Question

What are the organizational structure of MNCs? Describe them by the company case study and draw the figures of structure.

Answer 1

Organizational Structure of MNCs

An organizational structure is a visual diagram of a company that describes what employees do, whom they report to, and how decisions are made across the business. Organizational structure helps a company assign a hierarchy that defines roles, responsibility, and supervision. It’s the plan that outlines who reports to whom and who is responsible for what. It’s usually recorded and shared as an organizational chart that includes job titles and the reporting structure.

Multinational Companies (MNCs) are the organizational or enterprises that manage production or offer services in more than one country.

Types of structures

- Product structure

A product structure is based on organizing employees and work on the basis of the different types of products . If the company produces three different types of products , they will have three different divisions for these products.

- Functional structure:

This kind of organisational structure classifies people according to the function they perform in the organisation. The organisation chart for a functional based organsation consists of: vice president, sales department, service department, engineering or production department , accounting department and adminstrative department.

- Line and Staff structure:

line and structure combines the line structure where information and approvals come from top to bottom , with staff departments for support and specialization .Line and staff organizational structures are more centralized. Managers of line and staff have authority their subordinates, but staff managers have no authority over line managers and their subordinates.

- Line structure:

This has a very specific line of command.The approvals and orders in this kind of structure come from top to bottom in a line.Hence the name line structure. This kind of structure is suitable for small organizations.This is the short of structure allows for easy decision making, and is very informal in nature.They have fewer departments ,which makes the entire organization a very decentralized one.

- Market structure:

Market structure is used to group employees on the basis of specific market the company sells in a company could have three different markets they use and according to this structure, each would be a separate division in the structure.

- Matrix Structure

In a Matrix organizational structure, the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. It is a type of organizational management in which people with similar skills are pooled for work assignments, resulting in more than one manager to report to (sometimes referred to as solid line and dotted line reports, in reference to traditional business organization charts).

For example, all engineers may be in one engineering department and report to an engineering manager. But these same engineers may be assigned to different projects and might be reporting to those project managers as well. Therefore some engineers might have to work with multiple managers in their job role.

Starbucks Corporation’s Organizational Structure Type and Characteristics

Starbucks has a matrix organizational structure, which is a hybrid mixture of different features from the basic types of organizational structure.

For example, the company’s product-based divisions intersect with functional groups and geographic divisions, which in turn intersect with other parts of the organization. The following are the main features of Starbucks Coffee’s corporate structure:

1. Functional hierarchy
2. Geographic divisions
3. Product-based divisions
4. Teams

Functional Hierarchy. The functional hierarchy feature of Starbucks Coffee’s organizational structure refers to grouping based on business function. For example, the company has an HR department, a finance department and a marketing department. These departments are most pronounced at the top levels of Starbucks’s corporate structure, such as at the corporate headquarters. This characteristic is hierarchical. For example, the corporate HR department implements policies applicable to all of the company’s cafés. The functional hierarchy of the corporate structure facilitates top-down monitoring and control, with the CEO at the top.

Geographic Divisions.

Starbucks operations are divided into the following geographic divisions or segments:

• Americas (US, Canada and Latin America)
• Europe, Middle East and Africa (EMEA)
• China/Asia Pacific (CAP)
• Channel Development
• All other segments

Each geographic division has a senior executive. In this way, each local manager reports to at least two superiors: the geographic head (e.g. President of Europe, Middle East, and Africa Operations) and the functional head (e.g. Corporate HR Manager). This feature of Starbucks’s corporate structure enables closer managerial support for geographic needs. Each division head is given flexibility in adjusting strategies and policies to suit specific market conditions.

Product-based Divisions. Starbucks has product-based divisions in its organizational structure. These divisions address product lines. For example, the company has a division for coffee and related products, another division for baked goods, and another division for merchandise like mugs. This feature of the corporate structure enables Starbucks to focus on product development. In this way, the company develops and innovates its products with support through its organizational structure. Such development provides competitiveness that the business needs, especially in considering the threats identified .

Teams. Teams are used in different parts of Starbucks Coffee’s organizational structure. However, teams are most visible at the lowest organizational levels, particularly at the coffeehouses. For example, in each café, the company has teams organized to deliver goods and service to customers. This feature of Starbucks’s corporate structure enables the business to provide effective and efficient service to consumers. Team effectiveness is a major determinant of the financial performance of franchised locations and company-owned coffeehouses.

The current corporate structure of Starbucks is a result of reform to improve customer experience and business financial performance. The company recognizes the importance of strategic alignment involving various facets of the business. In this case, for example, aligning the corporate structure with trends in the coffee and coffeehouse industries stabilizes Starbucks’s market presence and market share. It is expected that the company’s future organizational structure will involve additional product-based divisions to account for further diversification. Its development history suggests that the company will continue acquiring more firms in the future to support its growth strategies.