MGMT-511_Module 2 Summary Paper
Vijay Laxmi Malik
Student ID# 248570 .
Lecture 8: Organizational Designs for Multinational Companies
A MNC manager must know how to build the right type of the organization to perform domestic
as well as multinational strategies. An organizational design is nothing but a hierarchal structure
in which coordination of flow of information, division of the work, goal setting and is each
structured into each subunit that in turn contributes towards holistic organization. If the manager
needs to design multinational organizational structure then he must understand and follow
divisions based on work, geography, products etc. A functional structure chosen for efficiency
usually have department/ functional subunits that perform a specific function such as marketing,
production of goods or services etc. This type of the structure can be cost effective with minimal
over heads, a stable environment that has few products line however since functional subunits
focuses on the functional goals coordination among different departments could be tough and
change to response could be slow as well. Another way of building the organization is based on
the designing around the product (product structure) or the geographical locations (geographical
structure). If organized this way functional efforts in each department are duplicated for each
product or for each of the geographical department. Also the product structure supports strategies
that focus on global products and rationalization whereas he geographic structure best suited for
the strategies that focus on the local adaptation. Compared to functional structure these type are
less efficient with more loss of economics of scale. Some of the organization chooses a hybrid
structure that can have functional, geographic, and the product units. An organization that has
newly expanded internationally follows domestic structure as an exporter by merely filling in the
customer’s order. The need to modify the organization structure becomes essential when the
, MGMT-511_Module 2 Summary Paper
Vijay Laxmi Malik
Student ID# 248570
company has gained success is expanding exponentially for e.g. a Manager can choose to create
a separate export department if more profit is coming from exporting of the goods. This export
department is responsible for all dealing at international al level, foreign distributors, and foreign
customers.
A company can also have the foreign subsidies in which subunits of an MNC are located on
other countries that the domestic/parent company. Within the subsidiary a company if follows
multi domestic strategy than it is called as minireplica subsidiary runs same way using same
technology, products as parent company. On the other hand a transnational subsidiary supports
multinational firm strategy. As an MNC manager a detailed understanding of which subsidiary
strategy to choose and follow and how it aligns with the overall multi-national organizational
structure is very critical. Most of the company are adapting to worldwide matrix structure that
provides structure and follows both local and the global strategies concurrently. This structure
works great for the companies that have well adaptation locally and product standardization. If
an organization has no set form or the strategy it can follow the transnational network structure.
A metanational structure can be adapted ,by those companies that have the learning and virtual
information sharing as the key drivers.
Lessons learned:
1. A good business strategy along with the right implementation is not only sufficient but it is
crucial that a company design it organizational structure so that it helps increase the productivity
Vijay Laxmi Malik
Student ID# 248570 .
Lecture 8: Organizational Designs for Multinational Companies
A MNC manager must know how to build the right type of the organization to perform domestic
as well as multinational strategies. An organizational design is nothing but a hierarchal structure
in which coordination of flow of information, division of the work, goal setting and is each
structured into each subunit that in turn contributes towards holistic organization. If the manager
needs to design multinational organizational structure then he must understand and follow
divisions based on work, geography, products etc. A functional structure chosen for efficiency
usually have department/ functional subunits that perform a specific function such as marketing,
production of goods or services etc. This type of the structure can be cost effective with minimal
over heads, a stable environment that has few products line however since functional subunits
focuses on the functional goals coordination among different departments could be tough and
change to response could be slow as well. Another way of building the organization is based on
the designing around the product (product structure) or the geographical locations (geographical
structure). If organized this way functional efforts in each department are duplicated for each
product or for each of the geographical department. Also the product structure supports strategies
that focus on global products and rationalization whereas he geographic structure best suited for
the strategies that focus on the local adaptation. Compared to functional structure these type are
less efficient with more loss of economics of scale. Some of the organization chooses a hybrid
structure that can have functional, geographic, and the product units. An organization that has
newly expanded internationally follows domestic structure as an exporter by merely filling in the
customer’s order. The need to modify the organization structure becomes essential when the
, MGMT-511_Module 2 Summary Paper
Vijay Laxmi Malik
Student ID# 248570
company has gained success is expanding exponentially for e.g. a Manager can choose to create
a separate export department if more profit is coming from exporting of the goods. This export
department is responsible for all dealing at international al level, foreign distributors, and foreign
customers.
A company can also have the foreign subsidies in which subunits of an MNC are located on
other countries that the domestic/parent company. Within the subsidiary a company if follows
multi domestic strategy than it is called as minireplica subsidiary runs same way using same
technology, products as parent company. On the other hand a transnational subsidiary supports
multinational firm strategy. As an MNC manager a detailed understanding of which subsidiary
strategy to choose and follow and how it aligns with the overall multi-national organizational
structure is very critical. Most of the company are adapting to worldwide matrix structure that
provides structure and follows both local and the global strategies concurrently. This structure
works great for the companies that have well adaptation locally and product standardization. If
an organization has no set form or the strategy it can follow the transnational network structure.
A metanational structure can be adapted ,by those companies that have the learning and virtual
information sharing as the key drivers.
Lessons learned:
1. A good business strategy along with the right implementation is not only sufficient but it is
crucial that a company design it organizational structure so that it helps increase the productivity
