Describe the five ways multinational organizations structure their divisions to integrate their international activity.

Question

Fill in the blank(s) with the appropriate word(s).

Answer 1

Five ways of integrating international activity are common.
1. The international division groups all international activities together in a single organizational
unit and is more popular with the United States than European MNOs. This structure has also
been the initial choice of a significant number of firms as they expand internationally.
2. The product division structure groups all units involved with like products together around the
world. In this case, it is possible for foreign subsidiaries in the same country to have a different
relationship to the firm depending on the product line.
3. The functional division expands its domestic functional units into its foreign counterparts (e.g.,
Marketing Europe, Marketing North America, etc.) based on geography.
4. The geographic division structure groups all functional areas into geographic units (e.g., North
American Division, European Division, etc.). As long as geographic divisions provide the
investment returns or other output that headquarters seeks, these division managers typically
have a great deal of autonomy, although modern communication technology can foster
excessive micromanagement by headquarters.
5. In the matrix structure, each subsidiary reports to more than one group (product, geographic, or
functional) for the purpose of integrating international operations with functional areas, product
areas, or both. The popularity of this type of structure has waxed and waned as the advantages
of integration versus the disadvantages of dual reporting were weighed against each other.