McDonald's organizational design integrates the international division and geographical structures. How does the geographical and product division structure work in a global context?

Question

What will be an ideal response?

Answer 1

As a company becomes more global, management frequently faces the dilemma of whether to organize by geography or by product lines. The geographical structure involves the assignment of operational responsibility for geographic areas of the world to line managers. The corporate headquarters retains responsibility for world-wide planning and control, and each area of the world—including the "home" or base market—is organizationally equal. For the company with French origins, for example, France is simply another geographic market under the organizational arrangement. This structure is most common in companies with closely related product lines that are sold in similar end-use markets around the world. For example, the major international oil companies utilize the geographical structure. McDonald's U.S. is organized into five geographical operating divisions, and McDonald's International has four. When an organization assigns regional or worldwide product responsibility to its product divisions, manufacturing standardization can result in significant economies. One potential disadvantage of the product approach is that local input from individual country managers may be ignored with the result that products will not be sufficiently tailored to local markets.