Global Structure

A multinational firm's organizational structure that reflects the “global” philosophy that the world is basically one homogeneous market is called a “global structure.” For example, by this philosophy, many large electronics and consulting firms, while allowing for minor local adjustments to packaging and language, basically project the same kinds of products and services around the world. However, there are several differences in terminology and philosophy in this field.

First, a “global” philosophy is characterized by seeing the world as one more-or-less monolithic market with similar tastes and preferences. In contemporary parlance this is opposite to a “multidomestic” (or multinational or multilocal) philosophy by which one sees the world as made up of many more-or-less unique markets, each with its distinct tastes and preferences. A position between these two extremes is called regionalism, whereby one sees the world as being made up of a small number of quite homogenous regions.

These constructs can be applied to industries, firms, and organizational structures, and it is informative to understand how global thinking at industry and strategic levels apply. For example, George Yip sees globalization as a function of the degrees to which the global marketplace is fragmented, local customer needs are distinct, local sourcing imperatives exist, costs are heterogeneous, and trade barriers are significant to cross-border commerce. Thus Randall Schuler, Peter Dowling, and Helen De Cieri and other scholars refer to some industries—like commercial aircraft, copiers, generic drugs, most electronics and computer hardware—as global industries; while retail, [Page 781]the food industry, and most services are considered substantially multidomestic.

Multinationals—and other large firms, for that matter—generally are divided into several parts, units, or divisions that reflect some aspect of their strategy. This link between structure and strategy was made famous in the classic book Strategy and Structure by Alfred DuPont Chandler. For example, a firm with five product categories may have been structured into five divisions, each division mandated to manage one of the product categories.

Chris Bartlett and Sumantra Ghoshal build on this logic as they focus on organizational responses to global and local forces; and they describe four organizational types (or mentalities) for the global organization that represent organizational and strategic responses to various industry contingencies. For example, they describe the global firm that views the world as its market, assumes that national tastes are more similar than different, and that believes in standardized products; and these strategic approaches require structural integrative mechanisms that are to coordinate worldwide activities, production, marketing, research and development (R&D), and planning. Thus, it is these structural processes that are implied by the term global structure.

Mechanisms

All large organizations need some structures that coordinate and integrate to some degree. However, the global strategy relies on these structures for implementation There are three major aspects to this kind of structure. The first is the locus of strategic responsibility. Second, the way the structure separates reporting relationships and dictates how the firm is divided. This aspect of structure may be called structuring. The final aspect is the kinds of coordination and integration systems—these may be called processes.

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