Organizational Structure of Different Types of Companies - Essay Example

Strategy Table of Contents Introduction 2 Global Company 3 Organization Structure 4 International Exporter 6 Organizational Structure 6 Transnational Company 8 Organization Structure 8 Multi-Domestic Company 9 Organization Structure 10 Multi - National Company 11 Organization Structure 11 Essence of Typology in MNC 12 Conclusion 14 References 15 Bibliography 17 Introduction Organizational structure plays a vital role in the growth and development of an organisation. A stable organisational structure can enable an organisation to build cordial relationship with the members of the organisation in various hierarchical levels. Organisational structure has to be appropriately aligned with organisation strategies and also has to be implemented together in strategy formulation as well as implementation by focusing on five core areas. These five core areas are strategy implementation; strategic change; human resources and strategy implementation; strategy and structure; and incentives and controls. Strategy implementation model assists in adapting to change through improving one particular model of objectives, controls, structures, mechanism, integration and also incentives for implementing company’s strategy. On the other hand, strategic change helps to understand the implementation stages. This will help the hierarchy in understanding who in the organisation supports the change or who are against it and which way to conquer the change resistance, these all are understandable in strategic change. Human Resources and Strategy Implementation consists of HR guidelines with strategy completion needs. Strategy and Structure is a vital tool for knowing how strategy concerns structure as well as how the decision of structure includes efficiency as well as effectiveness. Lastly, Incentives and Controls are creating some pathways to motivate and also control the performance for achieving a successful coordination (Wharton University of Pennsylvania, n.d.). Global Company Global companies structure their activities keeping in mind a need for venturing into a foreign land. Therefore, they have to be flexible in their organisational structure as doing business in different country has with different requirements so they have to be prepared accordingly. Although working in different countries of the world gives them advantages from economical point of view as they can go for economies of scale in their production system and also savings on actions like R&D, marketing, finance and operations are accomplished which might not be obtainable to the domestic companies. Once a company decides to venture globally, the foremost question is that how to run the business successfully on a global basis. The company generally implements three methods. The first one is the organic growth - one company relies on its core competencies to establish itself in the overseas sales or production market. Haier, ZTE and Huawei Technologies have pursued this path. Organic growth strategy allows an industry to globalize gradually by following its organizational timetable. This promotes benefit in the fact that this provides management team with a period to study to improve its operational ability and be a part of globalization. The second one is that of strategic alliance. This is the major replica used by the Taiwanese companies in looking for globalization. If a company has limited resources and capabilities, it needs to implement concentration strategy. It should concentrate on a positive part in value chain and strategic alliance to achieve sales, production, market and R&D together. Companies like Midea, Galanz, and Changhong have used this way. The third one is acquisition and merger, which, in the opinion of many experts, has the maximum risks. Recently, on the other hand, most of Chinese companies, characterized by TCL and Lenovo, have selected this method to accelerate their globalization. One benefit in venturing on a global basis is that it gives the companies an option of growth and global presence far quicker than if they had stayed on as a domestic player. (Yeung, A., 2005). Organization Structure A global company basically follows the matrix structure in their organization. The global functional structure is planned on the basis of company’s functions – production, finance, and marketing. Foreign operations are incorporated in the actions as well as responsibilities of all departments to expand functional specialization and also economies of scale. In global product (divisional) structure, one single product (or product line) is characterized through a separate division. Every division has its own dedicated general managers, who are accountable for its production as well as sales functions. In global geographic (area) structure, the most general structure of organising foreign operations is by analysing various geographic regions. Every regional manager is accountable for operations and also performance of the company in foreign countries inside a given area (California State University, n.d.). International Exporter A company, established in a particular country exchanges its manufactured product to another company located in a different country, is said to be involved in international exporting. The companies established in such activities are known as international exporter. The exporting company generally follows a global presence through their network of people in other countries. This helps them in understanding the needs of the local business set up, which helps them in providing them the needed material through exporting. The exporting process consists of investment, trade, financial transaction, and the policies as well as institutions which influence them (Deardoff, n.d.). Organizational Structure In the multinational business projects, as in local operations, organizational structure is characterized by commercial strategy. The segment of the strategic program associated to the international operations might range from straightforward export to the worldwide operations. On the other hand, the organizational structure used to perform the strategy might range from small export division to a plan reflecting