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Lecture 3 - Functions and Structure Within A Business Organization
Lecture 3 - Functions and Structure Within A Business Organization
I. Organizational structure
II. International business organization
I. Organizational
structure
Organizational structure
• Disadvantages:
• Senior managers overburdened with routine matters
• Senior managers neglect strategic issues
• Difficult to cope with diversity
• Coordination between functions difficult
• Failure to adapt
Divisional structure
• Advantages
• Flexible (add or divest divisions)
• Control by performance
• Ownership of strategy
• Specialization of competences
• Training in strategic views
Divisional structure
• Disadvantages:
• Duplication of central and divisional functions
• Fragmentation and non co-operation
• Danger of loss of central control
Matrix structure
• Advantages:
• Integrate knowledge
• Flexible
• Allow dual dimensions
Matrix structure
• Disadvantages:
• Length of time to take decision
• Unclear job and task responsibilities
• Unclear cost and profit responsibilities
• High degree of conflict
Project based structures
Advantages Disadvantages
• Highly flexible • May get out of control
• Good control of each project • Constant breaking up
• Integrate knowledge hinder the accumulation of
knowledge
II. International business
organizations
What is international business?
• Transnational • Multinational
Companies companies
International business
https://pediaa.com/difference-between-multinational-and-transnational/
Criteria
Transnational Companies Multinational companies
Definition - Have many companies around - Operate in more than one country
the world - Have a centralized management
- Do NOT have a centralized system.
management system.
Operation - Do NOT have subsidiaries but just - Own a home company and its
many companies. subsidiaries.
Local - Be able to gain more interest in - Have a centralized management
response the local markets where they system, there will be some barriers in
maintain their own systems. decision making.
Multinational structures
• International divisions
• An international division is a stand-alone division added
alongside the structure of the main home-based business
• Adopted by corporations with large domestic markets,
entry in overseas markets is relatively small compare to
domestic markets
Multinational structures
• Local subsidiaries:
• These subsidiaries typically have most of the functions
required to operate on their own in their particular local
market – one form of geographic divisional structure
• High local responsiveness but loosely coordinated
• Relationship and taste are very important due to
localization
Multinational structures
Global Coordination
Low High
Global
International
product
Local divisions
divisions
independence
and
responsivenes
s Local Transnationa
subsidiaries l corporation
High
Strategy and structure fit
• Diversification raises the corporate strategy challenges of control and accountability within
widely different businesses
• Internationalization strategies raise dilemmas over global scale, horizontal coordination and
local adaptation
• Innovation strategies typically require knowledge creation and knowledge-sharing
Discussion