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Presented by Suong Jian & Liu Yan, MGMT Panel , Guangdong University of Finance. - 567 - Chapter 19 ORGANIZATION STRUCTURE AND CORPORATE GOVERNANCE Q19.1 What is the difference between a vertical and a horizontal business relationship? Q19.1 ANSWER A vertical relation is a business connection between companies at different points along the production-distribution chain from raw materials, to finished goods, to delivered products. An example of a vertical relation is the business linkage between Wal-Mart Stores, Inc., the giant discount retailer, and Rubbermaid, the leading manufacturer of rubberized food- and household-storage products. By way of contrast, a horizontal relation is a business affiliation between companies at the same point along the production-distribution chain. The commercial relationship between Wal-Mart Stores, Inc,. and Target Corp., parent company of Target discount stores, is an example of a horizontal relation. Q19.2 During the last few years, the desktop computer has evolved from a tool for computation to an Internet-centered communications device. Is this likely to change corporate structures by increasing the efficiency of smaller, more nimble corporations? Q19.2 ANSWER Yes. The emerging information age of the twenty-first century promises to dramatically redefine corporate boundaries. Whereas the Post World War II corporate environment was designed for the efficient mass production of standardized industrial and consumer goods, present-day customers are more interested in unique combinations of goods and services to meet specialized needs. Just as the industrial revolution transformed the competitive landscape of the twentieth century, so too is the information revolution transforming corporate boundaries. Highly skilled managers no longer need to locate in New York, Chicago, or Los Angeles to find exciting career opportunities. Powerful desktop computers, the Internet and low-cost satellite communications make it possible to work in LA while living on Catalina Island, in Sante Fe, New Mexico, or Durango, Colorado. Centralized authority supported by layers of managerial staff is being replaced by desktop computers and sophisticated software that make line personnel instantly
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Chapter 19 Presented by Suong Jian & Liu Yan, MGMT Panel , Guangdong University of Finance. - 568 - accountable for bottom-line performance. Chief Financial Officers don = t want detailed reports filed by cumbersome staffs of accounting and financial personnel; they want immediate access to the data and user-friendly software. Ramifications of this ongoing revolution in information technology for corporate organizations should not be underestimated. Invention of the airplane did not make it important to become a faster walker; it changed the nature of travel. Similarly, invention of the Internet did not just increase the importance of computer literacy in the workplace; it promises to fundamentally change the size, scope and viability of organizations
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