The document discusses four stages of international evolution for companies: domestic, international, multinational, and global. It also examines how organizational structure should match a company's international advantages and forces for global integration versus national responsiveness. Different coordination mechanisms and cultural approaches to coordination are presented for global companies. Finally, the transnational model of organizations is defined as having dispersed yet interdependent worldwide operations coordinated through shared culture rather than formal structures.

1. Thomson Learning
© 2004 6-1
Chapter Six
Designing Organizations for the
International Environment

2. Thomson Learning
© 2004 6-2
Four Stages of International
Evolution
I.
Domestic
II.
International
III.
Multinational
IV.
Global
Strategic
Orientation
Domestically
oriented
Export-oriented,
multidomestic
Multinational Global
Stage of
Development
Initial foreign
involvement
Competitive
positioning
Explosion Global
Structure
Domestic
structure plus
export
department
Domestic
structure plus
international
division
Worldwide
geographic,
product
Matrix, trans-
national
Market
Potential
Moderate,
mostly
domestic
Large,
multidomestic
Very large,
multinational
Whole world
Sources: Based on Nancy J. Adler, International Dimensions of
Organizational Behavior (Boston: PWS-KENT, 1991), 7-8;
and Theodore T. Herbert, “Strategy and Multinational Organization
Structure: An Interorganizational Relationships Perspective,”
Academy of Management Review 9 (1984): 259-71.

3. Thomson Learning
© 2004 6-3
Matching Organizational Structure to
International Advantage
When Forces for
Global
Integration are . .
.
And Forces for
National
Responsiveness
are . . .
Strategy Structure
Low Low Export International
Division
High Low Globalization Global Product
Structure
Low High Multidomestic Global
Geographic
Structure
High High Globalization and
Multidomestic
Global Matrix
Structure

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© 2004 6-4
Domestic Hybrid Structure with
International Division
Scientific
Products
Division
Research &
Development
Human
Resources
Medical
Products
Division
Europe
(Sales)
Electrical
Products
Division
Corporate
Finance
CEO
International
Division
Brazil
(Subsidiary)
Mid East
(Sales)
Staff (Legal,
Licensing)

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© 2004 6-5
Partial Global Product Structure Used by
Eaton Corporation
Engineering President InternationalLaw &
Corporate
Relations
Chairman
Finance &
Administration
Regional
Coordinators
Global
Automotive
Components
Group
Global
Industrial
Group
Global
Instruments
Product
Group
Global
Materials
Handling
Group
Global
Truck
Components
Group
Source: Based on New Directions in Multinational Corporate
Organization (New York: Business International Corp., 1981).

6. Thomson Learning
© 2004 6-6
Global Matrix Structure
International
Executive
Committee
Power
Transformers
Germany Norway
Argentina/
Brazil
Spain/
Portugal
Transportation
Industry
Business
Areas
Country Managers
Local
Companies

7. Thomson Learning
© 2004 6-7
Building Global Capabilities
 The Global Organizational Challenge
Increased Complexity and Differentiation
Need for Integration
Knowledge Transfer
 Global Coordination Mechanisms
Global Teams
Headquarters Planning
Expanded Coordination Roles

8. Thomson Learning
© 2004 6-8
Cultural Differences in Coordination
and Control
 National Value Systems
Power Distance
Uncertainty Avoidance
 Three National Approaches to Coordination and Control
Centralized Coordination in Japanese Companies
European Firms’ Decentralized Approach
The United States: Coordination and Control
through Formalization

9. Thomson Learning
© 2004 6-9
Transnational Model of
Organizations
 Assets and resources are dispersed worldwide into highly
specialized operations that are linked together through
interdependent relationships.
 Structures are flexible and ever-changing.
 Subsidiary managers initiate strategies and innovations that
become strategy for the corporation as a whole.
 Unification and coordination are achieved primarily through
corporate culture, shared visions and values, and
management style rather than through formal structures and
systems

10. Thomson Learning
© 2004 6-9
Transnational Model of
Organizations
 Assets and resources are dispersed worldwide into highly
specialized operations that are linked together through
interdependent relationships.
 Structures are flexible and ever-changing.
 Subsidiary managers initiate strategies and innovations that
become strategy for the corporation as a whole.
 Unification and coordination are achieved primarily through
corporate culture, shared visions and values, and
management style rather than through formal structures and
systems