Course: Managing The Global Corporation
Prof: Akel Kayrouz
Organization Structure And Control System
Adopting the appropriate organization structures to effective strategy implementation is very important to the company’s development.
Companies change their structures to align with new strategic directions and competition and also to respond to development in their operating environment,like Samsung for example who has been badly hit by the global economic downturn so it has to make changes to effectively respond to the global recession,evidently the company startegy has had to change from high-tech competion to controlling cash flow and profitability. Samsung announced a major restructuring consolidating business operations into two operating divisions ,one focused on consumer products(televisions,cellphones..) and the other on components(memory chips,displays..),this required rassigning two-thirds of its executives and relocating 1200 staff.
Organizational structures must change to adapt a firm’s evolving internationalization in response to world wide competition,and they must fit the strategy,international managers should find the best way to attain that fit in organizing the company’s systems and tasks.
The choice of an effective structure is affected by many factors such as the firm’s size,the appropriate technology,the organizational environment,the geographic dispersion,differences in time ,language,cultural attitudes,and business practices…
* Evolution And Change In MNC Organizational Structures
Internationalization is the process by wich a firm gradually changes in response to international competition,a firm reoganizes as it internationalizes to accommodate new strategies,
The structure continues to change over time with growth,increasing levels of investment or diversity and the types of strategy chosen,this structural evolution that accompanies internationalization is known as the stages model,resulting from Stopford’s research on 187 U.S.MNC,but many firms do not follow the stages model because they start their internationalization at a higher level of involvement ,perhaps a full-blown global joint venture without ever having exported for example,even mature MNC’s must make structural changes sometimes for example the reorganization of Aluminum Company of America(Alcoa) for example split the company into smaller,more autonomous units,thereby giving more focus to growing businesses such as automotive products where the market of aluminum is strong.
The typical ways in which firms organize their international activities are shown in the following list:
-Domestic structure plus export department:
Many firms especially smaller ones start their international involvement by exporting,they may reorganize into a simple domestic structure plus export department.
-Domestic structure plus foreign subsidiary:
Some firms take a further step toward world wide operations by reorganizing into a domestic structure plus foreign subsidiary,this structure works well for companies with one or a few subsidiaries located relatively close to headquarters.
With market expansion the firm may then decide to specialize by creating an international division,organized along functional,product,or geographic lines.
-Global functional structure:
To respond to increased product diversification and to maximize benefitsfrom both domestic and foreign operations ,a firm may choose to replace its international division with an integrated global structure.
-Global product structure:
For companies with diversified product or service lines and that are aimed at dissimilar or dispersed markets, a global product (divisional) structure may be more strategically advantageous than a functional structure. In this structure, a single product or product line has its own separate division, headed by its own general manager, and...