Exam 11: Organizational Structure and Controls

The most centralized and most costly form of the multidivisional structure is the

In the hybrid form of the combination structure, some divisions are oriented toward products while others are oriented toward market areas.

The organizational structure for an internationally diversified firm requires trade-offs between global integration and local market responsiveness.

It is easiest to identify the company that functions as the strategic center firm in

Firms using the differentiation strategy need to respond quickly to environmental opportunities and threats. The structural features that are best for these requirements are centralization, specialization, and many rules and procedures.

Successful implementation of the differentiation strategy requires a structure that

Implementing the multidomestic strategy requires decentralization

In the Chapter 10 Opening Case about Borders shows that although strategy has a more important influence on structure, once a particular structure is in place, that structure influences strategy.

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?

Case Scenario : Compliance, Inc. Compliance, Inc., (CI) conducts clinical human and animal trials for the pharmaceutical and biotechnology industries. Revenues are split evenly between early and late drug development services. While the bulk of its business is conducted in Europe and the U.S. (10 and 17 subsidiaries, respectively), CI also has subsidiaries in Africa, Latin America, Asia, and Australia. Historically CI operated under a multidomestic strategy, owing to the fact that the clinical testing industry was geographically fragmented to meet the diverse needs of the many strong local pharmaceutical companies and distinct regulatory environments. CI's organizational structure truly reflected the autonomous character of each country's businesses. Many of the country managers have been with CI for over a decade, and have a great deal of discretion over the activities of their home-market businesses. However, globalization of the regulatory environment (both global and local standards), globalization of the biotechnology firms (increasing the geographic scope of their operations), and tremendous consolidation in the pharmaceutical industry (reducing the number of pharmaceutical industry participants to only a handful of major global companies) caused CI to question its multidomestic strategy. Consequently, the firm has begun its transition to a transnational strategy. -(Refer to the above Case Scenario ) What type of organizational structure was likely to have been in place under CI's multidomestic strategy?

The benefits of a simple structure include all of the following EXCEPT

According to Michael Dell, an overemphasis on financial controls to produce attractive short-term results contributed to performance difficulties at Dell, Inc. This point emphasizes the importance of properly balancing the use of strategic and financial controls.

Discuss the organizational structures used to implement corporate-level strategies.

Alfred Chandler found that firms grow in a predictable pattern, and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory?

A worldwide geographic area structure is an organizational form in which

Firms seeking to differentiate particularly need support from the ____ and ____ functions.

Case Scenario : Jewell Company. Jewell Company (JC) is a $2 billion diversified manufacturer and marketer of simple household items, cookware, and hardware. While JC's 16 different lines of business may appear quite different, they all share the common characteristics of being staple manufactured items and sold primarily through volume retail channels like Wal-Mart, Target, and Kmart. Because JC operates each line of business autonomously (separate manufacturing, R&D, and selling responsibilities for each line), it is perhaps best described as pursuing a related linked diversification strategy. The common linkages are both internal (accounting systems, product merchandising skills, and acquisition competency are centralized in the corporate office) and external (distribution channel of volume retailers). Despite this partial centralization of the divisions' operations, each business is run entirely separately. To keep the managers focused on their respective businesses, they are paid a base salary but can earn up to three times that salary in bonuses based on meeting divisional performance targets. An additional, but smaller part of their compensation is derived from stock options. -(Refer to the above Case Scenario) The centralization of Jewell's operations can be described as