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Large Corporations

Simple Structure
Simple structure is the oldest and most common organizational form
Staff serve as an extension of the top executive’s personality
Highly informal
Coordination of tasks by direct supervision
Decision making is highly centralized
Little specialization of tasks, few rules and regulations, informal evaluation and reward system
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Patterns of Growth of
Large Corporations

Functional Structure
Adapted from Exhibit 10.2 Functional Organizational Structure

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Patterns of Growth
of Large Corporations

Functional Structure
Found where there is a single or closely related product or service, high production volume, and some vertical integration
Advantages
Enhanced coordination and control
Centralized decision making
Enhanced organizational-level perspective
More efficient use of managerial and technical talent
Facilitated career paths and development in specialized areas
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Patterns of Growth
of Large Corporations

Disadvantages
Impeded communication and coordination due to differences in values and orientations
May lead to short-term thinking (functions vs. organization as a whole)
Difficult to establish uniform performance standards
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Divisional Structure

Adapted from Exhibit 10.3 Divisional Organizational Structure

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Divisional Structure

Organized around products, projects, or markets
Each division includes its own functional specialists typically organized into departments
Divisions are relatively autonomous and consist of products and services that are different from those of other divisions
Division executives help determine product-market and financial objectives
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Divisional Structure

Advantages
Strategic business unit (SBU) structure
Separation of strategic and operating control
Quick response to important changes in external environment
Minimal problems of sharing resources across functional departments
Development of general management talent is enhanced
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Divisional Structure

Disadvantages
Can be very expensive
Can be dysfunctional competition among divisions
Can be a sense of a “zero-sum” game that discourages sharing ideas and resources among divisions
Differences in image and quality may occur across divisions
Can focus on short-term performance
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Divisional Structure

Strategic business unit (SBU) structure
Divisions with similar products, markets, and/or technologies are grouped into homogenous SBUs
Task of planning and control at corporate office is more manageable
May become difficult to achieve synergies across SBUs
Appropriate when the businesses in a corporation’s portfolio do not have much in common
Lower expenses and overhead, fewer levels in the hierarchy
Inherent lack of control and dependence of CEO-level executives on divisional executives
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Matrix Structure

Adapted from Exhibit 10.4 Matrix Organizational Structure

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Matrix Structure

A combination of the functional and divisional structures
Individuals who work in a matrix organization become responsible to two managers
The project manager
The functional area manager
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Matrix Structure