Exam 11: Organizational Structure and Controls

Arnold Schwartz, CEO and founder of Schwartz Engineering, has repeatedly rebuffed efforts by other firms to draw Schwartz Engineering into strategic alliances. Schwartz Engineering has built its highly-successful business around proprietary processes invented by Mr. Schwartz in the 1980s. Mr. Schwartz is concerned that his firm will be required to share the sources of its competitive advantage with alliance partners. This is a reasonable fear.

As shown in the chapter Opening Case, Cisco's three semiautonomous lines of business each containing a self-contained organization with separate marketing and operational groups was appropriate for its rapid growth market.

The worldwide product divisional structure has centralized decision-making authority in the worldwide division headquarters to coordinate and integrate decisions and actions among business units.

To successfully implement a cost leadership strategy, there is a need for

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network?

Implementing the multidomestic strategy requires decentralization

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

Typically, a successful firm pursuing a differentiation strategy will

Distributed strategic networks are the organizational structure used to manage international cooperative strategies.

Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.

The worldwide geographic area structure differs from the worldwide divisional structure in the level of centralization of decision-making.

Companies and business units using the differentiation strategy should emphasize strategic controls (such as subjective measures of the effectiveness of product development teams).

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 will likely be needed for its transnational strategy? What impact will this have on the location of particular value chain activities?

Organizational structure

A firm pursuing a related-constrained diversification strategy would typically need all of the following EXCEPT

The integrated cost-leadership/differentiation strategy needs structural features that are partially centralized and partially decentralized, jobs that are semispecialized, and rules and procedures that call for some formal and some informal job behavior.

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.

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that

In the chapter Strategic Focus on Pepsico, the company changed its structure from a geographic to a hybrid structure to support its strategy change from a transnational to multidomestic strategy.