International Management

Organizing

MNCs are very large companies engaged in international business activities. They may have manufacturing, service, sales, or research and development sites in different countries around the world and may be organized in a variety of ways. One common MNC structure is the miniature replica in which almost all of the home country headquarters functions are replicated in a stand-alone fashion in each country in which the MNC operates. This structure is typical of MNCs that produce personal care or food products. Other MNCs are organized in very centralized structures where functions like finance and research and development are retained in the home country and only production, service delivery, or sales occurs in the foreign country. This is more typical of MNCs producing standardized products like consumer electronics, telecommunications equipment, and computer products.

While almost all companies and all countries in the world are involved in international business, a small number of MNCs from a small number of countries dominate global trade. The 10 largest MNCs produced more than the total gross domestic product (GDP) of the 100 smallest countries. The diversity MNCs encounter in operating environments results in their need to understand and respond to these differences. [Page 711]Operating environment complexity only increases as the number of host countries increases; thus, MNCs often have very complex organizational structure. In addition, the boom in use of information technology means that MNCs encounter networked, integrated work spaces that extend the need for international management into global, virtual, and even asynchronous work contexts.

To make matters worse, MNCs have entered into mergers four times more often in 2000 than just 3 years earlier, from 2,100 to more than 9,200 in a 3-year period: this pace continues. By 2000, more than 40% of all mergers were cross-border, a statistic that highlights the importance of international management. Almost overnight, the world has gotten smaller and bigger for international managers and the MNCs in which they work. It has gotten smaller because MNCs are so extensively networked and integrated with partners around the world. It has gotten bigger because MNCs enjoy significant business opportunities beyond the domestic corporation's organizational and national boundaries.

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