Page 441 - Cultures and Organizations

406 IMPLICATIONS

lar conclusion with regard to organizational cultures. This is a strong
argument for making cultural considerations part of strategic planning
and locating activities in countries, in regions, and in organizational units
that possess the cultural characteristics necessary for competing in these
activities.

Coordinating Multinationals: Structure Should

Follow Culture

Most multinational corporations cover a range of businesses and/or prod-
uct or market divisions, in a range of countries. They have to bridge both
national and business cultures.
The purpose of any organizational structure is the coordination of
activities. These activities are carried out in business units, each involved
in one type of business in one country. The design of a corporate structure is
based on three choices, whether explicit or implicit, for each business unit:

■ Which of the unit’s inputs and outputs should be coordinated from
elsewhere in the corporation?
■ Where should the coordination take place?
■ How tight or loose should the coordination be?

Multinational, multibusiness corporations face the choice between
coordination along type-of-business lines or along geographic lines.
The key question is whether business know-how or cultural know-how
is more crucial for the success of the operation. The classic solution is a
matrix structure. This means that every manager of a business unit has
two bosses, one who coordinates the particular type of business across all

countries, along with one who coordinates all business units in the particu-
lar country. Matrix structures are costly, often requiring a doubling of the
management ranks, and their functioning may raise more problems than
it resolves. That said, a single structural principle is unlikely to fit for an

entire corporation. In some cases the business structure should dominate;
in others geographic coordination should have priority. The result is a
patchwork structure that may lack beauty but that does follow the needs of
markets and business unit cultures. Its justification is that variety within

the environment in which a company operates should be matched with
appropriate internal variety. The diversity in structural solutions advo-