Chapter 11-2

Chapter 11-2 - KnowledgeObjectives Define organizational...

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1 Knowledge Objectives Define organizational structure and controls and review the difference between strategic and financial controls. Discuss the functional structures used to implement business-level strategies. Explain the use of three versions of the multidivisional (M-form) structure to implement different diversification strategies. Define strategic networks and strategic center firms.
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2 Organizational Structure Organizational structure specifies: The firm’s formal reporting relationships, procedures, controls, and authority and decision- making processes The work to be done and how to do it, given the firm’s strategy or strategies It is critical to match organizational structure to the firm’s strategy
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3 Organizational Structure Effective structures provide: Stability Flexibility Structural stability provides: The capacity required to consistently and predictably manage daily work routines Structural flexibility provides for: The opportunity to explore competitive possibilities The allocation of resources to activities that shape needed competitive advantages
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4 Strategy and Structure Relationship Strategy and structure have a reciprocal relationship: Structure flows from or follows the selection of the firm’s strategy but … Once in place, structure can influence current strategic actions as well as choices about future strategies
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5 Strategy and Structure Evolves… All organizations require some form of organizational structure to implement and manage their strategies Firms frequently alter their structure as they grow in size and complexity Three basic structure types: Simple structure Functional structure Multidivisional structure (M-form)
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6 Strategy and Simple Structure Owner-manager Makes all major decisions personally Monitors all activities Staff Serve as an extension of the manager’s authority Advantage Quick decision-making and flexibility Disadvantage One person bears all the information-processing responsibility
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7 Strategy and Functional Structure Chief Executive Officer (CEO) Limited corporate staff Functional line managers in dominant areas: Manufacturing Marketing Engineering Accounting Human resources Supports use of business-level strategies and corporate-level strategies with low levels of diversification
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Chapter 11-2 - KnowledgeObjectives Define organizational...

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