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Organizational Structure of MNCs

OrganizationalStructure of MNCs

OrganizationalStructure of MNCs



Theold structure of P&ampG was geographic division. It was based on theglobal area design with the operations of the company organizeddepending on the cluster of countries. The strengths of geographicdivision structure are that it is applicable when better todistinguish the global markets into regions, and organizes activitiesaround a single country. However, the weaknesses are that there isredundancy in effort among the various regions and discourages globalplanning and coordination. The old structure did not fit thecompany’s current global strategy given that it was losing pace tocompetitors and making many market losses.


WhenJager became the CEO of P&ampG in the year 1999, he proposed andimplemented the product division structure. The company was plannedaround products or product groups. The structure had four to sevenglobal business units. The structure had eight market developmentorganizations as well as international business services across theglobe. It redefined the roles of the corporate staff, centralized theIT department, and changed the culture of the company (Michigan StateUniversity, n.d).


Thestrengths of this form of an organization include the possibility ofthe employees gaining a large amount of expertise regarding theirproduct, offering a higher efficiency of production, as well assimpler global marketing. However, the weaknesses include duplicationof roles among the product divisions as well as making coordinationdifficult between the groups. Furthermore, it is hard to investigateall the aspects of the market where the organization operates.

Jagerwas fired because his proposed structure and strategy was notsuccessful. He proposed significant changes that were applied quicklyleading to opposition. The managers were never sure of theirresponsibilities while the employees resisted the changes. As aresult, there was the loss of morale among the employees as well asthe abandonment of chief executives (Michigan State University, n.d).


Thestrengths of Lafley’s global matrix plan are that it promotescommunication and coordination within the company and increasesinformation exchange via sharing. However, the weaknesses of the planare that it increases favoritism with employees having no clearcommand structure their leaders. They are accountable to severalmanagers (Cullen&amp Parboteeah, 2013).


Cullen,J., &amp Parboteeah, P. (2013). Multinationalmanagement.New York: Cengage Learning.

MichiganState University. (n.d). Organizationalstructure of multinational corporations.Retrieved fromhttp://globaledge.msu.edu/content/onlinecoursemodules/33/organizational-structure-of-mncs/player.html