Page 138 - International Marketing

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140 International Marketing BRILLIANT'S

3. Shipping costs, tariffs and other specific cost consideration dictate
local manufacturing.
Decentralization of authority is a prime advantage of this structure.
The motivation of division heads is high. New products can be added and
old ones dropped with only marginal effect on overall operations. Another
advantage of this structure is that the control of a product through the PLC
can be managed effectively.
A drawback of this structure is that co-ordination problems among
various product divisions can arise. It must be checked by the top
management. Division heads, who are promoted to headquarters, are likely
to be biased in favor of their former product area. Thus, a possibility of
neglecting certain product areas exists.
4. Matrix Organization
One of the recent developments in organization design is the matrix
structure. This structure has been adopted by many MNCs. It offers greater
flexibility and reconciles this flexibility with co-ordination and economies
of scale. In this, managers report to two bosses rather than to the traditional
single boss. There is dual rather than a single chain of command.

Chief Executive
Officer

Product Engineering Production Purchasing Administration
Manager A Staff Staff Agent Co-ordinator

Product Engineering Production Purchasing Administration
Manager B Staff Staff Agent Co-ordinator
Product Engineering Production Purchasing Administration
Manager C Staff Staff Agent Co-ordinator
Fig.: Matrix Organization Structure
For a MNC, the matrix organization is a solution to the problem of
responding to economic and political environments. A matrix organization
can have both geographic and product management components. The
product management component would have world wide responsibility for
a given product line and the geographic management component would
be responsible for all the product lines in a national setting.
In the matrix organization, it is expected that managers in the
geographic area will defend positions favoring efficiency and overall
economic competitiveness. Because their past experiences and their