International business encompasses commercial transactions that take place between two or more countries which involve multinational corporations. International business requires the proper organization of systems, activities, processes, and structure to ensure success in the global market.
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The main objective of a firm participating in international business is to increase revenues and profits. The international business provides a valuable opportunity for a firm to expand its size and increases the volume of its operations (Daniels & Radebaugh, 2007). This study looks at the organization of international business and also highlights what has been learned about the topic.
The organization of international business depends on the architecture of an organization. The architecture of an organization entails elements such as systems, process, structure, culture, and provision of performance benefits to the employees. The architecture must be in tandem with the conditions in the market.
Business strategy and architecture determines the profitability and success of an organization. A firm may adopt an international strategy whereby it transfers its competencies to the branches in the international market, or pursue a transnational strategy whereby the structure and operations are based on a matrix model (Daniels & Radebaugh, 2007).
Business entities involved in international business may also pursue a global standardization strategy that is aimed at achieving a global based service or product structure. In this case, the organization controls the decision making processes within the international subsidiaries. The organizations which rely on this model of operation are highly centralized and decision making is very easy (Daniels & Radebaugh, 2007).
The operational strategy used by a business depends on its architecture. Any change in the business strategy translates to a change in the business architecture. However, it is important that an international organization adopt a flexible architecture and strategy that can match with the changes in the business environment.
What I Have Learned
I have learned many things on the organization of the international business. Effective organization of international business depends on the effectiveness of the business strategy and structure. Particular organizational elements such as culture, processes, systems, and operations also play an important role in determining the success of a business in the international market (Daniels & Radebaugh, 2007).
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The incentives and control systems in an organization not only determine the productivity of the employees but also determine the allocation and utilization of organizational resources. With regards to the issue of control systems, I have learned that cultural control influences the behavior of employees in an organization and reduces the level of supervision.
I have also learned that businesses that operate in international markets may adopt different organization structures which include decentralized and centralized structures. In A decentralized structure, the top management of the organization delegates decision making authority to other managers of various branches.
The managers in the branches have the autonomy to plan and make their own decisions in running the business. In a centralized structure, the top management makes all decisions and executes all important plans and initiatives in the organization (Daniels & Radebaugh, 2007).
The structure adopted by a firm also determines the nature of division within the organization. For instance, a firm may adopt an international division model whereby activities are divided on the basis of products or functions. A firm may also adopt a world based structure whereby products and functions are divided based on the regions of the world (Daniels & Radebaugh, 2007).
Daniels, J., & Radebaugh, L. (2007). International Business: Environment and operations. New Jersey, Prentice Hall.