Essay on Globalization and Organizational Structure

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Org Structure Chapter 3 Q1. Organizational structure refers to the formalized arrangement of organizational components such as the headquarters, subsidiaries, business units/division with the headquarters and subsidiaries, product lines, jobs positions, tasks and reporting relationships in a organization. This is very much interconnected with how a business, depending on how your business is structure, it affects how your formalized arrangement operate. If your firm was just exporting, mostly all the organizational components would be at a centralized location. If you were operation through international alliances, partnership or consortia, then your relationships, reporting, etc. will be very different. • • Three levels of structural development for overseas operations The subsidiary or partnership can be a start-up that can be used to establish the firm’s international business Once the firm has a well-established international business, it will use its subsidiaries and alliances to operate its international strategy When the firm reaches the level of having a high proportion of assets/sales/employees outside its home country, the subsidiaries become leaders in creating new market share and competitive advantages

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Question 2. Please refer to figure 3.1

The frameworks that can be used to describe an MNE’s organizational structure is based on the basic organizational challenge to MNEs has always been the integration of activities that take place in different countries and coordination of foreign subsidiaries with headquarters. The basic global structure, the on of Every MNE can be describe in terms of intergration and local responsiveness.

The horizontal axis shoes the extent of local responsiveness and the vertical axis shows the degree of integration. (Source: From Powerpoint, Routledge) This is divided into 4 categories.     International Organizational Structure Weak pressures for local responsiveness Weak pressures for worldwide integration Foreign subsidiaries may be dependent on headquarters for resources and limited direction but still have major freedom to adapt to local conditions • Multi-Domestic Organizational Structure • Strong pressures for local responsiveness

• • •

Weak pressures for worldwide integration Has subsidiaries in multiple countries, which typically operate independently within each country

Global Organizational Structure • • • Strong pressures for worldwide integration Weak pressures for differentiation or local responsiveness Subsidiaries are heavily managed and controlled by headquarters

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Transnational Organizational Structure • • • Strong pressures for worldwide integration Strong pressures for differentiation or local responsiveness Subsidiaries resemble an integrated and interdependent global network (Source: From Powerpoint, Routledge)

Question 3. Firms with Global Organizational structure face strong pressure for worldwide integration but face weak pressure of differentiation . These organizations structure their foreign subsidiaries into worldwide lines of business that are heavily managed and controlled by headquarters. Foreign subsidiaries are heavily dependent on these assets and resources from headquarters. In this level, HR decision has to be made at the HQ level and implemented worldwide. Employs are hired everywhere, but worldwide polices must be maintained and implemented for headquarters. When it comes to transnational organization, these organizations resemble an integrated and interdepend global network of subsidiaries that have the ability to manage across national boundaries retaining local flexibility while achieving global integration. This form of organization has a truly global focus, making resource decision without reference to national origins, sharing its idea and technology with all of its units. The transnational firm is often put for as the direction in which all international firms are head. HR may question how to manage
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