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Chapter 11
Organizational Structure
and Controls
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Chapter 3
Internal
Environment
Chapter 2
External
Environment
The Strategic
Management
Process
Strategic Intent
Strategic Mission
Strategic
Competitiveness
Above Average
Returns
Feedback
Strategy Formulation
Chapter 4
Business-Level
Strategy
Chapter 5
Competitive
Dynamics
Chapter 6
Corporate-Level
Strategy
Chapter 8
International
Strategy
Chapter 9
Cooperative
Strategies
Chapter 7
Acquisitions &
Restructuring
Strategy Implementation
Chapter 10
Corporate
Governance
Chapter 11
Structure
& Control
Chapter 12
Strategic
Leadership
Chapter 13
Entrepreneurship
& Innovation
Strategic
Actions
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Structure Types
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Strategy & Structure
Growth Patterns
Sales Growth Coordination
and Control Problems
Efficient implementation
of formulated strategy
Multidivisional
Structure
Efficient implementation
of formulated strategy
Sales Growth Coordination
and Control Problems
Functional
Structure
Simple
Structure
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Simple Structure
Owner/Manager makes all major decisions directly and monitors all activities
Difficult to maintain this structure as the firm grows in size and complexity
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Functional Structure
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Functional Structure
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Functional Structure for
Cost Leadership Strategy
Operations is main function
Process engineering is emphasized rather than new product R&D
Formalized procedures allow for low-cost culture
Structure is mechanical; job roles are highly structured
Relatively large centralized staff coordinates functions
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Functional Structure for
Differentiation Strategy
Marketing is the main function for tracking new product ideas
New product R&D is emphasized
Most functions are decentralized
Formalization is limited to foster change and promote new ideas
Overall structure is organic; job roles are less structured
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Multi-Divisional Structure
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Multi-Divisional Structure
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Multi-Divisional Structure
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Variations of the
Multi-Divisional Structure
Multi-Divisional
Structure
(M-form)
Related-Constrained
Strategy
Related-Linked
Strategy
Unrelated /Holding
Company Strategy
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Strategic
Planning
Corporate R&D Lab
CorporateHuman
Resources
Legal
Affairs
CorporateMarketing
Corporate
Finance
Cooperative Form
Related-Constrained Strategy
Government
Affairs
Structural integration devices create tight links among all divisions
Large corporate office with R&D likely to be centralized
Culture emphasizes cooperative sharing
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President
Strategic Business Unit A
SBU Form
Related-Linked Strategy
Strategic Business Unit C
Strategic Business Unit B
Strategic Business Unit D
Structural integration exists among divisions within SBUs, but not across SBUs
Each SBU may have its own budget for staff to foster integration
Corporate headquarters staff serve as consultants to SBUs and divisions
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Competitive Form
Unrelated /Holding Company Strategy
President
Legal
Affairs
Finance
Corporate headquarters has a small staff
Finance and auditing are the most prominent functions in the headquarters
Divisions are independent and separate for financial evolution purposes
Divisions retain strategic control, but cash is managed by the corporate office
Divisions compete for corporate resources
Auditing
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Multi-Divisional Structure
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Attributes of Various Structural Forms
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A Structural evolution based on Geographic lines usually implies a Multi-Domestic International Strategy
Evolution of Multi-Divisional Structure
North America
Australia
Europe
Asia
Latin America
Africa
Product A
Product B
Product C
Product D
Chief Executive Officer
Corporate Office (Staff)
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Implementation of a Multidomestic Strategy
Worldwide
Geographic
Area
Structure
Green circles indicate decentralization of operations
Emphasis is on differentiation by local demand to fit a culture
Corporate headquarters coordinates financial resources among independent subsidiaries
The organization is like a decentralized federation
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Product A
Product B
Product C
Product D
A Structural evolution based on Product lines usually implies a Global International Strategy
Evolution of Multi-Divisional Structure
Chief Executive Officer
Corporate Office (Staff)
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Implementation of a Global Strategy
Worldwide
Product
Divisional
Structure
Green circle indicates centralization to coordinate information flow among worldwide products
Headquarters uses many intercoordination devices to facilitate global economies of scale and scope
Headquarters also allocates financial resources cooperatively
The organization is like a centralized federation
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A Transnational International Strategy is likely to utilize a structure and that results in emphasis on both geographic and product structures
Evolution of Multi-Divisional Structure
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27
34
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21
35
43
36
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76
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76
39
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