Strategic choices in diversified MNCs

Abstract

Prof. Prahalad analyzes the interrelation of strategic decision-making and a matrix structure of organization using a diversified multinational, the Beta corporation and its Executive Vice President, Dave Austin, as illustrations. Beta had four business aggregates - petrochemicals, pharmaceuticals, consumer products and mining; divided its operations into four areas - North America, Europe, Latin AmericdMiddle East and Asia/Africa/Australia; and had functional groups at the second level of organization - R&D, production, etc. At the top level, the matrix structure required approval of major decisions, such as investments, by both business group and area officials and joint venture partners also had to be considered. At the second level "conflicts took on a different color. For example, the functional groups ... controlled the deployment of almost all the technical manpower." Another area of conflict was over plant size with functional executives favoring larger scale units than area managers.