Cluster analysis applied to organisations rather than industry sectors, has demonstrated a distinct pattern of segmentation in the chemicals industry. Four discrete clusters were revealed. Although no attempt was made to pin-down the assertion, there does seem to be at least a tentative relationship between corporate organisation and performance. A brief synopsis of some of the principal dimensions of the clusters derived from the analysis is set out in Table 3.6. The purpose of this section is to summarise this pattern of segmentation.
CLUSTER GEOGRAPHICAL STRUCTURE ORGANISATIONAL STRUCTURE PRODUCTION PERFORMANCE
Extensive multinational operations with a decentralised network. Tendency to concentrate major proportion ot activities on developed (high and medium income) countries.
Highly differentiated and strongly integrated, with concentration of activities in mainstream chemicals. Large number of subsidiary companies most of which are directly
owned.
Large, expanding workforce. Medium capital Intensity.
Large capital base. Rapid growth in business and substantial capital returns.
II Extensive multinational operations but more centralised network than I. Greater emphasis on low Income host countries as well as
developed locations.
Highly differentiated, more so than I and less Integrated. Primary activities in mainstream chemicals but greater downstream diversity than I. Larger network of susidiary companies than I, fewer directly owned.
Large, contracting workforce. Low capital intensity.
Large but declining capital base. Rapid business contraction and negative capital returns.
Ill Modest multinational scale of operations compared to I and II and a centralised network. Activities primarily concentrated in developed countries.
Less differentiated structures with extensive downstream diversity compared to 1 and II. Fewer subsidiaries and less directly owned than II.
Medium, stable workforce. Medium capital Intensity.
Small capital base in slow decline. Slight growth in business, and reasonable returns.
IV Small multinational scale of operations and strongly
centralised network. Very little emphasis on low income host countries.
Highly integrated structures with little differentiation.
Substantial backward integration. Small network of subsidiary companies and especially affiliated companies.
Small, stable workforce. Very high capital intensity.
Medium capital base and growth In business. High return but low profits.
O ro
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B u s i n e s s o r g a n i s a t i o n s in C l u s t e r I are g e o g r a p h i c a l l y e x t e n s i v e a n d d e c e n t r a l i sed w i t h a w i d e m u l t i n a t i o n a l sphere of o p e r a t i o n s (the b u l k of w h i c h is in the m o r e d e v e l o p e d c o u n t r i e s ) . They also p o s s e s s : a s u b s t a n t i a l n u m b e r of s u b s i d i a r y c o m p a n i e s ; a large n u m b e r of s t r u c t u r a l d i v i s i o n s c o n c e n t r a t e d in the core of the c h e m i c a l s i n d u s t r y ; a large and growing w o r k f o r c e ; a strong c a p i t a l base and a g r o w i n g b u s i n e s s e n v i r o n m e n t . Quite c l e a r l y , these b u s i n e s s o r g a n i s a t i o n s w h i c h include names such as D o w , Du P o n t , H o e c h s t , B a y e r , and B A S F , a r e too big and q u a l i t a t i v e l y too d i f f e r e n t to fit the g e n e r a l c o n c e p t i o n of a ' m u l t i n a t i o n a l ' c o r p o r a t i o n . R a t h e r , they w o u l d s e e m to represent the group of emerging g l o b a l c o r p o r a t i o n s m e n t i o n e d in C h a p t e r s One and T w o . This set of e n t e r p r i s e s is the m o s t s u c c e s s f u l of a l l the business o r g a n i s a t i o n s w h i c h w e r e a n a l y s e d .
C l u s t e r II contains business o r g a n i s a t i o n s very similar to those in C l u s t e r I , the m a j o r difference being that they stand out on the basis of their poor p e r f o r m a n c e and rapidly c o n t r a c t i n g w o r k f o r c e s , c a u s e d by r a t i o n a l i s a t i o n . A s a result of these s t r u c t u r a l s i m i l a r i t i e s , coupled w i t h p e r f o r m a n c e d i s s i m i l a r i t i e s , this group of b u s i n e s s o r g a n i s a t i o n s has b e e n termed g l o b a l r e s t r u c t u r i n g c o r p o r a t i o n s and i n c l u d e s o r g a n i s a t i o n s such as I C I , R h o n e - P o u l e n c and A k z o .
B y far the largest group of enterprises is r e p r e s e n t e d by C l u s t e r I I I . T h i s s e g m e n t includes an array of fifty-two c o r p o r a t i o n s and c o m p a n i e s , o p e r a t i n g on a m o d e s t m u l t i n a t i o n a l scale but w i t h a p r i m a r y o r i e n t a t i o n to the c o u n t r y in w h i c h the o r g a n i s a t i o n s are i n c o r p o r a t e d . In a d d i t i o n , they h a v e fewer s u b s i d i a r y c o m p a n i e s and are m o r e d i v e r s i f i e d d o w n s t r e a m . T h e s e f e a t u r e s , together w i t h c o m p a r a t i v e
b u s i n e s s and e m p l o y m e n t s t a b i l i t y , point towards this c l u s t e r as r e p r e s e n t i n g the s t e r e o t y p e d m u l t i n a t i o n a l c o r p o r a t i o n s and c o m p a n i e s .
