Every organization is unique in the context that its goals, the environment within it, the size of the organization and the technology it uses to pursue these goals are different from one organization to another. These key variables are the most important factors that map out how an organization is going to be structured. Therefore, there is no one best way to structure an organization.
The structure of an organization, particularly ones operating in several countries, i.e. MNC’s is closely related to its strategies, as argued by (Qiu and Donaldson 2010,P 82). Their hypothesis suggests that small changes in the way an organization is structured may play a big role in how successful it is in reaching its goals. They effectively sort out different structural models that the organizations can base their structure on depending on a number of determinants. The key determinants being how responsive the organizations want to be in regards to the local market changes, how diversified they want their products to be between different countries and the degree to which they want a similar global rule, i.e. global integration. (Qiu and Donaldson 2010,P-98 ) An MNC with a more standardized product line globally such as Dell, Asus etc., which will have a more rigid approach with high centralization of authority cannot have the same strategy as another MNC which might be more accepting to selling diversified products and thus may be more willing to allow greater autonomy amongst their subsidiaries in other countries.
Similarly, the role of the subsidiaries of an MNC will also affect how it is structured.(Leiponen and Helfat 2011,P-655) argue that the goals of innovation or research and development (R&D) department of a MNC will shape how the organization may want to locate and effectively structure these departments. When an organization’s R&D team is inclined to producing ‘imitative innovation output’, their research indicates a decentralized system is preferable to a...
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