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International Organization Structure

Briefly analysis about how organization structure of international companies are created and different problems they face.

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chio
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205 views4 pages

International Organization Structure

Briefly analysis about how organization structure of international companies are created and different problems they face.

Uploaded by

chio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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First of all we need to start understanding what a companys structure is, which it is

the framework around which the group is organized, the underpinnings which keep
the coalition functioning. It's the operating manual that tells members how the
organization is put together and how it works. More specifically, structure describes
how members are accepted, how leadership is chosen, and how decisions are
made.
Even though it looks to be very simple to establish the organizations structure it is
one of the fundamental challenges that companies of all sizes face on determining
how to organize and staff their operations. This task becomes even more complex
when a company decides to do business across national borders.
A small business owner may start out as the only employee in his or her company.
In this case organization and staffing simply involves the efficient allocation of the
owner's time and attention to the various tasks associated with the business.
As the company grows, more employees will probably be hired. When this occurs,
it is useful to explicitly look at how tasks can be allocated across employees in a
systematic way, also a clearly-established structure gives the group a means to
maintain order and resolve disagreements. As the company grows still larger, it is
often useful to begin organizing the company into departments. So when
companies start to expand nationally and/or internationally they start to face the
process of structuring the organization.
While the need for structure is clear, the best structure for a particular coalition is
harder to determine. The best structure for any organization will depend upon who
its members are, what the setting is, and how far the organization has come in its
development.
For international companies structure must be well determined cause this will help
the organization to grow trough other boundaries or make it fail it. Perhaps the
simplest start for many organizations is to adopt what is known as an international
division.
International division
In the international division the domestic organization may remain relatively
unchanged while an additional side structure is added. This additional structure (in
collaboration with the domestic structure) takes on the responsibility for virtually all
international business. This structure assumes that there are skills associated with
doing business overseas that will transcend the typical business lines. Market
assessments, compliance with export/import regulations, arranging shipping,
identification of local representatives, establishment of dedicated sales offices,

production facilities, etc. are all examples of tasks often assigned to the
international division.
The international division is effective in consolidating international activity under
one area of responsibility. Such a division develops international expertise that can
serve all areas of the organization. This eliminates the need for every part of the
organization to master the ins and outs of doing business overseas (this can
sometimes be quite complex).
On the other hand, the existence of an international division encourages the
organization to approach their business in an artificially dichotomous manner. Part
of the business organization focuses primarily on the home country market, while
the international division serves "the rest of the world". In most organizations such
a structure lends itself to a continuing preoccupation with the home country market.
As a company becomes more serious about overseas business, it often finds it
useful to adopt a more sophisticated global structure.
Four examples of such organizations are included below.
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.
Product structure
A global product structure is often chosen in companies with an array of diverse
product lines. Each product line is assigned to its own organization unit so that
decision-making is focused on the product characteristic and the customers who
will be targeted. In many cases, the product unit will have its own functional
organizationin essence, operating as a standalone business in the context of the
larger organization. In many cases, a product unit will be managed with full profit
and loss responsibility.
Area/geographic structure
An area structure is often chosen by companies who want to emphasize
geographically specific strategies and focus decision-making on local needs.
Organizations may be divided up into regional and country structures where

country managers operate rather autonomous businesses supported by an array of


local functions. In this case, the country organization often operates as a fairly selfcontained business with substantial local authority as well as profit and loss
responsibility.
Matrix structure
A matrix structure is often adopted in organizations that would like to optimize
decisions across multiple organization dimensions. In other words, they would like
to achieve economies of scale where appropriate, but do not want to lose the
ability to respond to product/customer and geographic needs more effectively.

So we can conclude that a well established structure will ensure that an


organization can function well organized. It is very important that when a company
is being develop its structure it has to be determined because this can guarantee
or make fail the success of it.
International companies faces a harder decision on what type of structure fits
better for it, but they must look for those that fits better on their type of products
and services, also their type of operations and the markets where they want to
have presence.

Bibliography

"Business Fundamentals."
http://globaltext.terry.uga.edu/books CC BY-SA 3.0.
Organizational structure and human resources management.
Business Fundamentals.
Don McCubbrey

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