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ORGANIZATIONAL STRUCTURE AND CONTROLS Organizational Structure; “specifies the firm’s formal reporting relationships, procedures, controls, and authority and decision-making processes.” Organizational Controls; “guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective action to take when the difference between actual and expected results is unacceptable.”
Relationships between Strategy and Structure Simple structure Efficient implementation of formulated strategy . Sales growth coordination and control process Functional structure Efficient implementation of formulated strategy Sales growth coordination and control problems Multidivisional structure
Three Major Types of Organizational Structures a) Simple Structure; a structure in which the owner-manager makes all major decisions and monitoring all activities while the staff serves as an extension of the manager’s supervisory authority. b) Functional Structure; a structure consisting of a chief executive officer and a limited corporate staff, with functional line managers in dominant organizational areas, such as production, accounting, marketing, R&D, engineering and human resources. c) Multidivisional Structure; consists of operating divisions, each representing a separate business or profit center in which the top corporate officer delegates responsibilities for day to day operations and business-unit strategy to division managers.
Matches between Business-Level Strategies and The Functional Structure Functional Structure for Implementation of a Cost Leadership Strategy Office of the President Centralized Staff Engineering Marketing Operations Personnel Accounting
President and Limited Staff Functional Structure for Implementation of a Differentiation Strategy R&D Marketing Engineering Operations Marketing Human Resources Finance
Matches between Business-Level Strategies and The Multidivisional Structure Cooperative Form of The Multidivisional Structure for Implementation of a Related Constrained Strategy Headquarters Office President Government affairs Legal affairs Corporate R&D lab Strategic Planning Corporate Human Resources Corporate Marketing Corporate Finance Product Division Product Division Product Division Product Division Product Division
President SBU Form of The Multidivisional Structure for Implementation of a Related Linked Strategy Headquarters Office Corporate R&D Corporate Finance Strategic Planning Corporate Marketing Corporate Human Resources Strategic Business Unit Strategic Business Unit Strategic Business Unit Division Division Division Division Division Division
President Competitive Form of The Multidivisional Structure for Implementation of a Unrelated Strategy Headquarters Office Legal Affairs Finance Auditing Division Division Division Division Division
Characteristics of the Structures Necessary to Implement the Related Constrained, Related Linked, and Unrelated Diversification Strategies Structural Cooperative M-Form SBU M-Form Competitive M-Form Characteristics (related constrained) (related linked) (unrelated diversification) Centralization Centralized at Partially centra- Decentralized to of operationcorporate office lized (in SBU) divisions Use of integrati Extensive Moderate Nonexistent -on mechanisms Divisional per- Emphasize subjec Use a mixture Emphasize Formance apprai tive(strategic) cri subjective objective sals teria and objective (strategic) (financial) (financial) criteriacriteria Divisional Linked to overall Mixed linkage Linked to Incentive corporate corporate,SBU divisional Compensation performance and divisional performance performance
Matches between International Strategies and Worldwide Structures Asia United State Worldwide Geographic Area Structure for Implementation of a Multidomestic Strategy Multinational Headquarters Europe Latin America Australia Middle East/ Africa
Worldwide Product division Worldwide Product division Worldwide Product Divisional Structure for Implementation of a Global Strategy Global Corporate Headquarters Worldwide Product division Worldwide Product division Worldwide Product division Worldwide Product division
Matches between Cooperative Strategies and Network Structures A Strategic Network Strategic Center Firm
A Distributed Strategic Network Main Strategic Center Firm Distributed Strategic Center Firms