The organizational structure of a multinational company that reflects the “global” philosophy that the world is basically a homogeneous market is called the “global structure”. For example, with this philosophy, many large consulting and electronics firms, while allowing small local adjustments in packaging and language, basically project the same types of products and services around the world. However, there are several differences in terminology and philosophy in this field.
First, a “global” philosophy is characterized by viewing the world as a more or less monolithic market with similar tastes and preferences. In contemporary parlance, this is the opposite of a “multidomestic” (or multinational or multilocal) philosophy according to which one sees the world as made up of many more or less unique markets, each with its own distinct tastes and preferences. A position between these two extremes is called regionalism, whereby one sees the world as made up of a small number of fairly homogeneous regions. These constructs can be applied to industries, companies, and organizational structures, and it is informative to understand how global thinking applies at an industrial and strategic level.
For example, George Yip views globalization as a function of the degrees to which the global market is fragmented, the needs of local customers are different, there are local sourcing imperatives, costs are heterogeneous, and trade barriers are important to trade. cross-border. Thus, Randall Schuler, Peter Dowling, and Helen De Cieri and other scholars refer to some industries — such as commercial aircraft, photocopiers, generic drugs, most electronics, and computer hardware — as global industries; while retail, the food industry and most services are considered substantially multi-domestic.
Multinationals, and other large companies, are generally divided into several parts, units, or divisions that reflect some aspect of their strategy. This link between structure and strategy was made famous in Alfred DuPont Chandler’s classic book Strategy and Structure. For example, a company with five product categories may have been structured into five divisions, each of which has a mandate to manage one of the product categories. Chris Bartlett and Sumantra Ghoshal build on this logic by focusing on organizational responses to global and local forces; and describe four organizational types (or mindsets) for global organization that represent organizational and strategic responses to various industry contingencies. For example, they describe a global company that sees the world as its market, assumes that national tastes are more similar than different, and believes in standardized products; and these strategic approaches require structural integrative mechanisms that coordinate activities, production, marketing, research and development (R&D) and planning around the world.
Therefore, it is these structural processes that are implied by the term global structure. Mechanisms All large organizations need some structures that are coordinated and integrated to some degree. However, the overall strategy relies on these structures for its implementation. There are three main aspects to this type of structure. The first is the place of strategic responsibility. Second, the way the structure separates the reporting relationships and dictates how the company is divided. This aspect of the structure can be called structuring. The final aspect is the types of coordination and integration systems, which can be called processes.
Strategic Locus of Responsibility: A crucial aspect of organizational structure is the degree to which autonomy in decision-making from corporate headquarters is delegated to parts of the business. In the global firm there is a strategic imperative to centralize important strategic decisions. For example, decisions about product range, research and development, branding, and human resource management tend to be made at the corporate level rather than at the subsidiary level. Even customer service, which is the function most likely to be located closest to the customer, may have its main policies and standards set at the corporate level. Structuring – A characteristic of the global structure is that it is relatively blind to geographic distance and instead focuses on one or more other strategic dimensions, such as products or markets, that it considers more important (than geography) to its success in the implementation of a global strategy. .
Therefore, a global structure commonly has a major high-level division into product categories (generally called a global product structure), markets (global market structure), or some matrix (global matrix structure). As an example of a global product structure, Procter & Gamble (P&G) has three global product divisions, namely, Global Beauty, Global Home Care, and Global Health and Wellness. However, the distinction between product and market structures is likely to blur; For example, Boeing’s business units look like different product divisions (commercial aircraft, integrated defense systems, and Boeing’s capital corporation), but in reality all three have the goal of marketing various aeronautical and aerospace products and services to different groups. market, in this case commercial airlines, governments and financial intermediaries.
The structure of the global matrix attempts to organize activities by two (or more) managerial dimensions, such as product, geography and / or market. For example, HJ Heinz simultaneously has geographic divisions in North America, Europe, Australia / New Zealand, and emerging markets (selected countries in Asia and Eastern Europe); various product categories, namely ketchup / condiments / sauces, meals and snacks (including frozen foods), soups / beans and pasta, and baby food; and separate operations for the retail and foodservice channels. In a global structure, these various departmental and business divisions may have necessary aspects of local focus, but essentially work together to implement the global strategy of the company.
Processes: Finally, and very importantly, the structure involves processes such as coordination, integration, and information systems. These processes tend to be pronounced in the overall structure, and are generally very common in contemporary organizations. Kwangsoo Kim and Jong-Hun Park identify four generic integration mechanisms: (1) people-based integration mechanisms that use people to coordinate business operations across borders, involving transfer of managers, meetings, teams , committees and integrators; (2) information-based integration mechanisms use information systems such as databases, email, the Internet, intranet, and electronic data exchanges to integrate business operations across borders; (3) integration mechanisms based on formalization are based on the use of standardized or common work procedures, rules, policies and manuals in all units; and (4) integration mechanisms based on centralization retain decision-making authority at corporate headquarters, a concept similar to the previous section “strategic locus of responsibility.”
The more global the company is, the more it uses these processes. Intel, for example, uses relatively few formal structural mechanisms, but several cross-functional teams, including information technology (IT), knowledge management, human resources, finance, legal, change control, data warehousing, information management of common directory and cost reduction teams. -as integrative processes that allow them a rapid adaptation to changing conditions. Mechanism integration can also have negative effects, perhaps tying the hands of local managers, imposing compliance costs (both time and other resources), and creating unintended bureaucratic barriers to efficient decision-making. A study by David Brock and Ilene Siscovick, for example, found that the effects of integrative factors at the subsidiary level were often negative.
