Impact of global market entry on organizational structures and flexibility

¶ … Moving Into Global Markets on Structures

As the company moves along in terms of its international evolution, it also needs to adapt its organizational structure to include particular departments and divisions that would monitor and coordinate its external activities, as well as to change its perception from domestic and internal looking to external and international perspectives.

The adaptation of the organizational structure to the company's internationalization and its move into global markets is done differently depending on the degree of internationalization. When the company turns from the internal market to some external one by just exporting its products to the new country, its operations are most likely limited to exports and the only thing that will be needed is the creation of an export department. The export department would be in charge with coordinating export activities, supervising the host country market and the relationship with local distributors etc.

As the company grows more in its international presence, it is likely to add an international division or change the export department to include this. The international division would better correlate the international activities of the organization on several international markets and will ensure that the company's activities will follow the general objectives that were set. The organizational structure is now more complex, with the international division having most likely several of its own departments under its coordination, such as sales, marketing or subsidiary plant opening.

As the company turns multinational, with a worldwide product, a global product division is most likely to be formed that will ensure the coordination of all activities associated with the respective product, starting with marketing and sales, production, financial activities etc. The company might prefer a geographical redistribution among its organizational structure, which would most likely have different divisions for each of the countries where the company is present and selling its product. In any case, by turning into a multinational, the organizational structure is most likely going to become much more complicated so as to be able to coordinate activities on different markets and often involving different product portfolios.

The last phase in the company's internationalization process is when the organization is already a global one. This usually means that it approaches the entire world and sells its products in different markets globally. The organizational structure will become adapted to this usually by creating a set of connections between the different new smaller organizational structures created in each of the countries and a multifunctional matrix approach. As we can see, the organizational structure changes to adapt to the new stage of internationalization the company is in.

2. Discuss focuses on managing change and building flexible and innovative organizations.

The current business environment is definitely characterized by constant change in both internal and external factors. Everything ranging from the political and economic realities from the countries where the organization is present to the new technological advances induce change at every level within the organization. It is usually the companies best adapted to handle change that are likely to respond well to the new challenges and to become increasingly competitive in the future.

Organizations need to be not only adaptable to change, but they must also be sufficiently innovative as to embrace change and sometimes, even to bring about change. In terms of embracing change, the best example is probably the constant technological advances and development which any organization must be ready to integrate in its capacity. New technologies will often ease communication within the company and create the premises for better reaction to the market and to increased efficiency and work productivity.

However, bringing about change is often what makes the difference today between leaders and followers. A leader company will be able to create a market, to create a new product and to generally be innovative and bring about a novelty in things which will help it hold a significant competitive advantage. This will bring not only increased profits, but the capacity to develop new markets and create a bigger market share.

On the other hand, going back to the numerous changes that often occur on the market, we need to emphasize the importance of being flexible and being able to adapt and adopt change. Often this can be achieved by decentralization, which means that smaller units from the company will be able to better handle the challenges that arise though a higher capacity for reaction. This higher flexibility is often translated through a larger liberty of making decisions without prior approval from the centre and the fact that these units often act as smaller organizations, with the same objectives as the mother company, but with a liberty in terms of implementation and approach to market challenges.

3. Examines flat/horizontal structures and modular organizations

Flat structures are an excellent way of increasing and encouraging communication within an organization. One of the obvious reasons for this comes from the fact that, because of the flatness of the organization, there are fewer levels through which the information will need to pass, which will facilitate better communication between the different levels.