A multinational corporation operates in more than one country, with headquarters in one country and subsidiaries in others. They have large assets and turnover, networks of branches, advanced technology, and pursue continued growth. Their organizational structures include global product, area, and functional structures, as well as mixed, matrix, and transnational network structures. A matrix structure has dual lines of command, combining project and functional systems. Transnational network structures decentralize across countries to engage in value creation responsively.

1. MULTINATIONAL CORPORATIONS

2. Multinational Corporation
• A Multinational Corporation is any corporation that is registered and
operates in more than one country at a time. Generally the corporation
has its headquarters in one country and operates wholly or partially
owned subsidiaries in other countries.
• “A multinational corporation owns and manages business in two or
more countries.”- Neil H. Jacoby

3. Features of MNCs
 Huge assets and turnover
Network of branches
Continued growth
Advanced technology
Unity of control
Right skills
Aggressive marketing
Good quality products

4. Organizational Structure of MNCs
1. Global product structure
2. Global area structure
3. Global functional structure
4. Mixed structure
5. Matrix structure
6. Transnational network structure

5. Global Product Structure
• It is a structural arrangement in which domestic divisions are given
worldwide responsibility for product groups.
• If the firm produces a large number of diverse products, the structure
allows each major product line to focus on specific needs of its
customers.
• Helps to develop a cadre of experienced, well trained managers who
understand a particular product line.

6. Global Product Structure

7. Global Area Structure
• In a global area structure the activities of the MNC are organized
around specific areas (or regions). An area may be a country or a
group of countries.
• Departments or divisions are created that have responsibility for all
functions and all products concerning the specific region.
• They usually have narrow product lines that are not differentiated by
geographic area.

8. Global Area Structure

9. Global Functional Structure
• A global functional structure is often adopted by companies with a very
limited product scope.
• A CEO will oversee a number of business functions that have been
identified as critical to business operations. Because the product mix is
singular or limited, the CEO can coordinate the work of the functions and
bring the resources of each to bear on the product line.
• In this case, the CEO serves as the common denominator between the
functions.

10. Global Functional Structure

11. Mixed Structure
• It is a hybrid organization design that combines structural
arrangements in a way that best meets the needs of the enterprise.
Different businesses with different patterns of global demand, supply
and competition demand different management structures.
• Sometimes, the mixed structure is temporary one, the company opts
for a more common form after a year or two.
• It allows the enterprise to create the specific types of design that best
meets its needs.

12. Matrix Structure
• The matrix organizational structure possesses a dual chain of command.
• It is a mix of two other organizational structures, the project system, and the
functional system.
• A matrix organizational structure is appropriate when:
 Management attention must be focused on two or more key issues.
Large amounts of diverse information need to be processed.
Problem-solving is complex.
Economies of scale require the sharing of human resource expertise to achieve high
performance.

13. Manufacturing Sales Finance
Human
resource
Manager
Project C
Manager
Project B
Manager
Project A
Sales unit
Sales unit
Finance unit
Finance unit
Finance unit
Human
resource unit
Human
resource unit
Human
resource unit
Manufacturing
unit
Manufacturing
unit
Manufacturing
unit Sales unit
Top
management
Matrix Structure

14. Transnational Network Structure
• Transnational network organizations generally have a decentralized
organizational structure. These corporations do business in several
countries without one location as a corporate home.
• Transnational network structures engage in value creation in various
countries while maintaining high levels of responsiveness. It is a
flexible and efficient approach that is gaining popularity.