Page 136 - International Marketing

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138 International Marketing BRILLIANT'S

The main function of such an organization is to develop the firm's
foreign business ventures. The executive at corporate headquaters, who
oversees the division, is given line authority and is directly responsible for
the profitability of the international division. The creation of such a division
is a company's attempt to draw a distinction between its domestic and
international business.
Companies in a developmental stage favor this structure because
they may not have enough trained executives to staff a worldwide
organization effectively. Thus, the top management will be freed from foreign
operations to work on domestic business.
The draw-back to this design is that a firm can easily grow too diverse
for this particular structure. Further corporate planning can become awkward
because of the two autonomous units. The isolation of top management
can become a curse. Conflicts may occur as operations abroad expand
and business overseas grows. Thus, when the perspective of business
enlarges, the international division structure becomes ineffective.
2. Geographic Organization
A worldwide geographic structure can overcome the problems
associated with the international division structure. Foreign and domestic
operations are not isolated but integrated as if foreign boundaries did not
exist. World-wide markets are segregated into geographic areas.
Operational responsibility goes to area line managers, while corporate
headquarters maintain responsibility for world-wide planning and control.

Chief Executive Officer

Vice-president Vice-president Vice-president
of Personnel of Operations of Finance

US Manager European Asian
Manager Manager
China
Manager

Singapore
Manager
Fig.: Geographical Organizational Structure
Companies that operate under a geographic structure usually share
the following characteristics.