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Chapter 11 Organizational Structure and Controls Knowledge Objectives Studying this chapter should provide you with the strategic management knowledge needed to: Define organizational structure and controls and discuss the difference between strategic and financial controls. Describe the relationship between strategy and structure. Discuss the functional structures used to implement business-level strategies. Explain the use of three versions of the multidivisional (M-form) structure to implement different diversification strategies. Discuss the organizational structures used to implement three international strategies. Define strategic networks and strategic center firms. The Strategic Management Process Organizational Structure Organizational structure specifies: The firm’s formal reporting relationships, procedures, controls, and authority and decision-making processes The work to be done and how to do it, given the firm’s strategy or strategies It is critical to match organizational structure to the firm’s strategy Organizational Structure Effective structures provide: Stability Flexibility Structural stability provides: The capacity required to consistently and predictably manage daily work routines Structural flexibility provides for: The opportunity to explore competitive possibilities The allocation of resources to activities that shape needed competitive advantages Organizational Controls Purposes of Organizational Controls: Guide the use of strategy Indicate how to compare actual results with expected results Suggest corrective actions to take when the difference between actual and expected results is unacceptable Two types of organizational controls Strategic controls Financial controls Organizational Controls Subjective Criteria Are concerned with examining the fit between: What the firm might do (opportunities in its external environment What the firm can do (competitive advantages) Evaluate the degree to which the firm focuses on the requirements to i
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