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Organizational Structure and the Multinational Strategy

Lawrence E. Fouraker and John M. Stopford
Administrative Science Quarterly
Vol. 13, No. 1 (Jun., 1968), pp. 47-64
DOI: 10.2307/2391261
Stable URL: http://www.jstor.org/stable/2391261
Page Count: 18
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Organizational Structure and the Multinational Strategy
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Abstract

Organizations that have a single or a few related product lines and a high degree of vertical integration tend to be capital intensive, and to be organized in a centralized, functionally-departmentalized structure. Organizations that have a diversified product line tend to have a decentralized, divisional structure. This paper indicates that the first type tends to concentrate on domestic markets, while the second type accounts for most of U. S. direct investment abroad. Expansion abroad requires diversification, reorganization, and the training of general international managers. The evidence suggests that the organizations that have been most successful in meeting this new challenge have been those that had previously acquired the ability to develop general managers capable of controlling and guiding a heterogeneous, diverse enterprise.

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