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Ch11-1Chapter11OrganizationalStructureandControlsMichaelA.HittR.DuaneIrelandRobertE.Hoskisson©2000South-WesternCollegePublishingCh11-2CompetitivenessChapter3InternalEnvironmentChapter2ExternalEnvironmentTheStrategicManagementProcessStrategicIntentStrategicMissionStrategicCompetitivenessAboveAverageReturnsFeedbackStrategyFormulationChapter4Business-LevelStrategyChapter5CompetitiveDynamicsChapter6Corporate-LevelStrategyChapter8InternationalStrategyChapter9CooperativeStrategiesChapter7Acquisitions&RestructuringStrategyImplementationChapter10CorporateGovernanceChapter11Structure&ControlChapter12StrategicLeadershipChapter13Entrepreneurship&InnovationStrategicInputsStrategicActionsStrategicOutcomesCh11-3StructureTypesAllorganizationsrequiresomeformoforganizationalstructuretoimplementandmanagetheirstrategiesFirmsfrequentlyaltertheirstructureastheygrowinsizeandcomplexityThreebasicstructuretypes:FunctionalStructureMulti-divisionalStructure(M-form)SimpleStructureCh11-4Strategy&StructureGrowthPatternsSalesGrowthCoordinationandControlProblemsEfficientimplementationofformulatedstrategyMultidivisionalStructureEfficientimplementationofformulatedstrategySalesGrowthCoordinationandControlProblemsFunctionalStructureSimpleStructureCh11-5SimpleStructureOwner/ManagerOwner/ManagermakesallmajordecisionsdirectlyandmonitorsallactivitiesDifficulttomaintainthisstructureasthefirmgrowsinsizeandcomplexityCh11-6*Production*Finance*Engineering*Accounting*Sales&Marketing*HumanResourcesFunctionalStructureFirststagebeyondaSimpleStructureAppropriateforsingleordominant-businessfirmsAllowsspecializationoftasksOvercomesinformationprocessinglimitsofsingleowner/managerFunctionaldepartmentheadsreporttoChiefExecutiveOfficerwhointegratesdecisionsandactionsfromacompany-widepointofviewRisksconflictsbetweenmyopicfunctionmanagersCh11-7ProductionFinanceEngineeringAccountingSales&MarketingHumanResourcesFunctionalStructureChiefExecutiveOfficerCorporateFinanceCorporateR&DCorporateMarketingCorporateHumanResourcesStrategicPlanningCh11-8MarketingEngineeringOperationsPersonnelAccountingFunctionalStructureforCostLeadershipStrategyOfficeofthePresidentCentralizedStaff•Operationsismainfunction•ProcessengineeringisemphasizedratherthannewproductR&D•Formalizedproceduresallowforlow-costculture•Structureismechanical;jobrolesarehighlystructuredRelativelylargecentralizedstaffcoordinatesfunctionsCh11-9MarketingNewProductR&DOperationsHumanResourcesFinanceR&DMarketingFunctionalStructureforDifferentiationStrategyPresidentandLimitedStaff•Marketingisthemainfunctionfortrackingnewproductideas•NewproductR&Disemphasized•Mostfunctionsaredecentralized•Formalizationislimitedtofosterchangeandpromotenewideas•Overallstructureisorganic;jobrolesarelessstructuredCh11-10Multi-DivisionalStructureEachdivisionisoperatedasaseparatebusinessAppropriateforrelated-diversifiedbusinessesKeytaskofcorporatemanagersisexploitingsynergiesamongdivisionsManagersuseacombinationofstrategiccontrolsandfinancialcontrolsManagerstrytostrikeabalancebetween:CompetingamongdivisionsforscarcecapitalresourcesCreatingopportunitiesforcooperationtodevelopsynergiesThegoalistomaximizeoverallfirmperformanceCh11-11Multi-DivisionalStructureBalanceonthesedimensionsmaychangeovertimeThedecision-makingofmanagersinaMulti-Divisionalstructuremaybe:CentralizedorDecentralizedBureaucraticorNon-bureaucraticChangesinstrategyDegreeofdiversificationGeographicscopeNatureofcompetitionStructurewillevolveovertimewith:Ch11-12DivisionDivisionDivisionDivisionProductionFinanceEngineeringAccountingSales&MarketingHumanResourcesMulti-DivisionalStructureChiefExecutiveOfficerCorporateFinanceCorporateR&DCorporateMarketingStrategicPlanningCorporateHumanResourcesCh11-13CooperativeFormStrategicBusinessUnit(SBU)StructureCompetitiveFormVariationsoftheMulti-DivisionalStructureMulti-DivisionalStructure(M-form)Related-ConstrainedStrategyRelated-LinkedStrategyUnrelated/HoldingCompanyStrategyCh11-14ProductDivisionProductDivisionProductDivisionProductDivisionProductDivisionStrategicPlanningCorporateR&DLabCorporateHumanResourcesLegalAffairsCorporateMarketingCorporateFinanceCooperativeFormPresidentRelated-ConstrainedStrategyGovernmentAffairs•Structuralintegrationdevicescreatetightlinksamongalldivisions•LargecorporateofficewithR&Dlikelytobecentralized•CultureemphasizescooperativesharingCh11-15PresidentStrategicBusinessUnitASBUFormRelated-LinkedStrategyCorporateFinanceCorporateR&DCorporateMarketingStrategicPlanningCorporateHumanResourcesDivisionDivisionDivisionStrategicBusinessUnitCDivisionDivisionDivisionStrategicBusinessUnitBStrategicBusinessUnitD•StructuralintegrationexistsamongdivisionswithinSBUs,butnotacrossSBUs•EachSBUmayhaveitsownbudgetforstafftofosterintegration•CorporateheadquartersstaffserveasconsultantstoSBUsanddivisionsCh11-16CompetitiveFormUnrelated/HoldingCompanyStrategyPresidentLegalAffairsFinance•Corporateheadquartershasasmallstaff•Financeandauditingarethemostprominentfunctionsintheheadquarters•Divisionsareindependentandseparateforfinancialevolutionpurposes