As a company's international business grows, the need for having international divisions becomes evident. Explain how an international division structure works and what factors contribute to the establishment of an international division

Question

What will be an ideal response?

Answer 1

The complexity of coordination and directing activities grows with the growth of international business. Pressure is created to assemble a staff with the responsibility for coordination and direction of the growing international activities of the organization. This demands the creation of the international division as has happened in many of the organizations such as Walmart, Levi Strauss, Best Buy, and Walt Disney Company. Four factors contribute to the establishment of an international division. First, top management's commitment to global operations has increased enough to justify an organizational unit headed by a senior manager. Second, the complexity of international operations requires a single organizational unit whose management has sufficient authority to make its own determination on important issues such as which market entry strategy to employ. Third, an international division is frequently formed when the firm has recognized the need for internal specialists to deal with the special demands of global operations. A fourth contributing factor is management's recognition of the importance of strategically scanning the global horizon for opportunities and aligning them with company resources rather than simply responding on an ad hoc basis to situations as they arise.