Introduction
For any company to be part of a global business, a business strategy that incorporates an organizational model is essential in placing the business at a competitive edge. Doing business across national territory requires a business entity to have a model that will ensure its international operations do not jeopardize the reputation of the company. Such models or organization structures have used structures such as; global product structure, area structure, functional structure and customer structure.
Global product structure
For a corporation that uses global product structure, the business entity must first have a product department or division that is mandated with deliverance or production of a product in any areas of business operations. That means that in every country where the business is operating, there is a product manager (Daft, 2009). Each manager is given the autonomy to direct the company’s operations regarding the product in the best way possible he or she perceives will attain the overall company objectives. It also means that through a global product structure, the product managers in the country of operations will need to compete with other divisional managers in other countries in product delivery, considering the factors such as different context of challenges, cultures and economies.
The global product structure offers each product manager in different country an opportunity to take full control of managerial roles that includes planning, organizing, monitoring and controlling all aspects of the division’s functions that is all, the divisions work from production to marketing of the product or service in any part of the globe. This kind of organization structure or model works best when a business enterprise wants to take a competitive advantage through standardizing its products to a larger market. An example of such a company is Eaton Corporation in United States that deals with electrical and hydraulic accessories has used this model to make sure that its products are standardized and applicable in all its markets.
Area structure
Area structure is sometimes referred to as global area structure or global geographic division structure by some international business analysts. This structure is mostly used by business entities that want to get acquitted with a certain market within an already identified market region or segment. This means that although a company may penetrate into another country’s market, it may need to adapt to regions aligned with that market especially on matters that may include cultures, environment and economic status. A multi-domestic strategy is then initiated by the regional manager, by ensuring all functions within that area are only applied according to the needs of the area (Daft, 2009).
In other words, the company led by a regional manager tailors all the companies function to meet the specification of the region’s market in all aspects from production, marketing, selling etc. An example of such strategy has been used by the Nestle Company based in Switzerland. Nestle company which is a food company uses this global area structure to ensure that each regional manager is well conversant with cultures and local social aspects that may hinder the operations of an international company in a foreign market. The nestle foods company wants the local or regional market needs to be catered for and this is usually evident from the different flavoring, packaging and other food additives that each region puts in the products. These differences are as a result of varied regional needs and regional managers are mandated to harness this organization structure.
Functional structure
The functional structure or what is known as global functional structure is a model that is used by companies to manage less global business functions. This model is less engaging in global perspective and is mainly used for local business management. This organization model is only applicable where the business tends to diversify its products offering to newer market segments that are beyond borders of the host country (Hill, 2005).
Initially the functional structure is used by companies who don’t have large products range and so much of the decision making functions can be made from a central point. For example if the company has only two or one product line, and it would be more easier to standardize its operations and operate them from one central point and realization of economies of scale becomes a prerequisite. Another perspective to view functional structure, is when a company need to have a centralized decision making function concerning staffing roles; this decision making function is usually assigned to a human resource division. The human resource division can be centrally placed in the country hosting the company’s headquarters’ and all consultation and staffing roles can be done from a central point. This has proven to be advantageous for companies seeking standardization of functions in all areas of operations. An example of such a company is Asea Brow Boveri (ABB) that is based in Zurich.
This is an electrical dealing company that has operations in over 140 countries worldwide and a remarkable a human resource base of more than 200, 00 employees. To ensure that all human resource issues are catered for, the top brass management that includes human resource management makes business trips around the countries of operations managing, monitoring and recruiting if necessary.
Customer structure
Some international business entities serve diversified types of customers. These customers may range from other business entities, end product and service consumers, government departments, etc. All these kinds of customers cannot be served using the same business practices but rather require certain levels of expertise while engaging each kind of customer. In this case, a business would require having specialist or experts who are conversant and experienced at handling these groups of customers regardless whether the product or service is similar (Czinkota & Ronkainen, 2007). For example, government buying behavior is characterized by bidding and so the company would need to have an expert who quotes the best prices possible for the government without losing the customer to competitors and without making a non-profitable sale.
These experts are required to be well networked and informed of every customer’s intentions and pattern of buying to ensure that a close monitoring is facilitated and any change of buying behavior or trend is noticed at an early stage. An example of such a company is, L.L Bean, a company that deals with a range of products ranging from clothing’s, home furnishers etc. It is important to note that the company has a wider range of customers, that is, women, men, kids, housewives and office people who all need specific attention while making purchases. It therefore calls for such a company to have a customer structure that entails experts in women clothing, men clothing and furnishers, otherwise it would be hard for the company to generalize the needs of its clientele base.
References
Czinkota, M. R., & Ronkainen I. A. (2007). International marketing Stamford, CT: Cengage Learning. Web.
Daft, L. R. (2009). Organization Theory and Design. Stamford, CT: Cengage Learning. Web.
Hill, C. W. (2005). International business: competing in the global marketplace. Boston: McGraw-Hill/Irwin. Web.