subject: GETTING ORGANIZED FOR INTERNATIONAL MARKETING OF PRODUCTS [print this page] GETTING ORGANIZED FOR INTERNATIONAL MARKETING OF PRODUCTS
By Arshad Husain
INTRODUCTION
Once an organization decides to go international, it must begin to implement the decision. Some companies do so by simply shipping their goods to a foreign market and having a third party handle sales activities.
ORGANIZATIONAL STRUCTURE
Multinational enterprises cannot implement their strategies without an effective structure. The strategy sets forth the plan of action, but the structure is critical in ensuring that the desired goals are met efficiently.
Early organizational structures
When a company first begins international operations, it is typical for these activities to be an extension of domestic operations.
This department may report directly to the Chief Executive Officer (CEO) for immediate control measures.
As MNEs generate more and more revenues from their overseas operations, their strategies become more global in focus and the structures used to implement these strategies follow suit. European firms are a good example. Because their domestic markets are fairly small, these companies have traditionally had global structures. In all, there are six basic types:
(1) global product
(2) global area
(3) global function
(4) mixed
(5) matrix
(6) transnational network
Global product structure
A global product structure is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups. In this arrangement each product division sells its output throughout the world.
Global area structure
A global are structure is one in which primary operational responsibility is delegated to area managers, each of whom is responsible for a specific geographic region. This is polycentric (host-country-oriented) structure.
Global functional structure
A global functional structure is one that is built around the basic tasks of the organization.
Mixed structure
A mixed structure is a hybrid organization design there are combines structural arrangements in a way that best meets the needs of the enterprise. Figure 9.7 provides an illustration. Different businesses with different patterns of global demand, supply and competition demand different management structures.
Matrix structure
A matrix structure is an organizational arrangement that blends two organizational responsibilities such as functional and product structures or regional and product structures.
Transnational network structure
One of the newest forms of international organizational arrangement to emerge is the transnational network structure which is designed to help MNEs take advantage of global economies of scale while also being responsive to local customer demands.
STRATEGIC MANAGEMENT AND ORGANIZING STRATEGY
Research has shown that effective organizations follow the adage "from strategy to structure". They begin by formatting a strategy and only then design a structure that will efficiently implement this plan. In determining the best structure, three questions must be answered:
Can the company operate efficiently with domestic divisions or are international divisions also necessary?
On what should the organization be structured: product, area, function, mixed or matrix?
How can the necessary coordination and cooperation be most efficiently achieved? These answers are usually determined through a carefully analysis of five key variables.
Analysis of key structural variables
There are five key variables that MNEs examine in choosing from among alterative organizational structures. In some cases one of these variables will outweigh the others.
Organizational processes
The formal structure provides the skeletal framework within which the personnel operate. The structure is designed to answer the question: What is to be done? The organizational processes - decision making, communicating, and controlling - help to make the structure work efficiently.
Decision making
Decision making is the process of choosing from among alternatives. In international operations one of the primary areas of consideration is where the ultimate decision-making authority will rest on important matters.
Communication
Communication is the process of transferring meanings from sender to receiver. However, the way in which this is done often various from one MNE to another.
Controlling
Controlling is the process of determining that everything goes according to plan. This process is to reward performance and it consists of three steps:
