Exam 11: Organizational Structure and Controls

Case Scenario : Palmetto. Palmetto was an early pioneer of personal data assistants (PDAs) and dominates that market space (in terms of market share) with its core product, the Palmetto Pidgy. Because this product category was entirely new to the market, Palmetto had to internally develop the hardware and software sides of the business, and today is both a manufacturer of PDAs and a programmer and licensor of its PDA operating system software. Recently however, the hand-held device maker's performance has taken a dive as a result of slumping sales and costly inventory problems. Palmetto has also had difficulty coordinating its software and hardware businesses, in part due to the near absence of a coherent structure and the differing economics underlying the two. Specifically, hardware for PDAs is increasingly a cost-based business, while software is a highly differentiated one. While Palmetto is doing pretty well in both businesses, its own resource base does not allow it to compete any differently than that proscribed for other industry participants (i.e., competes on cost with hardware and features with software). In addition to these fundamental differences, new large entrants are entering both the equipment (e.g., Sony) and software (e.g., Microsoft) sides of its business, putting further pressure on margins. Management has decided that it is unable to focus on the complexities of each of these businesses so it is opting to break Palmetto into two separate, independent public companies - Pal, Inc. will be devoted to hardware and Mettolink, Inc. will be devoted to software. -(Refer to the above Case Scenario) What basic structural form would you recommend for both Pal and Mettolink? What must each firm be careful to avoid with this structure?

RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas among employees. In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial controls.

Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.

Describe the organizational structures used to implement cooperative strategies, giving attention to the role of the strategic center firm.

Define the three major dimensions of organizational structure: specialization, centralization, and formalization. How do these dimensions vary in organizations implementing the cost-leadership, differentiation, and the cost-leadership/differentiation strategies?

The BEST multidivisional structure to use

Typically, an organization using a simple structure would be

Financial controls are most important in the ____ strategy.

Discuss the organizational structures used to implement the different business-level strategies.

Describe the organizational structure associated with a firm that pursues an unrelated diversification strategy.

A firm pursuing an unrelated diversification strategy will utilize a ____ structure.

Organizational structure

Companies and business units using the differentiation strategy should emphasize financial rather than strategic controls.

____ is the degree to which decision making authority is retained at higher managerial levels.

Structural stability affects the organization's ability to:

Cisco's _________ corporate-level structure was useful in implementing its ___________ business-level strategy (Chapter 11 Strategic Focus).

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy?

Research has consistently shown that there is one best way to structure all organizations, regardless of competitive strategy.

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because

An important lesson from the Chapter 11 Opening Case about Borders is that