An Overview of Some of the Basic Organizational Structures of Multinational Corporations and Their Strategies

An Overview of some of the basic Organizational Structures of Multinational Corporations and their Strategies

Chapter – 1: Introduction

While it is becoming true that form must follow function, there are some traditional/classical organizational structures that are followed; besides new structures are experimented with. Multinational Corporations (MNCs) are having wide options, for different geo-locations may suit/dictate different structures. How much variety? How much uniformity? Variety in which aspects? Uniqueness in which aspects? Where variety? Where uniformity? How is the balance hit upon? These are certain issues that prop up right here. Structural designs are important for MNCs for they affect synergies, cost, control, responsiveness, competitive strength, etc. companies change structures to gain more and mitigate disadvantages. MNCs are represented by units spread throughout the world that need to be coordinated or integrated in some form and to some degree. The differentiation and integration of units needs to be done with some attention paid to being globally competitive, efficient, responsive and flexible to local needs and conditions and being able to transfer their learning across units. In essence, MNCs are firms that need to be global and local (multi-domestic) at the same time. There are, however, varying levels of ‘globalness’ and ‘localness’ that MNCs need to achieve through appropriate organization structure. Organizational structure is a representation of the formal reporting relationships within an organization and its affiliating entities.

Multinational Corporations have all the varieties in the world. They can adopt varied patterns; but beware of faltering on the performance benchmarks or intended level of control. MNCs try to set up organizational structures with strategic intent in mind. The strategic intent is effective...