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Saturday, May 8, 2010

Organizational Structure & International Business

The current organizational structure of Physical Movement Company (PM) is to let its existing personnel handle an international expansion even though such personnel has not experienced any relevant exposure yet. This means that PM has somewhat failed to foresee the most important step in its expansion plan in a global perspective. Moreover, this means that unless a very strong motivation strikes the assigned personnel, PM’s international sales can either suffer or fail. Why? If an action is "implemented without a consideration of the best organizational structure to support the change, the likelihood of the change being successful in the long run is poor." (Bissell & Zamora, 1993) It means that before the expansion, PM should have closely examined and evaluated its structure first and tried to analyze its possible impact upon its expansion plan. This might mean assigning a task to someone that is highly profiled with a kind of task required to a position (i.e., Vice President of International Sales) and it might mean hiring some personnel outside of the existing managers that it (PM) currently has..

Compatibility is a big thing to consider. Assigning the task for someone that is compatible with the tasks or job or designing a structure that is compatible with operational policies of the company is very essential. “The compatibility of organizational values with the values of the wider society in which the organization is embedded is deemed essential to the long-term success of organizations” (Giacobbe-Miller, Miller, Zhang & Victorov, 2003: Hofstede, 1984; Morris et al., 1994; Schuler and Rogovsky, 1998) and “research indicates that organizational-societal cultural congruence is important to productivity…” (Giacobbe-Miller, Miller, Zhang & Victorov, 2003: Newman and Nollen, 1996).

Changing PM’s structure cannot be ascertained as to the number of days, weeks or months. What is important to note is, if the organization can clearly define the following factors, it can readily and effectively change its organizational structure and design:

how people will interact with each other;
how communications will flow;
how rewards are distributed;
how power relationships are defined; and
what is important to the organization
The five factors above are according to Bissell & Zamora (1993). In this regard, PM’s structure can be changed depending upon its responses to the factors defining it and the factors that are basic in making an organization successful. An organization’s structure also continually changes, innovates and adopts according to its policies and strategies in its operation. This means that as PM expands, it structural design must go with and reinforce this plan.

Bissell, B. L., & Zamora, B. (1993). Organizational Structure: The Neglected Aspect of the Management of Modern Environmental Health Organizations. Journal of Environmental Health, 55(8), 23+.

Giacobbe-Miller, J., Miller, D., Zhang, W., & Victorov, V. (2003). Country and Organizational-Level Adaptation to Foreign Workplace Ideologies: A Comparative Study of Distributive Justice Values in China, Russia and the United States. Journal of International Business Studies, 34(4), 389+..

You have achieved great success at Physical Movement Company (PM Co.) as their Sales Manager. PM Company is a three year old, US$25 million home healthcare company, headquartered in the northeastern part of the United States. The firm creates and sells wheelchairs, walkers or other types of “mobility products” that give a person some level of mobility when they can no longer completely ambulate on their own. Recently due to an influx of inquiries about your mobility products and some very large, direct sales to customers outside your home country, you have been promoted to the position of Vice-President of International Sales, responsible for all sales outside the United States. The job sounds simple enough – just sell your great mobility products around the world! Benefits of the job include traveling globally, eating great food and shopping for bargains in your free time. Life is good!

However, after a few days in your new position you begin to realize there is more to this job than what you were previously accustomed to as a Sales Manager who sold only in your own country. Your previous job responsibilities included finding a need for your mobility products, overcoming any objections and closing the sale. You were very comfortable in this role. As you begin to call on companies around the world by phone and e-mail, you realize that the global business environment is far more complex, involves many more details, and requires much more knowledge than you ever realized! Because of the time zone differences, you are finding yourself working all the time as business is conducted 24 hours a day, 7 days a week around the world, so there is always someone you need to contact or follow-up with. No one in the company has ever sold internationally before. There are a few employees in the company who were not born in this country. They can provide some language skills and can share their cultural knowledge, but they do not have international business experience. However, you are now the global business leader for your company.

Late one night between calls to Singapore and China, you realize you need to quickly learn as much as you can about global business issues and their implications and to communicate these issues and their solutions to senior management so that together you and the company can achieve your new worldwide revenue objectives.

What is PM Companys optimal organizational structure? How does it impact PM Company’s international market expansion plans? How would it change as PM Company adopts additional international market expansion strategies? How long and what will it take to actually change the organizational structure?

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