INTERNATIONAL
ORGANISATIONAL
STRUCTURE
TYPES OF INTERNATIONAL
ORGANISATIONAL STRUCTURE
International World wide Geographic
Division Functional Area
Structure Structure Structure
Matrix Networked
Product org.
Structure structure
TRANSNATIONAL ORGANISATION
OR TRANSNATIONAL STRATEGY
INTERNATIONAL
DIVISION STRUCTURE
• Overseas unit is adjunct to parent Company
• One international division head
• Some parallel but less formal reporting also takes place directly to various
functional heads at the corporate headquarters.
• Human Resource : corporate human resource department coordinates and
implements staffing, expatriate management, and training and development
at the corporate level for international assignments. Further, it also interacts
with the HR divisions of individual subsidiaries.
• attention of the top management towards developing a holistic and
unified approach to international operations
ADVANTAGES &
DISADVANTAGES
Respond quickly to changes
Segregation of Int. Division from Domestic Division, which
may lead to two different camps in organisation
Low priority given to new products in international market
2. Worldwide Functional Structure :
- Each Functional department is responsible for worldwide
manufacturing activities
- Used by MNCs with same product lines or narrow product
lines.
- U Form Organisational Structure – Unity
- Best Example – British Airways
WORLD WIDE FUNCTIONAL
STRUCTURE
Advantage :
• Specialisation & Concentration of Functional Expertise.
• Easy Control relatively.
• Isolation of Problem becomes easy.
• Provides clearly marked career paths for hiring and promotion
• Employees work alongside colleagues who share similar
interests
Disadvantage
• Provides scope for different functional heads to disown (pass
the buck) project failures
GEOGRAPHIC AREA
STRUCTURE
Dividing world into Regional Manager More effective in
different geographic responsible for his or responding to market
Areas her geographic area conditions
Suitable for the firms
Lack of
Not suitable for – market driven
communication
products going under strategy rather than
among divisions is
rapid tech. changes dependency on
there
manufacturing.
GLOBAL PRODUCT
STRUCTURE
•
In a global product structure, the activities of the MNC are organised around specific
products or product groups.
• This structure is frequently used by MNCs. It is often called an “M-form” organisation,
where “M” stands for “multi-divisional”.
• The product structure allows managers to accumulate knowledge on their specific
product or product group and develop substantial expertise.
• worldwide responsibility for all functions concerning the specific product or product
group.
• Authority : Manager/ Incharge
• Autonomy- Considerable
GLOBAL PRODUCT DIVISION
Global Product Division Structure locates manufacturing and value
creation activities in appropriate global locations to increase responsiveness
to competitive opportunities, efficiency, quality, or innovation. Global product
divisions are responsible for Global Product Design and operate in
divisional, cluster, or holding company formats. Global Product divisions
have little in common. They are highly independent of each other.
Ford adopts this structure, abandoning its Global Geographic Structure.
Today most of the multinational enterprises with their diverse acquisitions
world-wide have diverse product portfolios. They mostly adopt product
structure as that offers certain great synergies.
ADVANTAGES
• intensive knowledge transfer concerning the product/product groups
• focus on differences between products
• expertise for specific products
• usually high market orientation of product divisions
• coordination in companies with heterogeneous products facilitated
• holistic view of the value chain
• promotion of entrepreneurial behaviour
• economies of scale easily exploited
• flexible response to changes in product requirements
DISADVANTAGES
• too difficult to organize communication across divisions.
• duplicated functions among the product divisions
• Lack of Synergy
• Control of headquarters – budgetry constraints and approvals' of key
decisions
GLOBAL GEOGRAPHIC
STRUCTURE
MIXED STRUCTURE – STRUCTURE
FOLLOWS STRATEGY
MATRIX STRUCTURE
- Most Complex form of org. Structure
- One design is superimposed on another existing design,
But different form.
- Structure
- Manager reports to two matrix bosses
- Matrix Managers – sharing subordinates
- TOP manager – heading all to balance.
HAVE A LOOK..
XYZ CO.
Product A, B, C
A- Functional Head
B- Functional Head
C- Functional Heads
Headquarter- Functional Executives
Functional Head reports to : Head of division & Functional
executives at Headquarters
STRENGTHS & WEAKNESSES
OF MATRIX MODEL
• Flow of communication throughout the organisation
• Fluidity
• Not suitable for those which have stable markets and few
products
• Becomes clumsy
• Contrary perspectives
• Slow decision making.
LET’S REVISE
CHOOSING A
STRUCTURE
Background and
Present and evolution of
Product strategy
future markets global
operations
Degree of
Capacity to centralisation
change and
decentralisation.
EMERGING
ORGANISATIONAL
STRUCTURE
The network structure is a newer type of organizational structure
viewed as less hierarchical (i.e., more “flat”), more decentralized,
and more flexible than other structures. In a network structure,
managers coordinate and control relationships that are both
internal and external to the firm.
Virtual Organisation Structure
RELATED ISSUES IN GLOBAL
ORGANISATIONAL DESIGN.
DIFFERENTIATION
When two alternatives are present.
Differentiation
Vertical Horizontal
USE OF SUBSIDIARY
BOARDS / ROLE
Advise
Respond to local Conditions
Assist in strategic Planning
ROLE OF INFORMATION
TECHNOLOGY
Bringing down the beuracratic Costs
Responsive to local needs faster
Customised and virtual products
Major Disadvantage ??
CONTROL SYSTEMS
Factors daunting International Business :
- Distance
- Diversity
- Degree of uncertainity
- Too much Independence
- Differences in approach.
