1. Designing Organizations for the International Environment
Chapter Six
Designing Organizations for the International Environment

2. Four Stages of International Evolution
Domestic
II.
International
III.
Multinational
IV.
Global
Strategic
Orientation
Domestically oriented
Export-oriented, multidomestic
Stage of
Development
Initial foreign involvement
Competitive positioning
Explosion
Structure
Domestic structure plus export department
Domestic structure plus international division
Worldwide geographic, product
Matrix, trans-national
Market
Potential
Moderate, mostly domestic
Large, multidomestic
Very large, multinational
Whole world
Sources: Based on Nancy J. Adler, International Dimensions of
Organizational Behavior (Boston: PWS-KENT, 1991), 7-8;
and Theodore T. Herbert, “Strategy and Multinational Organization
Structure: An Interorganizational Relationships Perspective,”
Academy of Management Review 9 (1984):

3. Matching Organizational Structure to International Advantage
When Forces for Global Integration are . . .
And Forces for National Responsiveness
are . . .
Strategy
Structure
Low
Export
International Division
High
Globalization
Global Product Structure
Multidomestic
Global Geographic Structure
Globalization and Multidomestic
Global Matrix Structure

4. Domestic Hybrid Structure with International Division
CEO
Human
Resources
Corporate
Finance
Research &
Development
Electrical
Products
Division
Scientific
Products
Division
Medical
Products
Division
International
Division
Europe
(Sales)
Brazil
(Subsidiary)
Mid East
(Sales)
Staff (Legal,
Licensing)

5. Partial Global Product Structure Used by Eaton Corporation
Chairman
Law &
Corporate
Relations
Engineering
President
Finance &
Administration
International
Regional
Coordinators
Global
Automotive
Components
Group
Global
Industrial
Group
Global
Instruments
Product
Group
Global
Materials
Handling
Group
Global
Truck
Components
Group
Source: Based on New Directions in Multinational Corporate
Organization (New York: Business International Corp., 1981).

6. Global Matrix Structure
International
Executive
Committee
Country Managers
Germany
Norway
Argentina/
Brazil
Spain/
Portugal
Business
Areas
Power
Transformers
Transportation
Industry
Local
Companies

7. Building Global Capabilities
The Global Organizational Challenge
Increased Complexity and Differentiation
Need for Integration
Knowledge Transfer
Global Coordination Mechanisms
Global Teams
Headquarters Planning
Expanded Coordination Roles

8. Cultural Differences in Coordination and Control
National Value Systems
Power Distance
Uncertainty Avoidance
Three National Approaches to Coordination and Control
Centralized Coordination in Japanese Companies
European Firms’ Decentralized Approach
The United States: Coordination and Control through Formalization

9. Transnational Model of Organizations
Assets and resources are dispersed worldwide into highly specialized operations that are linked together through interdependent relationships.
Structures are flexible and ever-changing.
Subsidiary managers initiate strategies and innovations that become strategy for the corporation as a whole.
Unification and coordination are achieved primarily through corporate culture, shared visions and values, and management style rather than through formal structures and systems