International Business: The New Realities, 5th Edition

Organizational Structures for International Operations

Generally, structure follows strategy. That is, we can think of organizational structure as a tool that facilitates the implementation of strategy and ultimately the firm’s strategic vision.35 Moreover, the organizational structure senior managers choose is largely the result of how important they consider international business and whether they prefer centralized, shared, or decentralized decision making. Organizational structures tend to evolve over time. As the firm’s involvement in international business increases, it adopts increasingly complex organizational structures.

Exhibit 11.5 describes the advantages and disadvantages of each structure. Let’s explore the major types of organizational ...