8.4.2 Examples
Steering control : specification check on materials entering production process
Screening control : quality control (by inspection or total quality control - TQC)
Output control : customer survey and subsequent feedback
Specifications for materials and quality control will nominate tolerances (eg 0.01 millimetre for machined metals). You should note that while such tolerances are used universally, some companies such as Japanese motor companies have been more successful than their competitors in controlling to such tolerances.
The 'types' of controls used in your textbook are as follows:
Personal controls |
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Personal contact on a one-to-one basis, or in meetings between an executive and subordinates. In the absence of standards, we might infer that personal 'controls' are by some other definition 'coordination'. (You can see why these terms were defined up front.) |
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Bureaucratic controls |
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Budgets Capital spending |
These are set 'standards' and illustrate why controls subsume standards. |
Output controls |
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Productivity Profitability Growth Market share Quality |
These are generally stated as goals or objectives and are generally quantified (hence 'standard'). |
Cultural controls |
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These are related to norms and values, so by their nature they are qualitative. You can have qualitative standards as well as quantitative standards, but they are more difficult to administer. |
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The preceding discussion was designed primarily to illustrate the elasticity of the terminology used to describe coordination, control and so on. Keep this in mind for the next reading, which includes the concept of performance ambiguity (Hill 2005, page 460).
Hill (2005) defines performance ambiguity as the inability to identify the poor performer in a group of sub-units which are interdependent. Again, this sounds like a deficiency in the system for coordination and integration, but Hill (2005) has chosen to identify it with the concept of control. No matter: what Hill (2005) is getting around to is the difference between 'controlling' the four types of multinational firms - multi-domestic, international, global and transnational. They put different emphases on the four types of controls nominated by Hill (2005). Irrespective of their strategy, all MNEs use output and bureaucratic controls. However, in global and transnational firms, the usefulness of output controls may be limited by performance ambiguities. As a result, these firms place greater emphasis on (organisation) cultural controls.
The American MNE Citibank provides a good example of cultural control. The bank has a rule that all desks must be cleared at the end of the day to ensure the security of documents. Any desk that is not cleared is photographed and the bank's internal auditors report the matter directly to the Board of Directors in New York . The Board then disciplines the CEO in the offending office, no matter what country it is in, the department head and so on down the chain to the officer who had not cleared the photographed desk.
A key feature of Citibank's culture is local acceptance of the presence of internal auditors who are responsible only to the Board at head office. Desks at Citibank are usually clear at the end of the working day!
We should wind up this chapter by reading from Hill (2005) about control systems and an article on benchmarking that highlights the importance of measuring the efficiency and effectiveness of business operations. This is also an appropriate place to read on recent changes to MNE organisational structures, in particular networks (referred to as virtual corporations in Reading 8.4) and horizontal corporations. The third reading provides further detail on networks.
In your text
Hill 2005, Chapter 13, pp. 458-473.
Reading 8.3
Stauffer, D. 2004, 'Are you sure your benchmarking is up to the mark?', Management Today , April, pp. 34-36 and 38-39.
Reading 8.4
Ball, D. A., McCulloch, W. H., Frantz, P. L, Geringer, J. M. and Minor, M. S. 2004, International Business: The Challenge of Global Competition , 9 th edn, McGraw-Hill/Irwin, Boston, pp. 486-489: 'Changes in organisational forms'.
Reading 8.5
Hacki, R. and Lighton, J. 2001, 'The future of the networked company', Business Review Weekly , 30 August-5 September,
pp. 58-60 and 62.
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