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Unit 3: Global Status and Control Mechanism in MNCs

4. Keiretsu: A newly emerging organisational arrangement is the keiretsu, which is a Notes
vertically integrated group of companies that cooperate and work closely with each
other. Example is the Mitsubishi group. This keiretsu consists of 28 core members
who are bound together by cross ownership, long-term business dealings,
interlocking directorates, and social ties. Many are three flagship firms in the group;
Mitsubishi Corporation, which is a trading company; Mitsubishi Bank, which finances
the keiretsu’s operations; and Mitsubishi Heavy Industries, which is a leading
worldwide manufacturer.

Did u know? Chaebol refers to a South Korean form of business conglomerate. They are
government-supported powerful global multinationals owning numerous international
enterprises. The Korean word means “business family” or “monopoly”. There are several
dozen large Korean family-controlled, government-assisted corporate groups. Through
aggressive governmental support and finance, some have become well-known
international brand names, such as Samsung, Hyundai and LG.

Self Assessment

Fill in the blanks:
1. HR activities are determined by and influence various organisational factors, like stage of
……….

2. HR activities are determined by and influence by ………. importance of the overseas
operations to total corporate profitability.
3. Some firms may use licensing, ………., or other operation modes, instead of establishing
their own foreign production or service facilities.
4. ………. is initial stage for the firms entering international operations.
5. Having made the decision to produce overseas, the firm may establish its own foreign
production facilities, or enter into a …………with a local firm, or buy a local firm.
6. In product/service based global division structure, the company treats each of its major
products as distinct Strategic ………. Units (SBUs).
7. A newly emerging organisational arrangement is the ……….., which is a vertically
integrated group of companies that cooperate and work closely with each other.



Caselet BIC World

IC is a very large manufacturer of razors, lighter, and pens. Recently, it has simplified
its operations to run from large super factories that serve large geographical markets.
BProduct distribution is then organised by continent, with country managers
reporting to their continental manager. The organisation thus has a matrix structure based
on two main lines of communication – (1) by product category, (2) by geographical region.
The matrix structure allows combining the benefits of a strong product expertise, together
with strong operational structures per geographic area.

Source: http://businesscasestudies.co.uk/business-theory/people/organisation-and-management-
structures.html#axzz2HZ1gqE2H

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