Licensing and foreign direct investment involves manufacturing in the host country, while exporting involves manufacturing in the domestic market or another manufacturing base outside the target market. In reality firms tend to internationalize different parts of the business rather than all elements of the value chain.

• Centralization assumes that advantages accrue from conducting business in large-scale centres where economies of scale can be achieved in a variety of business functions.
• Decentralization however assumes that greater advantages arise from conducting business in the host market, where adaptation to local environment and greater decision-making flexibility through local autonomy permit higher sensitivity to the local market.

A trend to observe in terms of decentralization is sales and marketing activities. While cost saving and plant economies may be attractive in production, closeness to the market and local responsiveness dominates in sales and distribution. Management can no longer consider the business as a mixture of functions. In a centralised organisation head office (or a few senior managers) will retain the major responsibilities and powers. Conversely decentralised organisations will spread responsibility for specific decisions across various outlets and lower level managers, including branches or units located away from head office/head quarters. An example of a decentralised structure is Tesco the supermarket chain. Each store of Tesco has a store manager who can make certain decisions concerning their store. The store manager is responsible to a regional manager.

Organisations may also decide that a combination of centralisation and decentralisation is more effective. For example functions such as accounting and purchasing may be centralised to save costs. Whilst tasks such as recruitment may be decentralised as units away from head office may have staffing needs specific only to them.

Certain organisations implement vertical decentralisation which means that they have handed the power to make certain decisions, down the hierarchy of their organisation. Vertical decentralisation increases the input, people at the bottom of the organisation chart have in decision making. Horizontal decentralisation spreads responsibility across the organisation. A good example of this is the implementation of new technology across the whole business. This implementation will be the sole responsibility of technology specialists.