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The global matrix structure is most closely associated with the transnational strategy.•The area structure facilitates local responsiveness but can inhibit worldwide economies of scale and sharing of knowledge and core competences among geographic areas. •The product structure overcomes these shortcomings but is weak in local responsiveness. •By using the global matrix structure, responsibility for operating decisions about a given product are shared by the product division and the particular geographic areas. •To implement the matrix approach, the firm develops a dual reporting system in which, an employee in a foreign subsidiary may report on an equal basis to two managers: the local subsidiary general manager and a corporate product division manager.
International Business: Strategy, Management, and the New Realities64Global Matrix StructureBlends Several Orientations•This structure requires managers to think and operate along typically two of the three major dimensions: geography, product, and function (cross-functional). •The firm must simultaneously possess the ability to: (1) develop worldwide coordination and control; (2) respond to local needs; and (3) maximize inter-organizational learning and knowledge-sharing. •The global matrix structure recognizes the importance of flexible and responsive country-level operations.•For most firms, the matrix approach represents relatively new thinking in the management of the modern MNE. How successfully firms are able to implement and maintain the approach for long-term global success remains to be seen.
International Business: Strategy, Management, and the New Realities65Unilever: An Example of Building a Global Matrix Structure•Earlier, the decentralized structure of Unilever’s international organization had produced much duplication and countless obstacles to applying a more efficient, global approach. •Unilever put in place a massive reorganization plan designed to centralize authority and reduce the power of local country bosses.•To implement a global culture and organization, the firm divested hundreds of businesses, cut 55,000 jobs, closed 145 factories, and discontinued 1,200 brands. •Today, Unilever has about 400 brands. New products are developed using global teams that emphasize the commonalities among major country markets. •Local managers are not allowed to tinker with packaging, formulation, or advertising of global brands, such as Dove soap.
International Business: Strategy, Management, and the New Realities66Disadvantages of Matrix Structure•The chain of command from superiors to subordinates can become muddled. It is difficult for employees to receive directions from two different managers who are located thousands of miles apart and have different cultural backgrounds and business experiences.