Explain why the design of organizational structure is important to international companies.

The structure of an international organization involves how its domestic and international units and activities are arranged and where formal power and authority will be located inside the company. It helps determine how efficiently and effectively the organization will be able to integrate and leverage its competencies and resources within and across various units of the enterprise, and thus contribute to successful implementation of the company's strategy.

Discuss the organizational dimensions that must be considered when selecting organizational structures.

The organizational structure selected for a company must be consistent with the organization's capabilities and resources, as well as with the environmental context in which the organization operates and with its strategy. In selecting an organizational structure, managers of an international company must consider the requirements for expertise in terms of product and technology, geography, customer, and function.

Discuss the various organizational forms available for structuring international companies.

Companies may (1) have an international division, (2) be organized by product, function, or region, or (3) have a mixture of them (hybrid form). To attain a balance between product and regional expertise, some managements have tried a matrix form of organization. Its disadvantages, however, have caused many managements to put a matrix overlay over a traditional product, regional, or functional form instead of using the matrix.

Explain the concept of the virtual corporation.

A virtual corporation enables companies to come together quickly to take advantage of a specific marketing opportunity. Because each member concentrates on what it does best, a virtual corporation can have capabilities superior to those of any member. Once the opportunity ends, the virtual corporation normally will disband.

Explain why decisions are made where they are among parent and subsidiary units of an international company (IC).

Several considerations govern where decisions are made in an IC family of organizations. They include the desirability of standardizing products as opposed to differentiating them for different markets, the competence of organization managements, the size and age of the IC, the benefit of one part of the family to the detriment of another, and building confidence or avoiding frustration of management.

Discuss how an IC can maintain control of a joint venture or of a company in which the IC owns less than 50 percent of the voting stock.

Control can be maintained over a joint venture or a company in which the IC owns less than 50 percent of the voting stock by several devices, including a management contract, control of the finances, control of the technology, and putting people from the IC in key executive positions.

List the types of information an IC needs to have reported to it by its units around the world.

Subsidiaries should report to the IC information about financial conditions, technological developments, market opportunities and developments, and economic and political conditions.