Multinational companies, especially smaller companies, face more organizational challenges than companies operating in a single country market. The company needs a strong structure to attract and retain talented employees and create a viable organizational hierarchy. Generally, companies choose between four types of organizational structures. Each has its own advantages and disadvantages. Choosing the right organizational structure for your business is imperative, because a poor organizational structure can lead to confusion among employees, decision-making errors between managers, and ultimately unsatisfactory results.
The functional use of the organizational structure The list of companies that use functional structures internationally is endless. A multinational company organized by function uses corporate functions as the basis of its organizational structure. Production, human resources, design and customer service are typical functional departments. If a company organized by function adopts a centralized structure, all businesses are located in the country of origin, and individual employees are responsible for different national markets.
This type of organization is effective for companies that are too small to have subsidiaries abroad. Larger companies can have this type of organization, but in a decentralized way, foreign employees do some work in their own country. In this case, companies must pay special attention to the coordination of activities. Geographical needs of structure For large companies and enterprises that need to enter foreign markets, a common form of organizational structure is based on geography. In addition to the central office or headquarters, semi-independent operating agencies have also been established in countries/regions where the company is active
What are the organizational policy issues regarding international business? For any international business, organizational policy issues and challenges are inevitable. In order to maintain business profitability, these problems and channels need to be carefully addressed. Some of the main issues related to organizational policies are as follows:
When the power of an organization is concentrated in only a few central points, it is called centralization. Only the selected person can participate in the decision-making process. The process of centralization involves the following aspects:-Only senior managers are involved in decision-making and operations. Middle managers are executed. Senior managers guide subordinate operations. Senior managers make decisions on the operation activities of lower managers. The power of the organization is distributed at all levels of administration. Department, called decentralization. Major decisions concerning organizational policies are mainly made by senior management. The rest are distributed between the middle and low directions.
All international business organizations follow an organizational structure. The main responsibility of following the organizational structure is to correct all processes of the organization. There are different types of organizational structures, and the type of organizational structure a company adopts depends on the requirements and business operations.
Some companies engaged in on-site manufacturing and companies involved in export generally adopt this initial branch structure. Some illustrations are of financial and consulting companies that usually follow the initial departmental structure. Some export companies that adopt this organizational structure include companies with advanced technology products.
In order to take care of the international operations of the business, a specific international department structure is being established. All companies that are still developing to implement commercial operations at the international level have adopted this structure.
Senior management understands the attitude of foreign markets.
International business is carried out together.
A separate local manager is required to manage international counterparts.
The global allocation of resources has become very difficult.
Divide the structure according to product groups, so that specific product groups are served by the division.
Manage the diversity of products, technologies and customers to meet all local needs.
This model is conducive to the coordination of all the different departments such as marketing, production and finance.
There is the possibility of personnel duplication.
Managers often deviate from their focus on long-term goals.
Only the local market is concentrated by department managers.
When a companys operations are controlled based on geographic location rather than product type, it is called a global regional division. Many companies that tend to operate only selected products use this global division.
Domestic and international operations remain unchanged. Geographical operations are managed by a global manager. Unit costs may be
Based on geographic location, it is difficult to adjust products without R&D.
On the basis of different functions, the is organized by this global functional division to emphasize functional leadership, more flexible management personnel, and centralized control. Companies that need to control the integrated production mechanism adopt this global functional division. The approach.
This model is most suitable for companies involved in the transportation of goods and raw materials.
This model is not suitable for all types of enterprises. This model is only suitable for oil and mining companies. Coordination of different processes becomes difficult. As the different processes are not integrated, the management of all processes is difficult.
The mixed matrix is a combination of global products, regions, and functional structures.
Meet the needs of all individual companies. Based on local needs and priorities, the method is tailored.
The structure is very complex and is a combination of one or more models.
This structure involves too many independent groups.
For larger companies, these can take the form of subsidiaries, while smaller companies can have things as simple as agents or small offices. This structure provides flexibility; the head office can transfer responsibilities overseas based on local conditions and overseas business capability requirements, and can also take over local business when necessary. This structural design maintains the companys homogenization direction. The chain of command is filtered to a central location with the same goals as the company. It enables growing companies to build small offices that mimic home offices