Chapter 11: Organizational Structure and Controls
At some point, however, the increased sales revenues resulting from success will
4. What are the differences among the three versions of the multidivisional (M-form)
organizational structures that are used to implement the related constrained, the
related linked, and the unrelated corporate-level diversification strategies?
The three variants of the multidivisional or M-form structure that should be used to
implement corporate-level strategies are the cooperative form, SBU form, and
competitive form.
Firms implementing a related linked strategy usually employ the strategic business unit
(SBU) form of the multidivisional structure. The SBU form consists of at least three
levels, with the top level being corporate headquarters; the next level, SBU groups; and
the final level, divisions grouped by relatedness (either product or geographic market)
Chapter 11: Organizational Structure and Controls
5. What organizational structures are used to implement the multidomestic, global,
and transnational international strategies?
The multidomestic strategy is one in which strategic and operating decisions are
decentralized to business units in each country to facilitate tailoring products to local
markets. However, it is sometimes difficult for firms to know how local their products
Given its emphasis on international scale and scope economies, the global strategy is a
strategy in which standardized products are offered across country markets and where
competitive strategy is dictated by the firm’s home office. The worldwide product
divisional structure (see Figure 11.9) is used to implement the global strategy. This
structure represents an organizational form in which decision-making authority is
Chapter 11: Organizational Structure and Controls
The transnational strategy is an international strategy through which a firm seeks to
provide the local responsiveness of the multidomestic strategy while achieving the global
efficiency of the global strategy. The combination structure has characteristics and
structural mechanisms that result in an emphasis on both geographic and product
structures. Thus, this structure has the multidomestic strategy’s geographic area focus and
6. What is a strategic network? What is a strategic center firm? How is a strategic
center used in business-level, corporate-level, and international cooperative
strategies?
A strategic network is a group of firms that has been formed to create value by
participating in multiple cooperative arrangements, such as strategic alliances. An
effective strategic network facilitates the discovery of opportunities beyond those
Chapter 11: Organizational Structure and Controls
The competence-related role of the center firm is to build or develop the core
competencies of other network member firms and encourage them to share capabilities
and competencies with other network partners.
Technology aspects of the center firm’s role include managing the development and
sharing of technology-based ideas among network partners.
MINI CASE
Sony’s Dilemma, Matching Strategy and Structure
Note: To prepare students for class discussion and to introduce them to the
fundamentals of the Strategic Management process, each chapter Mini-Case is
Chapter 11: Organizational Structure and Controls
In response to these issues, Sony moved to an SBU form of the multidivisional structure in
October 2015. The reorganization was intended to allow upper-level management to more
effectively allocate financial capital, thus creating more value for customers and building
Teaching Note
Many students will be familiar with Sony products and media content, such as the
PlayStation gaming console and Sony movie franchises like Spiderman. Encourage
them to brainstorm ways to integrate these various properties following Disney’s model
of integrated properties. Then ask students to discuss how Sony might change its
structure and/or strategies once again to better facilitate this integration.
Answers to Case Discussion Questions
1. To implement a corporate strategy, a firm needs to have a strong set of capabilities to
“parent” the set of business units that the firm has established or acquired. Given Sony’s
history and organization structure, what would you argue are Sony’s strongest parenting
or corporate capabilities? How will the new strategy utilize these capabilities?
Historically, when Sony was focused on developing electronic products, it was known for
2. Do you think that Sony has the right organization structure to foster the necessary
integration among its electronic and entertainment content businesses that its revamped
strategy seems to entail?
Chapter 11: Organizational Structure and Controls
3. What additional organizational structure and/or process adjustments will Sony need to
make to realize its revised strategic objectives?
Given that Sony is a global organization, the firm should adopt a global strategy in which
it offers standardized products across country markets. If so, it would want to use the
ADDITIONAL QUESTIONS AND EXERCISES
The following questions and exercises can be presented for in-class discussion or assigned as
homework.
Application Discussion Questions
1. Why do firms experience evolutionary cycles in which there is a fit between strategy and
structure, punctuated with periods in which strategy and structure are reshaped? Have
students provide examples of global firms that have experienced this pattern.
