International Business: Structures, Management and Governance

Range of management and governance structures

Many organizations have a governance system that is mainly based on Board of directors which bears the responsibility of making important decisions regarding operational matters. The auditor’s corporate board has the responsibility auditing the performance of the directors of the organization. Some of the features of the corporate governance structure include:

Functional structures

Functional structures include the division of activities of the organization or simply the segregation of duties in and organization or a business. For instance the board of director is the unit in a company that bears the responsibility of monitoring the normal execution of business activities and also monitors the administration of affairs pertaining to a certain company. Only the board has this role in the organization.
A functional structure is composed of a certain number of members depending on the nature of the organization. The company also employs a System of Executive Officer which closely monitors the execution of the various overseas and domestic Companies. Their number includes the president of domain companies of the business and the senior officials who bears the responsibility at various foreign regions and the officials who head the functions of the headquarters.

Multi divisional structures

Multi divisional structures consist of various operating divisions that make represents a different business or a profit centre. The separate different businesses should be having different systems of control to ensure they are utilized to the maximum. For example each of the division should incorporate the internal control system which is composed of codes of ethics that has been formulated for the directors and officers of the organization and states the critical matters that the management must adhere to.
Companies should make sure that a Compliance Committee has been formulated. It should have a president, directors, Executive officers and Corporate Auditors. This committee has the role of discussing the compliance of the company and finally communicates to the company.

Multi-national structure

Multi-national structure is an example of an organizational structure that is considered as a skilled arrangement of the various parts of the organization to ensure effective organization. Multi-national structure involves the organization of its subsidiaries and centralization of the organization. Multi-national structure also involves the organization of different operations in different countries of the world which involves distributing products throughout the world.

Basic policy on control

The international companies should establish various policies regarding large scale purchase of company’s shares. This may include whether large scale purchase of shares should be allowed. These policies are very vital in ensuring that the company delivers the level of sustained growth in order to satisfy the shareholders, investors, intended customers, the employees and the various business partners the company is associated with.

Matrix structure

Matrix structure is an organization structure that uses both function and product to group the employees. Matrix structure is mostly experienced where we have a company that has the desire to respond quickly to business environment. Matrix structure is very essential in companies that are actively involved in fast paced environments. There is a system where each worker reports to certain assigned functional head hence ensuring maximum productivity of the employees.

Product and geographic structures

Product and geographic structures entails the range of products to be offered in a market and implementation various structures that should be put into consideration when determining the range of products and the geographic area to be served by the entity. This is an area of great importance since it serves the purpose of determining the quantity of products to be supplied in a market to supplement the demand in various places. Since there is abundant competition, high quality goods should be offered for sale to maintain the market.

Key factors to consider when implementing the most appropriate structure

Market advantage test

Market advantage test is a factor worth considering since launching a new product in the market demands heavy investment accompanied by high risk. Test marketing is therefore undertaken by various firms to determine the response on new products to consumers in the market. This is therefore categorized as one of the stages of product development. This practice involves carrying out an experiment on a new product with the prevailing market circumstances but usually on a smaller scale. This provides valuable information necessary for managerial decision making since the objective of any entity which includes earning profits through making sales is achieved. Test market should be a bit smaller than the audience targeted but should posses’ similar population.

Parenting advantage test

Parenting advantage test is used to determine whether the design that has been put in place gives the required attention to the corporate activities. This shows clearly whether the design reflects the employees’ strength while the feasibility test analyses the follow its implementation. This is a factor that international organizations should consider to determine the reliability of a design that has been put in place.

People test

People test is a test that is carried out to obtain high quality information concerning management through measures which include testing. These are the factors that international organizations need to emphasize on since there is a lot of competition throughout the world. Enhancing good management ensures proper business performance leading to success of the entity. Relevant information necessary for decision making is made available through the people’s test and therefore it should be carried out before and after implementation of the entity.
Feasibility test
Feasibility test is a test that is conducted to test the viability of business idea before venturing into the business. Feasibility test serves the purpose of determining whether a person’s business is capable of developing into a profitable entity. This is one of the factors that international Businesses should put into consideration since if one invests in a business that is not viable, it leads to a huge loss of resources due to the inherent nature of resources requirement of international organizations. Before investing, a feasibility study should be carried out to ensure that the idea is viable and worth investing in. This is achieved through a detailed research and analysis of the market demand and other important factors.

Advantages and disadvantages of geographic and product strategies


Market domination

 Since the company is able to supply sufficient products in the market, the business is able to dominate the market since it offers products that meet the standard requirements of the consumers.
Quality products
 After a good research of the taste of the consumer, the business is able to produce goods that meet the customer requirements. These products being of quality make will make more sales and customers will tend to rely on them most often.

Increased sales value

Due to the geographic analysis conducted, new markets are identified and therefore increasing the total sales value of the entity and hence contributing to increased profit margin of the entity.
Effective competition
An entity involves itself in product research and therefore identifies the brands of commodities that are available in the market, it will be in a position to produce goods that are of quality and desired standards.
The exercise is expensive
The cost of conducting the various tests that are involved combined with the relevant research is very expensive. This is due to the fact that international companies are very huge and hence severe a very large market. The presence of the market extending to overseas make the work to be a bit technical thus demanding a lot of resources.
Time consuming
The exercise is generally time-consuming in nature since it involves a complete and deep analysis of the various types of products that are offered in various countries that are of similar nature to the ones the business has. This has the effect of delaying the initial implementation of the business in case of a business start-up.
Functional structure
Faster decision making
This is due to the fact that the people who are involved in decision making are not many and this facilitates easier and faster decision making. This is a result of the segregation of duties and one makes decisions that relates to their field which they are best suited.
Increased efficiency
This is a result of everybody working in the areas that they are most efficient resulting in improved output and also ensuring quality products which markets the organization and makes it to be considered as reliable to the customers.
Time saving
There are reduced movements and consultation since one works in the area they are best suited and hence much time that could have consumed consulting other people and many people doing the same job is saved. The time that is saved is used effectively utilized for productive performance.
Limited skills
Limited skills is realized due to the fact that various functions are separated resulting in employees possessing little or limited knowledge and skills in areas that are outside the functional unit in which they operate. This hinders the future of the company to prosper since in case of an emergency the company suffers until the person gets back. This may have a negative effect of reduced sales over a certain period.
Barriers in communication
The separation that is experienced results in poor communication and relationships between the employees of a company resulting in inadequate cooperation and coordination. These are the factors that have greatly contributed to poor performance of a business.
Individual focus
Instead of having a company focus there is presence of individual focus since all the employees are working towards achieving certain personal goals.

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