Organizational Structure of Multinational Corporations

Topic: Company Structure
Words: 705 Pages: 2


An effective organizational structure is crucial to ensure proper division of roles and interaction, achieving maximum results and minimization of costs. It also provides optimized organizational strength and number of units, simplifies inter-unit interaction, even distribution of pressure on staff, eliminates function duplication, double and triple subordination, and delimits leaders’ scope, power definition, and areas of responsibility, and productivity boost. Organizational structure refers to a scheme that manages relationships, and the command chain made up of units and company officers, located by importance and responsibility levels. An organizational structure chosen by a company is informed by its stage of development, for instance, formation, growth, stabilization, or crisis. Luthans & Doh (2018) posit that Multinationals use a structure that works best in the domestic market as well as oversee markets. The structures include International division, Global area, Global product, and Matrix.

Organizational Structure of the Coca-Cola Company

The Coca-Cola Company is a multinational soft drink company that uses the International division organizational structure. The International division model is more evolved as it incorporates specialized division for foreign market division action and does not limit exports. The critical management figures are managers who lead the production departments instead of the heads of functional units. The model is based on the production criteria characterized by product specialization through consumer-specific group targeting and regional specialty. With this model, the company is more accepted in other countries, which also embrace it as one of their own.

Advantages and Disadvantages of International Division Structure

The model’s key advantages include managing a diversified enterprise comprised of hundreds of thousands of staff and remote geographical units. It also offers flexibility and a quicker response to changes around the enterprise (Bonanomi, Hall, Staub-French, Tucker & Talamo, 2019). The model also expands the company’s borders, separates officers, and improves production efficiency and quality. Furthermore, there is even a closer connection between consumers and production.

The notable disadvantages of the structure include the large managing vertical level numbers between production unit managers, workers, and the management. There is also a vast distance between the main headquarters and office staff structure (Luthans & Doh, 2018). The vertical relationships mean hierarchical structure problems such as delays, manager congestion, and reduced cooperation in handling unit issues. The functions can also be duplicated at different levels resulting in high management structure maintenance costs. The linear management of offices also carries its shortfalls. The advantages of this structure outweigh the disadvantages in times of fair, stable existence but risk failure in an unstable atmosphere.

Global Product Structure

The global product structure is also one of the best for the Coca-Cola Company. The structure postulates treating each product of the company independently and gives each division a full global responsibility. This facilitates the product’s worldwide planning and strategy but is less responsive to local environments, consumer states, and behavior differences. The managers are able to accumulate knowledge on specific products and grow their expertise (Monteiro, Hopkins & e Melo, 2020). It helps achieve production efficiencies and allows for knowledge transfer between the divisions, benefit from economies of scale and fully exploit synergy effects.

Advantages and Disadvantages of the Global Product Structure

The advantages of this structure include the single information communication chain on the product and technology for division on every level. The resources for production and marketing are also entirely devoted to products offered by every production division to determine excellent results of production and selling for each local market. Each division, as a result, grows independently and this positions the organization strategically to adjust with the market dynamics when only certain products sell than others. The structure’s disadvantages include that local autonomy becomes limited and local subsidiaries become cost centers rather than profit centers. Communication and coordination problems between divisions result in loss of foreign market opportunity cooperation.


A good working structure of an organization improves the working and coordination of organizational entities and promotes organizational efficiency. Efficient MNCs support the incorporation of individual employee skills to promote flexibility and tap into their creativity. It is therefore imperative for organizations to work out customized efficient structures such as hybrid structure of the international division and the global product while also cultivating employee creativity and skill to achieve efficiency.


Bonanomi, M. M., Hall, D. M., Staub-French, S., Tucker, A., & Talamo, C. M. (2019). The impact of digital transformation on formal and informal organizational structures of large architecture and engineering firms. Engineering, Construction and Architectural Management, 27(4), 872-892. Web.

Luthans, F., & Doh, J. P. (2018). International management: Culture, strategy, and behavior. McGraw-Hill.

Monteiro, G. P., Hopkins, A., & Frutuoso e Melo, P. F. (2020). How do organizational structures impact operational safety? Part 1 – Understanding the dangers of decentralization. Safety Science, 123, 104568. Web.

Pfizer Company’s Organizational Structure
Daimler-Benz and Chrysler Merger