1. Norman, BUS 4385 Key Points: Structure Understand key decisions in structuring an organization Understand basic types of structure Strategy and structure should match Generic business-level strategies Corporate-level strategies

2. Norman, BUS 4385 Organizational Structure Definition: a firm’s formal role configuration, procedures, governance and control mechanisms, and authority and decision making processes Key Decisions Which, if any, decision-making should be centralized and which, if any, should be decentralized? How should tasks be divided? How should the various parts of a company be integrated? What form(s) of controls should be used to evaluate a firm’s performance? Financial: use of objective criteria Strategic: use of long-term and strategically relevant subjective criteria

3. Norman, BUS 4385 Types of Structure Simple structure: owner-manager makes all major decisions and monitors all activities Functional structure: CEO and small corporate staff with functional line managers in main areas such as production, accounting, marketing, engineering, and human resources Project/Product group structure: cross-functional teams are responsible for individual projects or product lines Multidivisional structure: separate operating divisions for each business act as profit centers and are delegated responsibility for day-to-day operations

4. Norman, BUS 4385 Structure and Business-Level Strategy Cost Leadership Centralized Formalized (rules & procedures) Emphasis on cost control Emphasis on process innovation Differentiation Decentralized Flexible Job roles less structured Emphasis on product innovation How would you structure an organization implementing an integrated low-cost/differentiation strategy?

5. Norman, BUS 4385 Structure and Corporate-Level Strategy Related-Constrained Tight links between business units Some activities likely to be centralized (e.g., marketing, distribution, R&D) Strategic controls that emphasize overall firm performance Culture emphasizes cooperative sharing BU HQ BU

6. Norman, BUS 4385 Structure and Corporate-Level Strategy Related-Linked Several groups that include closely related businesses Tight links between businesses in the same group Each group is a profit center Strategic controls that emphasize overall group performance Financial controls imposed by HQ on each group BU HQ Group AGroup B

7. Norman, BUS 4385 Structure and Corporate-Level Strategy Unrelated Small HQ staff Each business operates independently Financial controls--set financial goals for each business Divisions compete for corporate resources BU HQ