Chapter 11
Organizational Structure and Controls
Studying this chapter should provide you with the
strategic management knowledge needed to:
1. Define organizational structure and controls and discuss the
difference between strategic and financial controls.
2. Describe the relationship between strategy and structure.
3. Discuss the functional structures used to implement business-level
strategies.
4. Explain the use of the three versions of the multidivisional (M-form)
structure to implement different diversification strategies.
5. Discuss the organizational structures used to implement three
international strategies.
6. Define strategic networks and discuss how strategic center firms
implement such networks at the business, corporate and
international levels.
Learning Objectives
•Organizational structure specifies:
Organizational Structure and Controls
•Effective structures provide:
–stability
–flexibility
Organizational Structure
Organizational Controls
Organizational Controls
Organizational
Controls
Strategic
Controls
Financial
Controls
•Financial Controls: Objective criteria
–Accounting-based measures
•Return on investment
•Return on assets
–Market-based measures
•Economic Value Added (EVA)
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Organizational Controls
Organizational
Controls
Strategic
Controls
Financial
Controls
Matching Control to Strategy
Relationships between Strategy
and Structure
Evolutionary Patterns of Structure
and Organizational Structure
Evolutionary Patterns of Structure and
Organizational Structure (cont’d)
•All organizations require some form of
©2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 11–13
Sales Growth
Coordination and Control Problems
Efficient implementation
of formulated strategy
Simple Structure
Multidivisional Structure
Strategy and Structure Growth Pattern
Strategy and Structure:
Simple Structure
Simple Structure (cont’d)
Strategy and Structure:
Functional Structure
•Differences in orientation among
organizational functions can:
Functional Structure (cont’d)
Strategy and Structure:
Multidivisional Structure
•Strategic Control
•Three Major Benefits
Multidivisional Structure (cont’d)
Matches between Business-Level Strategies
and the Functional Structure
•Different forms of the functional organizational
structure are matched to: