7. Global Corporate Form – Function (Fig. 10.6)
Few companies organized by function at top level. Narrow and highly integrated product mix
is common to this form.
8. Hybrid Forms (Fig. 10.7)
Hybrid organizations use a mixture of organizational forms at the top level.
9. Matrix Organizations (Fig. 10.8)
Evolves from management’s attempt to mesh product, regional and functional expertise while
maintaining clear lines of authority.
10. Problems with the Matrix – managers from each dimension of the matrix must agree on a
solution. This leads to sub-optimal compromises, delayed responses and power politics. The
problem goes to higher organizational levels when managers cannot agree.
11. Matrix Overlay – because of these problems, some firms have maintained their organization
based on product, region or function, but have built into the structure accountability for other
organizational dimensions. Firms organized by product might have regional specialists in a
staff function, with the requirement that they have input to product decisions.
12. Strategic Business Units (SBUs) – business entities with clearly defined, market specific
competitors, the ability to carry out its business mission, and a size appropriate for control by
a single manager. Most SBUs are based on product lines.
C. Changes in Organizational Forms
The rapidly changing business environment is pressuring managements to look for organizational
forms that will enable their firms to act more quickly, reduce costs, and improve product quality.
D. Current Organizational Trends
Two organizational forms are now receiving the attention of many CEOs: the virtual corporation
and the horizontal corporation.
1. Virtual Corporation (network corporation) enables companies to come together quickly to
take advantage of a specific marketing opportunity. These alliances enable each member to
concentrate on its core competency. Benefits include obtaining specialized expertise globally,
flexible working practices, and global networking (modular corporations). Virtual
corporations take advantage of lower inventories through enhanced supply chain
management. A virtual corporation can have superior capabilities, flexibility, and market
response to those of any organizational form. Disadvantages include reduced management
control and employees can feel less job security due to rapid global market changes.
2. Horizontal Corporation. A form of organization characterized by lateral decision processes,
horizontal networks, and a strong corporate business philosophy. The idea is to substitute
cooperation and coordination for strict control and supervision. Teams are created to solve
specific problems or deliver product to market. Lateral relationships may enhance innovation
and new-product development.
E. Corporate Survival in the 21st Century
Managers will make greater use of the dynamic network structure that breaks down major
functions of the firm into small companies coordinated by a small-sized headquarters
organization. Business functions such as marketing and accounting may be outsourced. Firms
must learn how to be large and entrepreneurial. Small is not better; focused is better.
III. Control – successful firms use controls to put plans into effect, evaluate plan effectiveness, make
corrections, and evaluate and reward or correct executive performance. Subsidiaries and affiliates
are interchangeable terms.