4. Through reading the business press, students should identify a firm implementing the
global strategy and one implementing the multidomestic strategy. What organizational
structure is being used in each firm? Are these structures allowing each firm’s strategy to
be implemented successfully? Why or why not?
Chapter 11: Organizational Structure and Controls
39
Ethics Questions
1. When a firm changes from the functional structure to the multidivisional structure, what
responsibilities does it have to current employees?
4. Global and multidomestic strategies call for different competitive approaches. What
ethical concerns might surface when firms attempt to market standardized products
globally? When they develop different products or approaches for each local market?
INSTRUCTOR’S NOTES FOR MINDTAP
Cengage offers additional online activities, assessments and resources inside MindTap,
our online learning platform. Here is a comprehensive listing of the activities available
within each chapter of MindTap for Hitt, Ireland Hoskisson’s Strategic Management:
Competitiveness and Globalization, 13th edition:
Course Level Resource: Cornerstone to Capstone Diagnostic- features short quizzes in
Chapter Level Resources:
• What Would You Do Video
• MindTap Reader (eBook)
• Assignments:
o Multiple Choice Quiz
o Video Quiz
Chapter 11: Organizational Structure and Controls
Course Level Case Resources:
• Text Cases (Readings)
• Group Case Activities (Group Case Assignments)
• Supplemental Cases (Readings)
ADDITIONAL INFORMATION FOR SELECT MINDTAP RESOURCES:
WHAT WOULD YOU DO? GOOGLE
This exercise introduces students to strategic decisions as they are made in the real world.
Students should come to class prepared to discuss this exercise, and why they chose the
answer they did. All answers are graded as correct – the point of the exercise is to engage
your student’s interest.
Students watch a brief video where Eric Schmidt, the former CEO of Google, talks about
VIDEO QUIZ: GOOGLE
The media quiz offers additional opportunities for students to apply the concepts in the
chapter to a real-world scenario as it is described in news reports.
Title: Google
RT: 5:35
Topic Key: Organizational Structure, Strategic Management,
Google has recently undergone an organizational change, its first change in ten years. For
Chapter 11: Organizational Structure and Controls
lost its edge with innovation and needed to get back to their roots, which Larry Page could
inspire. There will be challenges with this reorganization, but with the high tech’s priority
Chapter 11: Organizational Structure and Controls
Suggested Discussion Questions and Answers
• Many speculate that Schmidt decided to release his role as CEO to Larry Page, the co–
founder, to capitalize on what was previously a core competency – innovation. How
would the change of CEO impact Google and inspire innovation?
Schmidt is known as the babysitter of Google, often telling the co-founders to
• Speed and decisiveness is one of the reasons Schmidt thought that becoming Chairman
of the Board and releasing the CEO role was the best decision. What change may also
be recommended for Google if speed and decisiveness are issues?
The organization needs to delayer. Lack of speed and decisiveness is often a
GUIDED CASE: SONY
This auto-graded activity asks students to read the short end-of-chapter case on Sony, and
answer questions in the areas of Analysis, Strategy, and Implementation &
Performance.
Recognizing that value could be gained by sharing resources, capabilities, and core
competencies across types of businesses, Sony has diversified into film, music, and digital
Chapter 11: Organizational Structure and Controls
In answering the Guided Case Questions, students will review these concepts:
• Organizational structures
GROUP PROJECT: BUILDING A BETTER MOUSETRAP:
THE RELATIONSHIP BETWEEN STRATEGY AND
STRUCTURE
This experimental exercise is intended to give students a scenario that applies directly to
this chapter and the knowledge gained with the previous chapters in a problem-solving
setting. The purpose of this exercise is to show how organizational structure works in
alignment with strategy to improve business performance.
The students will act as a consultant to a firm that recently changed its structure as a
Students will be asked to:
• Identify a firm that has recently changed structure due to declining performance.
• Prepare a background report to identify how the firm is impacted by answering the
following questions:
o What type of structure did the firm utilize before its performance declined?
Chapter 11: Organizational Structure and Controls
• Create an oral presentation that summarizes how the organization’s efforts are or are
not paying off.
You can adapt this exercise to individual students by limiting the scope of the research