International Organizational Structure

Factors That Influence Decision Number of lines of business Specialized skills involved in products Customer differences in tastes Geographic breadth

International Organizational Structures Global functional model Geographical model Single matrix model Hybrid models Organic model

Global Functional Model Corporate Headquarters Global R&D Operations Marketing Subsidiary Local Advantages Efficiencies Economies of scale Rapid transfer of skills Disadvantages Inflexibility Local dysfunctions Market rejection Discourages Initiative Subsidiary

Geographical Model Advantages Disadvantages Flexibility Local needs Corporate Headquarters Advantages Flexibility Local needs Quickly adapts to markets Disadvantages Diseconomies of scale Duplication Poor at serving global customers Regional Headquarters Regional Headquarters Regional Headquarters Country Subsidiary Country Subsidiary Country Subsidiary Country Subsidiary Country Subsidiary Country Subsidiary

Single Matrix Model Advantages Disadvantages Global efficiencies Corporate Headquarters Advantages Global efficiencies Local responsiveness Disadvantages Power struggles Role ambiguity Bureaucracy Dilution of responsibility Cost inefficiencies Cost of compromise Global R&D Global Operations Global Marketing Local R&D Local Operations Local Marketing Subsidiary Subsidiary Local R&D Local Operations Local Marketing

Multi Division Models Advantages Disadvantages Corporate Headquarters Advantages Handle multiple lines of business Runs “Investment bank” as top structure Disadvantages Difficult to maintain synergy across divisions Multiplies disadvantages of each sub-model Product Division 1 Product Division 2 Product Division 3 Complete Global Functional model Or Complete Geographical Model Or Complete Single Matrix Model

Hybrid Models Mix and match components of any of the above Try to maximize advantages why minimizing disadvantages for your particular business situation Most are so complex no one really has clear oversight of combined operations.

Organic Model Advantages Disadvantages Flexible structure that adapts as needed Local responsiveness Disadvantages Cost of Politics Dilution of responsibility Lack of leadership