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from one unit to another. Area structures are therefore usually complemented
with staff specialists for specific product categories. These staff specialists facili-
tate information transfer and strive to limit duplication.
Companies that are reasonably diversified (high level of foreign product
diversity) usually adopt a worldwide product structure. In this type of structure,
divisions are created for each major product or product group. Again divisions
are relatively independent and autonomous and are responsible for their own
value-creating activities (production, R&D, marketing, etc.). A major advantage
of this approach is that it improves efficiency, because activities can be easily
coordinated and rationalized within the product group. Transfer of core com-
petences and knowledge is also much easier than in the area division structure.
This structure works well for industries in which cost-efficiency and coordi-
nation are of paramount importance. In contrast to the area structure, however,
this structure makes attention to local differences far more difficult, sometimes
resulting in a lack of local responsiveness.
According to Stopford and Wells, yet another structure may be necessary if
the company enters a subsequent stage, one in which both foreign sales and
product diversity are high. They see the global matrix as the ideal structure for
this stage of international development. This structure should combine the
advantages of the area and product structure: local responsiveness and global
efficiency. In the matrix structure, responsibility for a particular product is
shared by both product and area managers. Many managers will have to report
to two bosses: one in the product division and one in the area division. The
advantage of the matrix is that it should enable a company to balance product
and area requirements and achieve both efficiency and responsiveness. The
reality is often different. Many matrix structures are associated with conflict,
bureaucracy and slowness of decision-making. Because of shared decision-
making, it is difficult to assign individual responsibility and the result may be
chaos, lack of direction and inflexibility. Both in academic literature and in
practice, attention has therefore shifted from matrix structures to matrix cul-
tures and in general to the ‘softer’ aspects of the organization, such as people,
processes and control mechanisms.

The soft side of the organization

In this chapter, we are concentrating on theories and developments related

to multinational organizations. In general management literature, however,

we also see a move away from the focus on structural variables and a ten-

dency to bring ‘the soft side of the organization’ into the picture, combined

with an emphasis on flexibility. Mintzberg, for instance, sees the adhocracy

(one of his organizational configurations, the others being the simple struc-

ture, the divisionalized form, the machine bureaucracy and the professional

bureaucracy) as the organization of the future (Mintzberg, 1983: 275). The

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