Chapter Six
Designing Organizations for
the International Environment
1
Four Stages of International
Evolution
I.
Domestic
II.
International
III.
Multinational
IV.
Global
Strategic
Orientation
Domestically
oriented
Export-oriented,
multidomestic
Multinational
Global
Stage of
Development
Initial foreign
involvement
Competitive
positioning
Explosion
Global
Structure
Domestic
structure plus
export
department
Domestic structure
plus international
division
Worldwide
geographic, product
Matrix, transnational
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): 259-71.
2
Matching Organizational Structure to
International Advantage
When Forces for
Global
Integration are . .
.
And Forces for
National
Responsiveness
are . . .
Low
Strategy
Structure
Low
Export
International
Division
High
Low
Globalization
Global Product
Structure
Low
High
Multidomestic
Global
Geographic
Structure
High
High
Globalization and
Multidomestic
Global Matrix
Structure
3
Domestic Hybrid Structure with
International Division
CEO
Human
Resources
Electrical
Products
Division
Corporate
Finance
Scientific
Products
Division
Medical
Products
Division
Research &
Development
International
Division
Europe
(Sales)
Brazil
(Subsidiary)
Mid East
(Sales)
Staff (Legal,
Licensing)
4
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).
5
Global Matrix Structure
International
Executive
Committee
Business
Areas
Germany
Norway
Country Managers
Argentina/
Brazil
Spain/
Portugal
Power
Transformers
Transportation
Industry
Local
Companies
6
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
7
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
8
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
9