The organization process can be divided into two phases:
Phase A: Creating an organizational structure that will allow the MNC to take full advantage of its global resources
Phase B: Determining the organizational behavior dictated by the required degree of coordination of the company's global activities
Phase A of the organization process involves dividing the MNC's domestic and foreign activities into departments. Phase B entails prescribing the decision-making rules that will be followed by the MNC headquarters and its overseas subsidiaries. The latter task requires choosing between centralization and decentralization. The organization process must result in a scheme that will satisfy two seemingly contradictory objectives. Obviously the desire to maximize the benefits of specialization must be weighed against the cost of the coordination necessary to prevent these specialized forces from pursuing counterproductive objectives.
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