Exam 11: Organizational Structure and Controls

In most cases,the focus strategy is best managed using a______structure.

Case Scenario 2: 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 it 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 because of 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 (that is, it competes on cost with hardware and features with software). In addition to the issues created by these fundamental differences, other large companies are entering both the equipment (such as Sony)and software (such as 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 Case Scenario 2). How would the implementation of this structure differ for Pal?

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

An SBU structure consists of at least three levels: the top level,the corporate headquarters; the next level,the strategic business units (SBUs); and the final level,SBU divisions.

If firms band together in a large number of vertical complementary strategic alliances,there is a danger that the government will suspect them of illegal collusive activities.

Galatea Foods was founded in Greece by Galatea Chronos in 1978,and the company spread rapidly through Western Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European division is headed by her only daughter,and the French-Italian division is headed by Ms. Chronos' brother. This company probably uses the strategy.

A private university is made up of various "schools," such as the School of Journalism,the School of Business,the School of Law,the School of Arts and Sciences,and so forth. The university is experiencing some financial problems,so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the organizational structure.

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

Organizational structure

Typically,an organization using a simple structure would be

Discuss the difference between strategic controls and financial controls.

TheLG Company has units operating in significantly different industries and uses financial controls to manage its portfolio. LG is most likely using the______structure.

Alliances of organizations in the same position on the value chain are known as vertical alliances.

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). The centralization of Jewell's operations can be described as

The simple structure is used by owner-managed firms which are characterized by informal relationships,few rules,limited task specialization,and unsophisticated information systems.

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchises are creating the greatest possible value. This is an example of a(n)

A firm's specifies the work to be done and how to do it given the firm's strategy or strategies.

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

A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities,while the staff merely serves as an extension of the manager's supervisory authority.

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