Why is organizational structure an important issue for international companies?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Organizational structure is important for all firms of any significant size.  It is important to set up lines of authority and communication so that jobs can be done as efficiently as possible.  However, one can argue that this is even more important in international (multi-national) companies.

The reason for this is that these companies face more complex organizational problems.  They will have operations in many different countries that may need to coordinate with one another.  Their employees in the various countries may or may not be able to work well together.  The firm must decide whether to add layers of bureaucracy, for example, to help coordinate the activities of related sections of the company that are in different countries.

Because international companies are larger and face more complex organizational issues, organizational structure is particularly important for them.

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