Organisational structure in international business
Introduction
In 1962 the American industrial historian Alfred Chandler theorised that 'structure follows strategy'. This implies that an organisation should first define its operating strategy and then decide on the organisational structure appropriate for the pursuit of that strategy. Multiple studies since Chandler suggest this 'strategy imperative' has general validity. Certainly, there is little question that strategy influences structure at the top levels of organisations. It is therefore not surprising that Chapter 12 of your textbook, which dealt with strategy, should be followed by discussion of the structure of international businesses (in Chapters 13 and 14).
Hill's (2005) text copes very well in condensing organisation design (structure) into two chapters. There are whole textbooks devoted to the topic of organisation design, so you should recognise and accept that Hill (2005) leaves a lot of basic organisation theory unstated in his Chapter 13.
This chapter deals with the structuring of organisations to pursue a multi-domestic, global, international or transnational strategy (Chapter 13). We discuss the second part of structure in Chapter 9 when we deal with the modes of entry into international markets (Chapter 14).
Topics
The following is the outline of the topics covered in this chapter.
- 8.1 Organisation design
- 8.2 Organisation design options
- 8.3 International structure options
- 8.4 Coordinating and integrating mechanisms
- 8.5 Summary
Learning outcomes
The objectives for this chapter have been carefully constructed to reflect the most significant concepts and ideas we are going to cover and to provide a focus for your work during the chapter. After completing the work you should be able to:
- distinguish between vertical and horizontal differentiation
- define the arguments for centralisation and decentralisation
- define four types of integrating mechanisms
- define four types of control systems.
