Organizational Structure

Essay by AmBeddUniversity, Bachelor's July 2004

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1) What variables have to be considered in designing the organizational structure for international operations? How do these variables interact, and which do you think are the most important?

The major variables which have to be considered are the firm's strategy, size, and appropriate technology as well as the environment in those parts of the world in which the firm operates. Additional variables include geographic dispersion, differences in time, language, cultural attitudes and business practices. I believe the environment to be the most important variable.

2) Explain the need for an MNC to "be global and act local." How can a firm design it organization to enable this?

A company must have the structure in place to respond to local market structures and consumer preferences while at the same time have enough centralized structure in place to coordinate its varied interests throughout the world. It is a balancing act that assures foreign managers have the flexibility to handle operations on a contingency basis.

Companies employ regional presidents who oversee subsidiaries and serve as tethers to the home corporation and are part of the firm's overall management rather than independent. This structure assures that there is not much centralization which can become a bureaucracy, slow to react and change in an ever-evolving global economy.

3) What is a transnational organization? Since many MNCs are moving toward this format, it is likely that you could at some point be working within this structure-how do you feel about that?

A transnational organization is a horizontal one which retains local flexibility while managing across national boundaries and achieving global integration. This helps link foreign operations to each other and headquarters. This decentralized operation requires the dispersal of responsibility and decision making to local subsidiaries and alliances. This a lateral rather hierarchical system of communication.