the ground to ensure smooth implementation of the plan.
- Ensure that information is clearly documented and communicated throughout the organization.
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