Module 3: Corporate Strategy & Multi-Divisional Structure

Question 1

Cooperative Form of Multi-Divisional Structure (related constrained strategy)

Answer 1

• Operations is centralised at corporate office.
• Extensive use of integration mechanisms.
• Emphasises subjective (strategic) criteria for divisional performance evaluation (since extensively incorporate corporate strategy).
• Divisional incentive compensation is linked to overall corporate performance.

Question 2

Strategic Business Unit Multi-Divisional form (related linked strategy)

Answer 2

• Operations is partially centralised (in SBUs) because divisional manager is making most of the decisions (high on horizontal differentiation).
• Moderate use of integration mechanisms
• Uses a mixture of subjective (strategic) & objective (financial) criteria to evaluate divisional performance.
• Divisional incentive compensation has a mixed linkage to corporate, SBU & divisional performance.

Question 3

Competitive Multi-Divisional Form (unrelated diversification strategy)

Answer 3

• Operations is decentralised to divisions.
• Nonexistent use of integration mechanisms.
• Emphasises objective (financial) criteria for evaluating divisional performance (because the division only has to focus on its own objectives - no integration mechanisms used - hence no incorporation of corporate strategy into operations of the division).
• Divisional incentive compensation is linked to divisional performance.

Question 4

Lions Case Study: Strategic Business Unit form of Multi-Divisional Structure

Answer 4

I am thinking Fermentum (as a product division of the Australian Division) would incorporate some strategic objectives of the corporate strategy from Lion Company.

Fermentum would become a SBU? Of Lion’s, and seek to make have its own performance evaluation & divisional incentives, in the case of ensuring that the brand markets & sells to its customers effectively.

There are 4 product varieties offered by Fermentum? And these would be smaller product divisions, focusing on achieving Strategic objectives & financial objectives of Lion Company & Fermentum (SBU).