Exam 11: Organizational Structure and Controls

Andermeyer Jewelers,which specializes in high-end jewelry,has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding,it has never Had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the structure.

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

For firms in a vertical complementary alliance (such as between Toyota and its suppliers),it is more difficult to identify the strategic center firm than in a horizontal complementary alliance (for example,airline alliances).

The Structure is the most appropriate structure for implementing the integrated cost Leadership/differentiation strategy.

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.

The marketing and R&D functions are emphasized in the differentiation strategy's functional structure.

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

Which of the following is TRUE?

Some experts consider the Structure to be one of the 20th century's most significant organizational Innovations because of its value to diversified firms.

Case Scenario 1: 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 more than 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 Case Scenario 1). What type of organizational structure was likely to have been in place under CI's multidomestic strategy?

Icarus Aviation,Athena Instrumentation,and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus,Athena,and Hercules

After years of negotiating short-term contracts with its suppliers,Icon Images has decided to agree to longer-term contracts. In doing this,Icon Images is hoping to

Typically,a successful firm pursuing a differentiation strategy will

Case Scenario 3: 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 such as Walmart, 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 Case Scenario 3)What is the corporate structural form used by Jewell?

Case Scenario 3: 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 such as Walmart, 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 Case Scenario 3). Jewell's divisional incentive compensation can be described as

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

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.

Financial controls are most important in the______strategy.

There are three variations of the multidivisional structure.

Case Scenario 1: 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 more than 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 Case Scenario 1). What type of organizational structure will likely be needed for CI's transnational strategy? What impact will this have on the location of particular value chain activities?