Chapter 17
Organizing and Controlling International Marketing Operations and Perspectives for the
Future
LEARNING OBJECTIVES
After studying this chapter students should be able to:
• Identify the factors in the firm’s internal and external environment that determine
the organizational design best suited for international operations.
CHAPTER SPOTLIGHTS
• Organizing for International Marketing Operations: The organizational design of
the firm is influenced by factors in the firm’s environment and by factors within the
firm.
• Examining International Organizational Designs: There are four formal
organizational structures used by multinational firms: International division
CHAPTER OVERVIEW
This chapter provides a description of the factors in the firm’s external and internal
environment that determine the organizational design for international operations. Four
different organizational designs and related examples are illustrated. Formal and informal
controls necessary to ensure that company operations follow the company’s objectives are
also identified.
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CHAPTER OUTLINE
17-1 Organizing for International Marketing Operations:
Organizational design of the firm is determined by the following factors:
17-1a Factors in the Firm’s Environment:
1) Competitive Environment: In highly competitive environments, a
decentralized organization is optimal because it allows for the most rapid
reactions to competitors’ moves. High flexibility is essential to react to
changes quickly.
2) Environmental Stability: In countries with unstable political environments,
17-1b Factors within the Firm:
Firms with extensive international involvement are more likely to have an
17-2 Examining International Organizational Designs: There are four types of formal
structures of organizational design used by multinational companies:
17-2a International Division Structure:
The firm has two main divisions – the domestic division and the international
17-2b Worldwide Regional Division Structure:
17-2c Product Division Structure:
Subsidiaries report to the product division (the strategic business unit) with
17-2d The Matrix Structure:
Each operations unit reports to both region/country managers and product
17-3 Controlling International Marketing Operations:
17-3a Formal Controls:
Instituting formal company controls involves the following procedure:
1) Establishing Performance Standards: Parameters are developed for evaluating
17-3b Informal Controls:
Companies can also use informal controls to ensure that there is a fit between
17-4 International Marketing: Future Perspectives:
The Internet and related technologies have expanded the realm of international
marketing and dramatically increased access to new markets. World markets are
expected to continue to benefit from the expansion in opportunities facilitated by
e-commerce. As the world population grows, there will be significant changes in
KEY TERMS
Formal Controls: Systematic controls, such as performance standards and measurement,
used in international marketing to ensure that international company operations are in
line with company goals and objectives.
Matrix Structure: An organizational structure whereby each operational unit reports to
both region/country managers and product managers.
Organizational Design: The organization of reporting and coordination within a
company.
Organizational Structure: The outcome of the organization of reporting and
coordination within a company.
DISCUSSION QUESTIONS
1) List the factors that influence organizational design. Describe how each factor
influences the design.
Factors within the firm that can influence its organizational design include the
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2) Compare the international division structure and the regional division structure.
What would make a company move from an international division structure to a
regional division structure?
The international division structure is an organizational structure that has two
main divisions: The domestic division and the international division. Firms that are
primarily focused on domestic operations, but whose international operations have an
3) How does the matrix structure differ from the other three organizational
structures? Explain.
In the matrix structure, each operational unit reports to both region/country managers and
4) Discuss the formal and informal controls used to ensure that international
marketing operations are in line with company goals and objectives.
The formal controls used include establishing performance standards, measuring
performance, and addressing discrepancies. The first step is establishing performance
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REVIEW QUESTIONS
True/False
1. True
Multiple Choice
1. A
iPhone: An International Company
1. Describe the new product trends that are widely attributed to the iPhone.
The iPhone has revolutionized the mobile phone industry. Its introduction and immediate
popularity set new standards for other products in the industry. Perhaps the most
important trend it set was its emphasis on style. Consumers like the iPhone for its beauty
2. How is the iPhone present internationally? Describe the different entry
modes of the iPhone.
The iPhone launched internationally after its initial US launch. It has pursued unique
entry modes that have met with skepticism. It chose to launch in Germany, France, and
3. How is Apple leveraging its competitive advantage in each of the
international markets described in the case?
The iPhone has a high differentiation advantage that it uses as leverage in its
international markets. The iPhone is the number one must-have mobile phone on the
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