Why is organizational structure an important issue for international companies?

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Organizational structure is important for all businesses, but it is especially important for multinational corporations and for companies with clients and/or vendors headquartered in other countries. Every country has its own laws and regulations governing the conduct of business. Some countries (China would be a prime example) maintain distinctly different sets of laws for domestic and foreign-owned companies—laws that favor domestic industries and place additional bureaucratic obstacles in front of foreign businesses. Companies whose businesses cross international borders must be cognizant of these legal differences and structure themselves accordingly, for example, by maintaining legal and accounting departments dedicated to individual foreign countries.

Organizational structure is not only important for legal and accounting purposes; foreign markets often differ qualitatively from domestic ones. Products popular or in demand in the domestic market are not necessarily in demand in...

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