NITIN KUMAR LOHIA 3C BBA(2008-11) A1810408056

Organizational StructureThere is no permanent organization chart for the world. . . . It is of supreme importance to

be ready at all times to take advantage of new opportunities.

—Robert C. Goizueta, (Former) Chairman and Ceo, Coca-Cola Company

Evolution and Change in MNCInternationalization is the process by which

a firm gradually changes in response to international competition, domestic market saturation, and the desire for expansion, new markets, and diversification.

Structural Evolution (Stages Model) occurs when managers redesign the organizational structure to optimize the strategy’s changes to work, making changes in the firm’s tasks and relationships and designating authority, responsibility, lines of communication, geographic dispersal of units and so forth

Basic Organizational StructuresA number of basic structures exist that

permit an MNC to compete internationallyStructure must meet the need of both the

local market and the home-office strategy of globalization

Contingency approach Balances the need to respond quickly to local

conditions with the pressures for providing products globally

Most MNCs evolve through certain basic structural arrangements in international operations

Basic Organizational Structures (cont.)Global Structural Arrangements

Global Product Division Structural arrangement in which domestic divisions

are given worldwide responsibility for product groups

Global Area Division Structure under which global operations are

organized on a geographic rather than a product basis

Global Functional Division Structure which organizes worldwide operations

primarily based on function and secondarily on product

Matrix Organization Structure Structure that is a combination of a global product,

area, or functional arrangement

Typical ways that firms organize international activitiesDomestic structure plus export

departmentDomestic structure plus foreign

subsidiaryInternational divisionGlobal functional structureGlobal product structureGlobal Geographic Structure

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International Division Structure

PersonnelProduction Marketing Finance

Chief Executive Officer

DomesticDivision

Paint

DomesticDivisionTools

InternationalDivision

DomesticDivision

Furniture

DomesticDivision

Hardware

Japan Australia Italy

OfficeOperations

Marketing GovernmentRelations

Multinational Matrix Structure

PersonnelProduction Marketing Finance

Chief Executive Officer

North America Industrial Goods Europe

Manager,Industrial GoodsNorth America

Manager,Industrial Goods

Europe

Integrated Global StructuresThe global functional structure is designed

on the basis of the company’s functions – production, marketing, finance, and so forth. Foreign operations are integrated into the activities and responsibilities of each department to gain functional specialization and economies of scale.

Matrix Structure is a hybrid organization of overlapping responsibilities – it is used by some firms but has generally fallen into disfavor recently