Page 133 - International Marketing

NPP

BRILLIANT'S Managing International Market 135

5. Economic blocs: Companies operating within a regional economic
bloc usually integrate their subsidiaries within the bloc area to deal
better with trade barriers and oversee these operations by establishing
special regional organizational units. Such a design makes it feasible
to provide adequate responses to the unique economic characteristics
of the bloc arrangement.
For example, IBM, Sperry Rand Corporation and Control Data, all
use different organizational structures. Sperry Rand operates with a
product structure because of a diversified product line. IBM, because of
its large size has an area organization. Control Data's product line and
international business have not expanded to the point where more
decentralized decision making is necessary and can thus operate
effectively with a functional structure.
Criteria for Choosing Organization Structure
The organizing goal of international marketing is a structure that
helps the company to respond to differences in international market
environments and at the same time enables it to extend valuable corporate
knowledge, experience and know-how from the home market to the
entire corporate system.
In other words, the structure must be compatible with the organization's
task, technology and the relevant conditions of the external environment.
Thus, no single structure will meet the requirements of all the corporations.
The choice of an appropriate form of organization should be based on
several criterias:
1. Foreign Market Vs. Domestic Markets: If a firm does a substantial
proportion of business overseas, greater
emphasis needs to be given in organizing Choosing Organization
foreign operations. If the major markets are Structure
in the home place, the foreign part of the 1. Foreign Market Vs.
business may simply be organized through Domestic Markets
an export department.
For example, a company like Nestle, 2. Evolution of Corporate
which does over 90 percent of its business Organization Structure
outside its home market of Switzerland, needs 3. Nature of Business
a global organization structure. But a major 4. Management's Orien-
thrust of companies like Procter and Gamble, tation
is on the domestic market; therefore, they 5. Availability of Qualified
would not attach the same importance to Managers
foreign markets as does Nestle.
2. Evolution of Corporate Organization Structure: When an
organization first expands to foreign markets, its foreign affiliates or