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Globalization and Organizational Structure

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  • 0:05 Globalization &…
  • 0:42 Planning Strategy
  • 2:09 Leadership Strategy
  • 2:50 Change in Structure
  • 3:20 Lesson Summary
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Lesson Transcript
Instructor: Rob Wengrzyn
Organizational structure can be influenced by many different aspects of globalization. In this lesson, we will explore organizational structure and the impact globalization can have on it.

Globalization and Organizational Structure

Organizational structure is a very complex issue. When we talk about organizational structure, we are talking about how a company links organizational departments, functions or geography to accomplish its goals.

You see, if an organization does not develop its own structure, it will self-organize, which means it will develop a structure on its own. That is why companies organize themselves in ways that help them produce the product or service they make as efficiently as possible.

Taking this thought process and blending in globalization, we can discuss how organizational structure is impacted or influenced to change by globalization.

Three Main Aspects

There are three main aspects to consider that relate to organizational structure and globalization. In many ways, these aspects are present if a company does not have globalization pressures put upon it, but they take on a different perspective when globalization is involved.

Planning Strategy

Most companies plan a strategy to go to market with their products. First, let us look at an organization that is not influenced by globalization. They would develop a strategy to go to market with the resources and perspectives they have from here in the United States. If we incorporate globalization, they will have additional resources (materials, knowledge and human capital) outside of the United States with which to work.

Having these additional aspects can and does influence planning, and hence, structure. For instance, what if a company finds that an office in Dubai can make a widget better and cheaper than they can in the United States. The company would shift production there, and that would change planning as to how the company will price, ship and incorporate the widget from Dubai into the company's finished product. Since the company has access to better or lower-cost production, they can change their strategy as it relates to how they go to market.

If that widget that Dubai is making is a critical part of the finished product, organizationally, Dubai now becomes more important to the U.S.-based company. That could mean that the managers and executives in Dubai might have more power than their U.S. counterparts.

Leadership Strategy

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