S17: Organizational structures & M&A Strategies

Question 1

What is the simple structure? What strategies does it use?

Answer 1

One owner/manager and all the staff under; uses focus & business-level strategies

Question 2

What is the functional structure? What strategies does it use?

Answer 2

One CEO and different functional lines (ex: marketing, R&D, HR, etc.); uses business and some corporate-level strategies

Question 3

Pros (4) & Cons (2) of functional structure?

Answer 3

Pros:
- economies of scale and scope
- performance standards are better maintained
- specialized training + skills development
- clear decision making and lines of communication

Cons:
- hard to integrate
- lack of common vision

Question 4

What is the multidivisional structure?

Answer 4

Once CEO, product lines underneath and under each product line there are the functions associated with them
Top CEO delegates responsibilities for day-to-day operations + business-unit strategy to division managers
Appropriate when firm grows through diversification

Question 5

Pros (3) & Cons (3) of multidivisional structure?

Answer 5

Pros:
- Corporate officers can monitor the performance of each business accurately
- Comparison between divisions is easier -> improves resource allocation process
- Stimulates managers of weak divisions to look for ways to improve

Cons:
- difficult to coordinate
- replication of resources
- pressure to generalize, not specialize