A t the other e x t r e m e to C l u s t e r I , C l u s t e r IV c o n t a i n e d the e n t e r p r i s e s w i t h the s m a l l e s t m u l t i n a t i o n a l sphere of o p e r a t i o n s , s t r o n g l y c e n t r a l i s e d on their own d o m e s t i c e c o n o m y . T h e s e b u s i n e s s o r g a n i s a t i o n s are s u b s t a n t i a l l y b a c k w a r d integrated and h a v e only a r e l a t i v e l y s m a l l n u m b e r of s u b s i d i a r y c o m p a n i e s . A l s o , the o r g a n i s a t i o n s in this c l u s t e r are e x p a n d i n g seemingly by r e t a i n i n g b u s i n e s s p r o f i t s and by e m p l o y i n g small w o r k f o r c e s w i t h c a p i t a l i n t e n s i v e m e t h o d s of p r o d u c t i o n . S e v e r a l of these c h a r a c t e r i s t i c s are h a l l m a r k s of the t y p i c a l l y large n a t i o n a l b u s i n e s s o r g a n i s a t i o n w h i c h m a y , or may n o t , operate m u l t i n a t i o n a l l y . B u s i n e s s o r g a n i s a t i o n s w h i c h fit this d e s c r i p t i o n include the large s t a t e - c o n t r o l l e d c o r p o r a t i o n s such as C h a r b o n n a g e s de F r a n c e , D S M and V e b a . S u b s i d i a r y c o m p a n i e s of g l o b a l c o r p o r a t i o n s , such as D u Pont Canada and U n i o n E x p l o s i v e s Rio T i n t o , a s u b s i d i a r y of Rio T i n t o Z i n c , are also m e m b e r s of the g r o u p .
T h e n u m b e r of J a p a n e s e b u s i n e s s o r g a n i s a t i o n s in this cluster r e q u i r e s some e x p l a n a t i o n . In p a r t i c u l a r , M i t s u b i s h i C h e m i c a l I n d u s t r i e s , M i t s u b i s h i P e t r o c h e m i c a l s and M i t s u b i s h i R a y o n , are related to each o t h e r by i n t e r l o c k i n g d i r e c t o r a t e s through the M i t s u b i s h i E n t e r p r i s e G r o u p . J a p a n e s e e n t e r p r i s e groups do n o t , h o w e v e r , p r e s e n t c o n s o l i d a t e d a c c o u n t s , and they are not d i r e c t l y c o m p a r a b l e w i t h w e s t e r n - s t y l e h o l d i n g c o m p a n i e s . The importance of this set of e n t e r p r i s e s m a y t h e r e f o r e be u n d e r s t a t e d in the a n a l y s i s . W h e t h e r or not this c o m p a r a t i v e l y loose m e m b e r s h i p of companies to larger e n t e r p r i s e g r o u p s a f f e c t s p e r f o r m a n c e a n d , i n d e e d , w h e t h e r they h a v e their w e s t e r n e q u i v a l e n t , is an u n r e s o l v e d and c o n t i n u i n g debate (see
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for instance, N a k a s e , 1981).
RAMIFICATIONS OF BUSINESS ORGANISATION SEGMENTATION
Whereas the discussion so far has concentrated on describing the organisation of enterprises operating in the chemicals industry, this section aims to broaden the discussion to examine some of the ramifications of business organisation segmentation. In particular, three questions need to be addressed. F i r s t , what are the central themes linking these distinct forms of business organisations? Second, which are the most powerful business organisation segments? Finally, how do these structural characteristics and positions of power affect
the dynamics of corporate organisation?
Forms of Business Organisation: Some Central Themes
The description of the four broad types of business organisation operating in the chemicals industry illustrates the different forms of organisation which accompany an expansion in the geographical scope of corporate space. At least four themes can be referred to which both reaffirm and extrapolate some of the tentative conclusions drawn from Chapter Two in several respects:
Decentralisation
Growth in the multinationality of business organisations carries with it a tendency to decentralise activities out of the country in which the enterprise first began its operations. This feature is most strongly developed in the 'global' and 'global restructuring' forms of corporations and least evident in the 'large national' business organisations. As subsidiary companies of global and 'multinational' types of corporation are included in this latter group, it is important
to p o i n t out that g e o g r a p h i c a l d e c e n t r a l i s a t i o n is r e l a t i v e to the l e v e l of o r g a n i s a t i o n a l a n a l y s i s .