Page 132 - International Marketing

NPP

134 International Marketing BRILLIANT'S

marketers formulate diverse strategies to fit the various different markets
and successfully compete in them. A basic requirement for the effective
implementation of any strategy is appropriate organizational structure.
Managers may follow a decision process of global co-ordination and
integration. But the political demands of a particular host country may
require a more diverse and locally responsive decision process. These
simultaneous pressures for greater integration and greater diversity create
strain in structuring the organization. Thus, choosing an appropriate
structure is an important and complex issue.
Factors Affecting Organizational Design
A multinational corporation must choose an organizational structure
that maximizes decentralization while still providing for the co-ordination of
independent activities. The structure is determined by the following factors:
1. Quality of management: The
decentralization of authority to the local level Factors Affecting
can become quite a problem because the Organizational Design
quality of management varies from country
to country. However, authoritative 1. Quality of management
committees either at the corporate or 2. Diversity of product line
regional level with majority control can be 3. Size of firm
used to offset this potential problem. 4. Location of subsidi-
2. Diversity of product lines: Most aries and their char-
firms with a high degree of product diversity acteristics
decentralize on a product basis, rather than 5. Economic blocs
on an area basis. Firms producing a few
similar products will not decentralize on a product basis, because of the
high degree of interdependence among these products. But complete
standardization is usually not practical or desirable for marketing decisions
because of different market characteristics and consumers.
3. Size of firm: Firm that derives a substantial portion of business
from foreign operations usually drops the international division structure in
favor of a product or geographic structure, which facilitates growth. As
long as its international business is small, a firm can operate effectively
with an international structure.
4. Location of subsidiaries and their characteristics: A company
that emphasizes local and regional variations will lean toward the
geographic structure because specific geographic variation must be
specifically catered to. On the other hand, a company whose subsidiaries
are similar to those of the home country is unlikely to favour a geographic
structure because a good degree of standardization can be used in
promoting products.