Level of Importance

ORGANIZATIONAL STRUCTURE

As a firm develops international business activities, its corporate structure must adapt to the changing environment in order to accommodate foreign operations effectively. The organizational structure that emerges will depend on many factors, including the location and type of foreign facilities, the impact of international operations on total corporate performance, the nature of assets employed in pursuit of business abroad, and the time horizons for achieving international and total corporate goals.

Firms must establish legal and organizational structures at home and abroad to meet company objectives. Within each foreign country these arrangements may differ because of the unique nature of activities and environmental requirements. Layered above the country organizations are additional structures that coordinate activities in more than one country. The form, method, and location of operational units at home and abroad will affect taxes, expenses, and control. Consequently, organizational structure has an important effect on the fulfillment of corporate objectives.

The more important the foreign operations, the higher they report in the structure.

The more important the specific foreign operations are to total corporate performance, the higher the corporate level to which these units should report. The organizational structure or reporting system therefore should change over time to parallel a company's increased involvement in foreign activities.

At one end of the spectrum is the firm that merely exports temporary surpluses through a middleman who takes title and handles all the export details. Clearly, in this situation few people in the firm are concerned with the conduct of the business. Since no personnel are either overseas or engaged in the export arrangement, there is no need for the firm to devise new personnel policies or training programs. Because the title to goods changes hands in the home country, there are no foreign legal or tax matters to consider. Also, since payment is effected in the home currency, there are no problems of transferring funds or evaluating country-by-country performance. Finally, because no attempt is made to increase foreign sales, the firm does not require new marketing programs. The entire operation is apt to be so insignificant to total corporate performance that top-level management is concerned very little with such transactions. The duties may be handled by anyone in the organization who knows enough and has time to discern whether or not orders can be filled. In this situation, foreign activities should be handled at a low level in the corporate hierarchy.

At the other end of the spectrum is the firm that has passed through intermediate stages and now owns and manages foreign manufacturing and sales facilities. Every functional and advisory group within the company undoubtedly will be involved in the establishment and direction of the facilities. Since sales, investments, and profits are now a more significant part of the corporate total, people very high in the corporate hierarchy are affected by the foreign operations.

Дата добавления: 2014-11-29