Chapter 11: Organizational Structure and Controls 367
The worldwide product divisional structure supports use of the global strategy. In the
worldwide product divisional structure, decision-making authority is centralized in the
worldwide division headquarters to coordinate and integrate decisions and actions among
divisional business units (see Figure 11.9).
Integrating mechanisms are important to the effective use of the worldwide product divi-
sional structure. Direct contact between managers, liaison roles between departments, and
both temporary task forces and permanent teams are examples of these mechanisms. The
disadvantages of the global strategy/worldwide structure combination are the difficulties
involved with coordinating decisions and actions across country borders and the inability
to quickly respond to local needs and preferences. To deal with these types of disadvantages,
firms sometimes choose to try to somewhat simultaneously focus on geography and prod-
ucts. This simultaneous focus is similar to the combination structure that we discuss next.
Using the Combination Structure to Implement
the Transnational Strategy
The transnational strategy calls for the firm to combine the multidomestic strategy’s local
responsiveness with the global strategy’s efficiency. Firms using this strategy are trying to
gain the advantages of both local responsiveness and global efficiency.^90 The combination
structure is used to implement the transnational strategy. The combination structure is
a structure drawing characteristics and mechanisms from both the worldwide geographic
area structure and the worldwide product divisional structure. The transnational strategy
is often implemented through two possible combination structures: a global matrix struc-
ture and a hybrid global design.^91
In the worldwide product
divisional structure,
decision-making authority is
centralized in the worldwide
division headquarters to
coordinate and integrate
decisions and actions among
divisional business units.
The combination
structure is a structure
drawing characteristics and
mechanisms from both the
worldwide geographic area
structure and the worldwide
product divisional structure.Figure 11.9 Worldwide Product Divisional Structure for Implementing a Global StrategyGlobal
Corporate
HeadquartersWorldwide
Products
DivisionWorldwide
Products
DivisionWorldwide
Products
DivisionWorldwide
Products
DivisionWorldwide
Products
DivisionWorldwide
Products
DivisionNotes:- The “headquarters” circle indicates centralization to coordinate information flow among worldwide products.
- Corporate headquarters uses many intercoordination devices to facilitate global economies of scale and scope.
- Corporate headquarters also allocates financial resources in a cooperative way.
- The organization is like a centralized federation.