a totally incorporated multinational operation stands on product, geography, and function. The objective of this empirical exercise is to provide participants the chance to expand their acceptance of the organizing purpose to the international applications (Graf, L. A. & Hemmasi, M., n.d.). The internet has developed into an indispensible part for the international export companies. For a large number of years, internet has served as a tool through which companies used to communicate with those external companies using the electronic mail and also it helped them in gathering a rich resource of information which companies can use as a control device to assist in completing their business programs. The international export companies primarily accept export marketing by an evolutionary sequence of sequential levels (Anderson, 1993; Beamish and Calf, 1995). The application of web for the export marketing allows export companies to leapfrog conformist levels, as this removes every geographical constraint, allows the immediate establishment of effective branches all over the world, and permits direct as well as instantaneous foreign market entry for conducting their businesses. The export barriers are categorized into four most important categories namely psychological barriers, operational barriers, organisational barriers and product or market barriers (Gregory and Hamill, 1997). The psychological barriers create an apprehension with the insights of high cost as well as excessive risk, ethnocentric orientation, short-term perspectives, and also similar variables. The operational barriers consist of ordinary paperwork, setbacks in payment, etc. The organizational barriers take place from resource problems, short of knowledge of the foreign market as well as limited understanding of the international activities. The product and market barriers relates to selection choices of the country, the necessity to adjust outputs and also tariff as well as non-tariff restrictions. Transnational Company Transnational companies are those that generally control economic assets in other countries. A trans-national company generally controls market share of around 10 % in a foreign country. In liberal legal practice, how influential transnational companies might become, they does not define and must not be subjected to similar legal obligations as well as responsibilities as states. Their private rights are justified of protection and also their private commitments are challenging enough. Their familiar forms of the legal classification, this seems, cannot take them much further. Transnational companies and states are generally signified as having an oppositional association. Transnational company represents the private and states stand for the public. Transnational company represents the effective as well as natural, and also the impulsive; whereas states stands for inefficient and also the artificial. (Mclean, J., 2003). Organization Structure Transnational companies aim to understand locations and also experience curve of economies. The other situation that generally occurs with their organisational structure is Centralized management over global production hub The transnational companies require being locally quick to respond (Rutgers University Computing Service, n.d.). The structure of transnational company signifies a theory of small power detachment and also theory management. Furthermore, communication scenario of transnational company is generally horizontal in nature with very little of hierarchy. As a result, locus of control is moderately decentralized as workers have a tall level of sovereignty. Collectivism, as divergent to individualism, is the structural plan of preference. Group agreement is performed in organizational choices. Even though this often generates greater incompetence in attainment of decisions, it also supports the reaction of the team unit motivated towards a general vision, which is consequently high. Top level executives have to perform an inclination in the hierarchical ladder as well as continue to look for developmental scope in the company. Further confirmation of the small power distance as well as superior corporate culture surrounding is open door policy. Managers do not show their superiority feelings. This has been put into practice in the matrix structure to acclimatize the internet explosion, extend beyond the transnational corporation structure. Multi-Domestic Company A multi-domestic company has multi-country associates, each of which devises its personal business strategy based upon apparent market differences. Multi-domestic company transactions occur among national borders and it also might involve three major environments. These are as follows: 1. Domestic 2. Foreign 3. International (Culverhouse College of Commerce, n.d.). Organization Structure Multi – domestic countries basically has a decentralized organizational structure. The customary multi-domestic structure is used to distinguish MNEs (Multi - National Enterprises) with a collection of independent ancillary operating in various countries like decentralized federation of responsibilities as well as assets under a general brand name. The old and pure multi-domestic companies’ models that adopt nation - precise strategies with a little international synchronization or knowledge, alter from the midpoint of headquarters. The centre of power, business strategic choices, decision making, resource allocation, knowledge generation as well as transfer, and also procurement exists in with each nation ancillary. According to the global incorporation and local receptiveness matrix, the uncontaminated multi - domestic organizational structure stands for the great case of domestic localization and responsiveness, and little global incorporation. In the same way, the international exporter form the customary multi-domestic organizational structure from time to time to describe as historically premature while this structure is not well-located to participate in a post--globalization surroundings where global integration, standardization, and also economies of scale as well as scope are significant. On the other hand, the multi-domestic structure is immobile and viable in conditions