relationships between various multinational strategies and types of organizational structures

The multinational strategy employed by a company can influence the organizational structures that are effective for such a company. For example, a company that expands through the creation of independent subsidiaries may have difficulties with a functional structure since long distances may affect the flow of communication and thus the ability of the entity to respond to emerging matters in the local environment appropriately. For such companies, a divisional structure where managers are appointed for different regions may be a better way to delegate authority but still remain with some level of control. As discussed subsequently, other multinational structures may demand different organizational structures for the entity to be able to perform well in its foreign enterprises.

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