This document provides an overview of a university lecture on organizational structures and control systems for international management. It defines and compares different types of organizational structures for multinational enterprises, including export departments, international divisions, global area structures, global product structures, and matrix structures. For each structure, it outlines advantages and disadvantages. It also discusses debates around centralization versus decentralization of control.

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MGF3681: International Management
Week 7:
Organisational Structure
and Control Systems

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Week 6 Lecture
• Contrast foreign, minireplica and transnational subsidiaries.
• Define Global Product and Global Area structures and give an
example of when an organisation would use each one.
• What is an export department? What is an international
division? What are the advantages in having an international
division?
• Describe, using examples, of how a matrix structure works in
an international organisation.
• Evaluate the arguments in the centralisation / decentralisation
debate.

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Organisational Structures
• The Export Department
• The International Division
• Global Product Structure
• Global Area Structure
• Matrix Structure

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What is this?
Chief Executive Officer
General
Administration
R&D Manufacturing Marketing IT
Export
Department

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Export Department!
• Usually the first foreign market entry mode for
manufacturing
• At low levels, may not require a change to
organisational structure
• When exports increase, a separate export division
may be set up

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What is this?
Chief Executive Officer
Domestic Operations International Operations
AsiaEurope

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International Division
• A separate division is dedicated to managing the
firms international operations
• Typically headed by a vice-president who reports to
the CEO
• Usually accompanied by a significant shift in
resource allocation
• Still best suited to companies with relatively low
international sales

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Advantages
• It helps to concentrate managerial expertise
and know-how
• Increased coordination of overseas
functions

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Disadvantages
• Battle for resources between domestic and
international sales
• Knowledge transfer between domestic and
international departments can prove difficult

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What is this?
Chief Executive Officer
Vice President
Asia Pacific
Vice President
Middle East
Vice President
South America
Vice-President
North America

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Global Area Structure
• Divides the entire world operations of a firm into
countries or regions, with each area having a fairly
high degree of functional autonomy
• The role of headquarters is to maintain overall
strategic direction and control of the MNEs finances

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Advantages
• Because operational and strategic decision making
is delegated to regions or countries, this companies
are allowed high levels of local responsiveness

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Disadvantages
• It can be inefficient due to repetition of efforts
• It may become difficult to transfer learnings and
knowledge across regions

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What is this?
Chief Executive Officer
InternetFixed Line DevicesNetworksMobile Devices

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Global Product Structure!
• A structure whereby the multinational
organises around what is usually a fairly
diversified set of products
• Each product division has responsibility for
producing and marketing a certain group of
productions worldwide
– E.g. P&G: Shavers, Shampoo, Snack Food

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Advantages
• All support functions (R&D, marketing, etc.)
are focussed on the product and therefore
more specialised

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Disadvantages
• Duplication of corporate support functions
• Tendency for managers to focus on subsidiaries
with the greatest potential for sales

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What is This?
Corporate TVsApplianceCell Phones
North
America
Europe
Asia

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Global Matrix Structure
• Comprised of overlapping geographic and
product division structures in which decision
making is shared between product and
geographic managers

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Advantages
• If implemented well, it can help achieve
both global integration and local
responsiveness

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Disadvantages
• Very complex and difficult to implement

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Australia
1. What type of organisational structure arrangement is the MNC
going to use in setting up its Australian operation?
2. Can this MNC benefit from any of the new organisational
arrangements, such as joint venture, the Japanese concept of
Keiretsu, or electronic networks? (define these terms first)
3. Will this operation be basically centralised or decentralised?

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Week 7 Lecture
• What are the four components of the Basic Work Motivational
Process? Provide an example of how cultural differences can
influence each of these.
• Explain Expectancy Theory of motivation. Using one or more
of Hofstede’s dimensions, discuss the influence of cultural
differences have on this process.
• Explain Equity Theory of motivation. Using one or more of
Hofstede’s dimensions, discuss the influence of cultural
differences have on this process.
• Explain Goal-Setting Theory of motivation. Using one or more
of Hofstede’s dimensions, discuss the influence of cultural
differences have on this process.

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Next Week
• Motivation Across Cultures
• Need to have your textbook