ORGANIZATIONAL STRUCTURES

AND MODELS IN GLOBAL

CONTEXT
BY:
RIDHIMA AGGARWAL
MBA(PT)
V SEMESTER
ORGANIZATIONAL MODELS
Multinational corporation
International organization model
Global organization model
Transitional organization model
MULTINATIONAL
CORPORATION
Became popular when many European
companies internationalized during the
pre-war (1920s & 1930s) when the trade
barriers were very high.
MNC is characterized by polycentrism
Decentralized federation of assets &
responsibilities
Sensing & exploiting local opportunities
Knowledge developed & retained within
each unit
 INTERNATIONAL
ORGANIZATIONAL MODEL
This organization structure was predominant
in the case of the American companies
which internationalized in the early post
war years.
These are characterized by high parent
control of foreign subsidiaries.
Sources of core competencies centralized,
others decentralized.
Adapting & leveraging parent co. strategies.
Knowledge developed at the centre &
transferred to overseas units.

 GLOBAL ORGANIZATIONAL
MODEL
The Japanese co. which internationalized
since the mid 1960s through the 1970s &
1980s adopted this model.
These orgs. Are characterized by
concentration of resources & authority in
the parent.
The global configuration is based on
centralization of assets, resources &
responsibilities.
Implements parent company strategies.
Knowledge developed & retained at the
centre.
The rapid decline in tariffs, coupled with
dramatic improvements in transportation &
 TRANSNATIONAL
ORGANIZATIONAL MODEL
These orgs. Seek to eliminate some of the
drawbacks of other type of organizations,
as it endeavors to achieve global
competitiveness through, inter-alia,
multinational flexibility & world wide
learning.
TNCs are characterized by interdependence
& integration b/w the overseas units.
These orgs. are dispersed and specialized.
Contributions are differentiated by national
units to integrated world wide operations.
Knowledge is developed jointly & shared
world wide.
 GLOBAL ORGANIZATIONAL
STRUCTURES
Global product structure;
Global geographic structure;
Global functional structure;
Global customer structure;
Global matrix structure.
 GLOBAL PRODUCT
STRUCTURE
This structure is popular with large
conglomerates with multiple, unrelated
business.
This structure enhances co-ordination b/w
different areas for any one product line,
but it reduces co-ordination of all product
lines within each zone.
 PRESIDENT

CENTRAL STAFF

PRESIDENT PRODUCT GROUP

PRESIDENT
I PRODUCT GROUPPRESIDENT
II PRODUCT GROUP III

FOREIGN SUBSIDIARY FOREIGN

DOMESTIC PRESIDENT I PRESIDENT
SUBSIDIARY FOREIGN
II PRESIDENT
SUBSIDIARY III PRESID
 GLOBAL GEOGRAPHIC
STRUCTURE
Under this structure the market is divided
geographically.
In contrast to the product division structure
this structure is appropriate for MNCs with
narrow product lines.
Naturally, this pattern tends to improve co-
ordination of all product lines within each
zone but to reduce co-ordination b/w areas
for any one product line;
Eg: when the Ranbaxy restructured its org
as a part of its global orientation, its export
department was abolished & the world
market was divided into four regions.
 PRESIDENT

CENTRAL STAFF

VICE PRESIDENT AREA I VICE PRESIDENT AREA II VICE PRESIDENT AREA III
 GLOBAL FUNTIONAL
STRUCTURE
Here, the heads of functional areas, such as
production, marketing, finance &
personnel, are responsible for the world
wide operations of their own functional
areas;
In certain industries like mining & energy, a
variation of this structure (process
structure), which uses processes as the
basis for the structure, is common.
 PRESIDENT

CENTRAL STAFF

VICE PRESIDENT PRODUCTION (WORLDWIDE) VICE PRESIDENT MARKETING (WORLDWIDE)

SUBSIDIARY I PRESIDENT
SUBSIDIARY I PRESIDENT
SUBSIDIARY I PRESIDENT
 GLOBAL CUSTOMER
STRUCTURE
If the global customer groups are so diverse
requiring distinctive approaches, the
organizational structure maybe based on
the diversity of the customer groups;
This structure would not be appropriate if
the product lines are very diverse, making
customer groups different for each product
group.
 GLOBAL MATRIX STRUCTURE
The mixed, hybrid/ matrix structure seeks to
combine the advantages & overcome the
disadvantages of other alternative
structures.
 PRESIDENT

CENTRAL STAFF

VICE PRESIDENT PRODUCTION (WORLDWIDE) VICE PRESIDENT MARKETING (WORLDWIDE)

COUNTRY X COUNTRY Y

PRODUCTION MARKETING