Organization Structures Used By International Firms

1488 Words Sep 11th, 2016 6 Pages
9) What are the pros and cons associated with various organization structures used by international firms (4.2)? Let us now have a look at the various organization structures used by Multinational organizations.
a) International division structure The international division structure looks after all the international businesses of the company. All the international businesses directly report to the international division structure. The major disadvantage of this structure is that the international business structure has to depend on the domestic divisions. The profits generated cannot be streamlined entirely towards international business improvement.
b) Functional division structure The disadvantage of functional division structure is that this structure suits the companies with limited product range and with limited customers. Large companies with many units cannot afford to have this structure because the coordination between units and divisions will become unstable as the units start developing. The advantages are that it is popular for small businesses. This structure does not require lot of overhead expenses like accounting fee, rent, and wages.
c) Product division structure The advantage of product division structure is that the managers and employees of the firm can have full knowledge about the products their division manufactures. The production rate also increases as the managers have access to local raw materials which are cheap. The marketing also becomes…
Open Document