ORGANISATION STRUCTURE-it refers to the framework within which managerial and

operating tasks are performed.it specifies the relationship between people,work and
resources.
The type of organisational structure that is appropriate for an organisation will depend
upon many issues. Some issues are fairly obvious. For example, small and medium-
sized businesses will have smaller and less complicated organisational structures than
very large companies such as Unilever or Procter and Gamble. The number of different
country markets and the current size of the company market share in different markets
will influence the need for the number and type of people to be employed internationally.
Centralisation vs Decentralisation
Centralistion-Companies centralize or keep key activities with themselves
in order to control and coordinate
Decentralization provide more auotonomy at local country level
the company will need to take account of specialisation across the dimensions of
function, product and geography
Function is concerned with occupational specialisation.
 Product is concerned with the co-ordination, integration and control of activities
based on the product
 Geography is concerned with matching the company with its external environment.

TYPES OF ORGANIZATION STRUCTURES

The macropyramid organisation

Here, the whole of the strategic function is performed in head office. In these types of
organisations the strategic planning is handed down to product, function and geographic
managers to plan in detail and then to implement.

In the macropyramid the main elements of the marketing mix are managed from the
main head office. Marketing is standardised as much as possible. Local involvement in
the main strategic decision process is limited. Unless the head office is very well briefed
about local conditions, its planning may result in missed opportunities at a local level.

The umbrella structure

This is a decentralised system of planning and control. Subsidiaries are given full
independence at all three management levels. The centre concentrates on providing
very broad corporate objectives and has high-level expertise in various functional areas
that can be used to provide advice and support to subsidiary companies. The umbrella
structure is based on the multi-national enterprise with a polycentric orientation operating
in a multi-domestic way.

The interglomerate
In this organisation the centre is concerned with financial returns. The strategies to
achieve the required returns are the responsibilities of the subsidiaries. Here, each
subsidiary is responsible for its own strategic planning. This type of
structure, for example used by Hanson, is most likely to apply to large complex
organisations that have subsidiaries in different industries, using different technologies.

Factors Affecting Choice of Organisational Structure

We have already touched on several factors that will affect the choice of the most
appropriate
type of organisational structure for international business. In summary the following
represent the major factors:
 Company size.
 Extent of international market spread.
 Range and diversity of products/services.
 Level and nature of involvement in international business.
 Overall corporate and marketing objectives.
 Company capabilities and resources.
 Organisational culture.
Many of these are self-explanatory but the final two on our list of factors affecting
organisational structure, namely ‘organisational culture’ and ‘company capabilities and
resources’, need exploring further.