Evaluate basic organizational structure options of MNEs What

Evaluate basic organizational structure options of MNE’s. What types of organizational structures do you have experience with? Were some more desirable than others? Explain why.

Solution

Functional

A functionally organized MNC utilizes corporate functions as the fundamentals for its organizational structure. Production, human resources, and customer service are the functional units. If a functionally organized firm has a centralized structure, all operations are based in the home country and individual employees are given responsibilities of different national markets. This kind of structure is efficient for companies that are too small to have overseas subsidiaries. Larger ones may have this kind of organization, but in a decentralized way, where foreign employees carry out some of the work in their own nations. In this , companies have to pay more attention to coordination.

Geographic

A usual form of structure for bigger companies that need a presence in the foreign markets is one that\'s based in geography. In addition to the headquarters, semi-independent operations are created in the nations where the company is active. For larger companies, this may take the form of subsidiaries, whereas  smaller companies can have an agent office. This structure has flexibility; the head office may transfer responsibilities overseas if needed by local conditions , but it can also take over local operations if required.

International Division

One method MNCs can accommodate foreign operations without disrupting the organization in their home market is to establish an international division. It gives the firm freedom to have the focus on its home market in its main organization while leaving the international division free to adapt to the foreign markets in which it is active.

Matrix

A matrix structure combines the efficiency of the functionally organized firm with the flexibility of extensive local operations. Foreign employees report to local management for queries about their work, and they report to the head office for all other functions. The home organization has control of disciplinary issues, pay, while the employees carry out the work according to local needs.