THE ORGANIZATIONAL

CONTEXT

CHAPTER 2

MANAGEMENT DEMANDS ON
INTERNATIONAL GROWTH
Size
Flow &
volume of
information

Operation
modes

Host
country
demands

Structure

Management
demands on
Internationalizati
on

Geographical
dispersion

Control
mechanism
Natural
culture &
languages

THE PATH TO GLOBAL STATUS

Most firms pass through several stages of
organizational development as the nature
and size of their international activities grow.
As they go through these evolutionary
stages, their organizational structure change,
typically due to :
The strain imposed by growth and geographical
spread.
The need for improved coordination and control
across business units.
The constrain imposed by host-government
regulations on ownership and equity.

STAGES OF INTERNATIONALIZATION
Network of
Subsidiaries

Foreign
Production
Sales
Subsidiary

Exporting

Licensing

Subcontracting

HR Activities Export stage

Export tends to be handled by
intermediary (foreign agent or distributor).
Export manager appointed to control
foreign sales and activities seek new
market (from domestic operation).
Create an export department (hire export
staff) and perhaps training foreign agents.
The role of HR department is unclear.

EXPORT DEPARTMENT STRUCTURE

Corporate
Executive

Finance
Manager

Logistic
Manager

Production
Manager

Marketing
Manager

Domestic
Sales Mgr

Human
Resource
Manager

Internation
al Sales
Mgr

Issues
of roles
&
respon
sibility

HR Activities Sales Subsidiary

Foreign agent or distributor replaced by direct
sales with the establishment of sales subsidiaries
or branch offices in the foreign market countries.
More confidence in the international sales
activities.
The desire to have greater control/decisions
Exporting is still controlled at corporate
headquarters, but make decision on sales
coordination, including staffing.
The decision to use PCNs leads into expatriation
management issues and activities.

EXPORT DEPARTMENT STRUCTURE

Corporate
Executive

Finance

Logistic

Producti
on

Marketing

Direct
Export

Export

Human
Resource
Sales
Subsidi
ary

Issues
of roles
&
respon
sibility

GLOBAL PRODUCT DIVISION

STRUCTURE
Headquarters

Worldwide
production
group/div. A

Worldwide
production
group/div. B

Worldwide
production
group/div. C

Area 1
Domestic

Area 2
International

Functional
Units

Functional
Units

GLOBAL AREA DIVISION STRUCTURE

Headquarters

North
American
Area

Latin
American
Area

European
Area

Middle East
/Africa Area

Far East
Area

GLOBAL MATRIX STRUCTURE

Headquarters
Area 1

Area 2

Product
Division A
Product
Division B
Product
Division C

Mana
ger

Area 3

THE MATRIX
In the matrix structure, the multinational is attempting to
integrate its operations across more than one dimension.
The matrix is considered to bring the management system a
philosophy of matching the structure to the decision making
process.
Area managers are responsible for the performance of all
products within the various countries that comprise their
regions, while the product managers are responsible for sales
of the specific product ranges across the areas.
Product A Manager reports to vice President of Global
Products and VP of International (geographical matters).
Country/Are HR Manager involves in staffing issues involving
product division staffs report indirectly to VP Global
Products and Corporate HR at headquarters.

Four contributing factors in matrix

structure implementation
Dual reporting, which lead to conflict and
confusion.
The proliferation of communication which
creates information logjams
Overlapping responsibilities
The barriers of distance, language, time,
and culture, which often make it very
difficult for managers to resolve conflicts
and clarify confusion.