International Business Practices - Essay Example

Physical Movement Company (Pm) started a process to become an international player in the mobility products industry. They do not have any previous experience realizing business outside the United States. They selected three countries to start their global launch of their products which were the United Kingdom, Switzerland and Japan. In order to manager their international business affairs the company needs an organizational structure to meet the special demands of doing business overseas. The purpose of this discussion is to select the optimal organization structure for Physical Movement Company to enable them to succeed in their new international venture.

The optimal structure for Physical Movement Company is an international division structure with centralized control. An international division structure separates the international division from the domestic operations. This structured is considered the most appropriate structure for rookie players in the international business since it completely separates the revenue streams obtain from oversee operations, inclusively it separates it between the divisions which in this case would be one per country for a total of three divisions.

Centralized control is the best approach because the management of the company wants to learn from the integration into foreign markets and needs to be involved in the decision making as much as possible. The table below illustrates the advantages and disadvantages of centralized approaches:Advantages Centralized Approach1. Facilitates coordination2. Consistent decisions3. Easier to implement changes4. Eliminates duplicated efforts5. Less foreign managerial recruitsDisadvantages Centralized Approach1.

Excessive workload for top management2. Decentralization is more flexible3. Divisions do not have control4. Lack of flexibility (The Organization of International Business, 2001).The international division structure will allow the company to carefully analyze the chosen markets and implement different marketing strategies in each of the markets. The company currently has different theories and marketing plans which they believe based on their research will work, but only time will tell the effectiveness of the plans.

As the company matures they can systematically switch from a centralized to decentralize managerial style on a case by case basis per division. Decentralization of particular divisions could be allowed in locations in which the company’s plans were successfully implemented. If the company enjoys significant growth internationally and expands into other markets then the company may purse reorganizing its international organizational structure into an international area structure or global product structure.

A full implementation of the international business structure will take some time. The first step is to locate the physical space in which the division will operate in each of the countries which should be a rented space since buying is a long term commitment and the company may exit early if things don’t work out. The next step is to recruit the personal needed to run the operation and set up the information systems. While these things are occurring the top company executives need to establish good diplomatic relationships with top governmental officials to obtain as many incentives as possible.

The overall time frame of the operation could take between 270-365 days. The international division structure will help PM start its global rollout. It is the best organizational structure since it limits the risks of having outsiders making decision which may not aligned with the corporate culture of the organization and it will maximize its chances of achieving its strategic intent (Radebaugh & Sullivan).ReferencesRadebaugh, D., Sullivan. International Business. Retrieved August 14, 2007 from http://facweb.furman.edu/~dstanford/ibnotes/ibnote15p.

htm The Organization of International Business (2001). Retrieved August 14, 2007 from http://www.su.edu/faculty/dpavsek/ba455chapter13.PDF