1. The document discusses various factors that impact organizational structure for global companies such as degree of international operations, products, market size, and human resources. 2. It describes different types of organizational structures including product, geographic, functional, market, and matrix structures and notes their advantages and disadvantages. 3. The document also covers how companies can control global organizations through developing standards, measuring performance, analyzing deviations, and effective communication systems.

1. Organizational Structures

2. Learning Objectives
 factors that impact how global
organizations are structured and
managed
 Types of organizational structures
 Controlling the global organization

3. Factors that impact structure and
decision making
 Degree of involvement in international
operations.
 Products that the firm markets.
 Size and importance of the firm’s markets.
 Human resource capability of the firm.
 Corporate goals, Strategies and objectives.

4. Organizational Structure
 Companies must change strategies as their
structures evolve from domestic to multinational.
 The organizational structure, control systems,
culture, and human resource management
systems that together determine how
efficiently and effectively organizational resources
are used.
• All organizations require some form of
organizational structure to implement and
manage their strategies
• Firms frequently alter their structure as they
grow in size and complexity

5. Designing Organizational Structure
 Organizing
 The process by which managers establish working
relationships among employees to achieve goals.
 Organizational Structure
 Formal system of task and reporting relationships
showing how workers use resources.
 Organizational design
 The process by which managers create a specific type of
organizational structure and culture so that a company
can operate in the most efficient and effective way

6. Tall and Flat Organizations
 Tall structures have many levels of authority
 As hierarchy levels increase, communication gets
difficult creating delays in the time being taken to
implement decisions.
 Communications can also become distorted as it is
repeated through the firm.
 Can become expensive
 Flat structures have fewer levels and wide spans of control.
 Structure results in quick communications but can lead
to overworked managers.

7. Tall and Flat Organizations

8. Types of Organizational Structures
Product Most often used by multinational corporations.
Structure Improved cost efficiency is a major benefit.
Geographic Second most used approach. Follows the marketing
Structure concept most closely.
Functional The simplest from the administrative viewpoint. A
Structure variation is one that uses processes as a basis for
structure.
Market Especially used if customer groups are dramatically
Structure different.
Matrix Integrates the various approaches. Most companies find
Structure this arrangement problematic. Complexity of this
structure may increase the reaction time of a
company.

9. Product Structure
 Allows functional managers to specialize in one product
area
 Removes need for direct supervision of division by
corporate managers
 Divisional managers have the responsibility for devising
an appropriate business-level strategy to allow the
division to compete effectively in its industry
 Each product group is responsible for marketing, sales,
planning, and (in some cases) production and research
and development

10. Product organizational structure
• Advantageous when product line constantly changes
with technological advances
• Facilitates the development of global products and
global roll-outs
• Appropriate when perceived differences involved with
marketing the various product lines are greater than
perceived differences in geographic markets
• Knowledge of specific geographic areas can be limited
and sensitivity to local market conditions can be
diminished

11. Geographic organizational structures
 Focus on regions of world
 Allows company to locate marketing and manufacturing
efforts in such a way as to take advantage of regional
benefits
 Puts company in closer contact with distributors,
customers, and subsidiaries
 Managers locate different divisions in each of the world
regions where the organization operates.

12. Geographic organizational structures
• Separate unit for each Geography
 Extremely sensitive to local customs, laws, and needs
 Expensive!!!
 Many companies are phasing out country-based
structures and are moving toward regional centers
• Appropriate when company needs intimate knowledge of
its customers and their environments
• Gives company opportunity to understand the local
culture, economy, politics, laws, and competitive
situation

13. Functional organizational structures
• Top executives in marketing, finance,
production, accounting, and research and
development all have worldwide
responsibilities
• Best for narrow or homogeneous product
lines with little variation between products
or geographic markets

14. Market Structure
• Groups divisions according to the particular kinds of
customers they serve
• Allows managers to be responsive to the needs of their
customers and act flexibly in making decisions in
response to customers’ changing needs

15. Matrix Structure
• An organizational structure that simultaneously groups
people and resources by function and product.
 Results in a complex network of superior-subordinate
reporting relationships.
 The structure is very flexible and can respond rapidly
to the need for change.
 Each employee has two bosses (functional manager
and product manager) and possibly cannot satisfy
both.
• Developed to overcome drawbacks of geographic,
functional, and product organization structures
• Allows for two or more dimensions of theoretical weight,
e.g., importance to product and geography
• Complexity can cause duplication of authority, confusion
of responsibility and power struggle

16. Matrix Structure

17. Controlling the Global Organization
1.Developing standards
 Behavioral standards
 Performance standards
1.Measuring and evaluating performance
2.Analyzing and correcting deviations from
the standards
4. Effective communication systems
facilitate control

18. Post-Class Activity
 Why organizational issues for born-global
firms differ from those for traditional
multinational companies.
 Give examples of how technology can be
utilized to support internal global
communications systems.
 Discuss the conflicts that can arise
between international headquarters and
national subsidiaries.
 Global account management.
 Transnational network structure.