where local receptiveness, local discrimination, and also local adaptation are vital, while the chance for effective production, global knowledge alteration, economies of scale, as well as economies of scope are negligible. Multi - National Company A multi - national company is referred as a company which has marketing and manufacturing unit in different countries. Multi-national company has many sides and should be viewed from different standpoints like management, ownership, strategy and also structural. (IOWA State University, n.d.). Organization Structure Multinational companies need an organizational structure which can accommodate common business functions like marketing, finance, production, research and development among others. Those functions are needed for thriving beyond domestic market. The most suitable organizational structure will be described by the global strategy of a company, along with the comparative size of international actions as compared to the domestic operations, as well as the distinctiveness of marketplace in which company competes. Multi - national company uses the matrix structure. Most of the cases, it deals with the decentralized process. In the twentieth century, it has became apparent that their is a requirement for fresh approaches to the governance, and that has primarily occurred because of the thorny size of the enterprises, diversification of their actions (multi-disciplinary), and also the impediment of procedures in a energetically changing environment. Essence of Typology in MNC Changes in nature of service stipulation which has directed service enterprises to move much eagerly to global development have been evaluated. It has been argued that the possible accessibility of range of economies of scope or economies of scale with both decrease the risk as well as enhance the benefits of internalisation for firms. One critical question in the international business study is how multinational companies manages and organises their global operations. Given ever amplifying globalization and regionalization trends, supplementary roles as well as authorizations have altered from being self-governing stand-alone operations to more incorporated and interdependent systems. A rising research stream in this stratum focuses on nature of national auxiliary and also the roles which auxiliaries play in strategies of multinational companies. Most of the researchers have improved typologies which try to identify the prominent features which differentiate subsidiaries. The typology proposed by Bartlett and Ghosal clearly identified the need of interdependent and integrated relationships and networks in between the parent or the holding company and the subsidiary companies situated in a different country. Conclusion It is quite clear that the multinational companies also follow the same type of organizational structure which is followed by multi-domestic, transnational, global and international company. Like global company, multi-national companies also follow similar matrix structure. It also includes investment and trade like international exporting company. Multi - national companies have foreign manufacturing unit where transnational companies also possess global manufacturing business units. On the other hand, multi-national company and multi-domestic company both involve the decentralized process. So, from all of this information it can be analysed that the business structure of global, international exporter, transnational and multi-domestic company are very much useful to the multi-national companies to organize their international structure. References California State University, No Date. Dominguez Hills. Organizational structure and control systems. [Online] Available at: cbapp.csudh.edu/depts/management/bchrispin/MGT418/.../ch08.ppt [Accessed June 11, 2010]. Culverhouse College of Commerce, No Date. Definition. The Rapid Change of Global Definition. [Online] Available at: http://webcache.googleusercontent.com/search?q=cache:LWMNABQ8BPIJ:www.cba.ua.edu/~dford/Chap001.ppt+What+is+multidomestic+company+site:edu&cd=5&hl=en&ct=clnk&gl=in&client=firefox-a [Accessed June 11, 2010]. Graf, L. A. & Hemmasi, M., No Date. Organizational structures for Internationational Operation. Wayne State University’s School of Business Administration. [Online] Available at: http://sbaweb.wayne.edu/~absel/bkl/vol17/17ce.pdf [Accessed June 11, 2010]. IOWA State University, No Date. Definition. Multinational Corporation. [Online] Available at: http://econ2.econ.iastate.edu/classes/econ355/choi/mul.htm [Accessed June 11, 2010]. Mclean, J., 2003. The Transnational Corporation in History: Lessons for Today? Indiana University Maurer School of Law. [Online] Available at: http://www.law.indiana.edu/ilj/volumes/v79/no2/mclean.pdf [Accessed June 11, 2010]. Rutgers University Computing Service, No Date. Strategy and Organization Structure. International Business Environment. [Online] Available at: http://crab.rutgers.edu/~sambhary/International%20Bussiness%20Environment/notes/International%20Organizational%20Structures.pdf [Accessed June 11, 2010]. Deardoff, A., No Date. Deardorff’s Glossary of International Economics. University of Michigan. [Online] Available at: http://www-personal.umich.edu/~alandear/glossary/i.html [Accessed June 11, 2010]. Vivekanandan, K. & Rajendran, R., 2006. Export Marketing and the World Wide Web: Perceptions of Export Barriers among Tirpur Knitwear Apparel Exporters- An Emperical Analysis. California State University Long Beach. [Online] Available at: http://www.csulb.edu/journals/jecr/issues/20061/paper3.pdf [Accessed June 11, 2010]. Wharton University of Pennsylvania, No Date. Implementing Strategy: Leading Effective Execution. Executive Education. [Online] Available at: http://executiveeducation.wharton.upenn.edu/open-enrollment/strategy-management-programs/Implementing-Strategy.cfm [Accessed June 11, 2010]. Yeung, A., 2005. How Can Chinese Companies go Global More Successfully? China Europe International Business School. [Online] Available at: http://www.ceibs.edu/link/latest/images/20051012/1734.pdf [Accessed June 11, 2010]. Bibliography Bartlett, C. A. and Ghoshal, S. 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