14.7 Organizational structure and human resource management

Organizational structure and human resources management

One of the fundamental challenges facing companies of all sizes is determining how to organize and staff their operations. This task becomes even more complex when a company decides to do business across national borders.

A small business owner may start out as the only employee in his or her company. In this case organization and staffing simply involves the efficient allocation of the owner’s time and attention to the various tasks associated with the business. As the company grows, more employees will probably be hired. When this occurs, it is useful to explicitly look at how tasks can be allocated across employees in a systematic way. As the company grows still larger, it is often useful to begin organizing the company into departments.

In many cases, a company’s early moves overseas involve reacting to an apparently random or unexpected overseas business opportunity. At first, such business may be conducted anywhere in the organization on an ad hoc basis. As a company extends its operations overseas, it takes on additional complexity as decisions have to be made which address global and local product design, local responsiveness to individual markets, cross-border financing, etc. As the international side of the business grows, many companies conclude that a reorganization of some type can better handle the current international business demands, and better position the company to take full advantage of international opportunities as they arise. In the following section, several common international organization structures are briefly described.

International division

Perhaps the simplest start for many organizations is to adopt what is known as an international division. With the addition of an international division, the domestic organization may remain relatively unchanged while an additional side structure is added. This additional structure (in collaboration with the domestic structure) takes on the responsibility for virtually all international business. This structure assumes that there are skills associated with doing business overseas that will transcend the typical business lines. Market assessments, compliance with export/import regulations, arranging shipping, identification of local representatives, establishment of dedicated sales offices, production facilities, etc. are all examples of tasks often assigned to the international division.