chapter  7
17 Pages

Functional Integration

Businesses are organized around functions as a way to benefit from specialization of activities. Most medium-sized and large international companies are organized into eight functional areas: accounting, administration and legal, finance, human resources management (HRM), management information systems/information technology (MIS/IT), marketing, production and operations management (POM), and research and development (R&D). The strategic decisions a company develops center on these functions. Hence, we have human resources strategy, marketing strategy, and so on. The critical question for managers is, how will an international company manage these diverse functions in developing the most effective strategies and maximizing the available resources? International companies view development of their strategies as a collective effort, even though the company develops strategies specific to each function. In other words, strategies for a function such as marketing are developed in conjunction with and through the coordination of activities in the areas of production, finance, R&D, and so on. Coordination is the critical process in linking and integrating an international company’s various functions and activities. Figure 7.1 presents how the functions are linked to one another.