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Chapter 11
11
Organizational Structure
and Controls
Michael
Michael A.
A. Hitt
Hitt
R.
R. Duane
Duane Ireland
Ireland
Robert
Robert E.
E. Hoskisson
Hoskisson
Strategic
Competitiveness
Above Average
Feedback
Returns
Ch11
Structure Types
All organizations require some form of organizational
structure to implement and manage their strategies
Ch11
Multidivisional
Strategy & Structure Multidivisional
Structure
Structure
Growth Patterns
Sales
Sales Growth
Growth Coordination
Coordination
and
and Control
Control Problems
Problems
Efficient
Efficient implementation
implementation
of
of formulated
formulated strategy
strategy
Functional
Functional
Structure
Structure
Sales
Sales Growth
Growth Coordination
Coordination
and
and Control
Control Problems
Problems
Efficient
Efficient implementation
implementation
of
of formulated
formulated strategy
strategy
Simple
Simple
Structure
Structure
Ch11
Simple Structure
Owner / Manager
Ch11
Functional Structure
First stage beyond a Simple Structure
Appropriate for single or dominant-business firms
Allows specialization of tasks
* Production * Engineering * Sales & Marketing
* Finance * Accounting * Human Resources
Corporate
Corporate Corporate Strategic Corporate
Human
R&D Finance Planning Marketing
Resources
Ch11
Functional
Functional Structure
Structure for
for
Cost
Cost Leadership
Leadership Strategy
Strategy
Office of the President
• Operations is main function
• Process engineering is Relatively large
emphasized rather than new centralized staff
product R&D Centralized coordinates
functions
• Formalized procedures allow Staff
for low-cost culture
• Structure is mechanical; job
roles are highly structured
R&D Marketing
Corporate
Corporate Corporate Strategic Corporate
Human
R&D Finance Planning Marketing
Resources
Multi-Divisional
Multi-Divisional
Structure
Structure
(M-form)
(M-form)
Cooperative
Cooperative Strategic
Strategic Business
Business Unit
Unit Competitive
Competitive
Form
Form (SBU)
(SBU) Structure
Structure Form
Form
President
Government
Government Legal
Legal
Affairs
Affairs Affairs
Affairs
President
President
Corporate
Corporate Corporate Strategic Corporate
Human
R&D Finance Planning Marketing
Resources
• 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
Ch11-
Competitive Form
Unrelated /Holding Company Strategy
President
President
Corporate
Corporate Office
Office (Staff)
(Staff)
North Latin
Europe Asia Africa Australia
America America
Product A
Ch11-
Evolution of Multi-Divisional Structure
Chief
Chief Executive
Executive Officer
Officer
Corporate
Corporate Office
Office (Staff)
(Staff)
North Latin
Europe Asia Africa Australia
America America
Latin
Latin Multinational
Multinational Europe
America Europe
America Headquarters
Headquarters
Middle
Middle
Australia
Australia East/
East/
Africa
Africa
Corporate
Corporate Office
Office (Staff)
(Staff)
Ch11-
Implementation of a Global Strategy
Worldwide Worldwide Worldwide
Worldwide Worldwide
Product Products
Products Products
Products
Division
Division Division
Division
Divisional
Structure
Worldwide
Worldwide Multinational Worldwide
Worldwide
Products
Products
Multinational Products
Products
Division
Division Headquarters
Headquarters Division
Division
Worldwide
Worldwide Worldwide
Worldwide
Products
Products Products
Products
Division
Division Division
Division
Ch11-
Strategic Networks
A Strategic Network is a grouping of organizations
that has been formed to create value through
participation in an array of cooperative arrangements,
such as a strategic alliance
Strategic
Strategic
Network Firms Center
Center
Firm
Firm
Ch11-
Strategic Center Firm’s Critical Functions
Strategic
Strategic
Strategic Outsourcing Center
Center
Firm
Firm
Capability Development
Technology Sharing
Building Linkages to
Facilitate Learning
Ch11-
Strategic Outsourcing
Strategic
Strategic
Center
Center
Firm
Firm
Strategic Outsourcing
Capability Development
Strategic
Strategic
Center
Center
Firm
Firm
Technology Sharing
Building Linkages to
Facilitate Learning
Ch11-
Capability and Technology
Strategic
Strategic
Center
Center
Firm
Firm
Strategic Outsourcing
Capability Development
Technology Sharing
Strategic
Strategic
Building Linkages to Center
Center
Facilitate Learning Firm
Firm
Ch11-
Building Linkages to Facilitate Learning
Strategic
Strategic
Center
Center
Firm
Firm
Main
Main
Strategic
Strategic
Center
Center
Firm
Firm