Emerging Trends in Global Organizational Structures

Though global organizational structures tend to depict certain kind of rigidity, structure tends to change and new trends emerge.

Mixed Nature of Structures

Because of growth dynamics, companies change their organizational structures. Simplified organizational structures get replaced by complex or mixed structures. Until organizational re-structuring is made, new acquisitions might report to headquarters. Circumstances prevailing in a particular country, product, or function might necessitate separate handling until a re-structuring is effected, apart from the overall structure. The structure of 100% subsidiaries is different from that of JVs. 100% subsidiaries enable a deeper network of communications. Overall structure may be incomplete and less revealing. PepsiCo is organized by product lines, namely soft drinks and snacks. This would seem to imply that each product line is integrated globally. However, each line has its own global division, which separates it from domestic operations.

Structures evolve to suit growth and need

A company that only exports can afford just with an export department attached to a product or functional division. You may note departments are sub-divisional. But if global operations continue to grow and off-shore production is felt needed export department may no longer be sufficient. A global division replaces the department. In due course global division gives way for geographic divisions. Later with sustained growth, geographic divisions goes off, matrix structures come up.

Above figure gives the change from global division to other forms as MNEs grow in size, stature, complexity and the like. The need and opportunities for being globalized and localized are the two opposite forces. Ultimately a matured Multinational Enterprise (MNE) will blossom into a Transnational Corporation (TNC). There are two alternative routes. From overtly localized structures it may pull itself up to become a TNC structured. Else, from an overtly globalized structure it may bend itself down a little to become a TNC structured as depicted in the figure. There is the golden mean route that traverses in upward slope diagonally taking Matrix structure, MNC structure, Global company structure and finally TNC structure.

About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]
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