Organizational Structure &

Control

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 Group members
Swati Amrute 9165
Parag Gavhale 9179
Shwetambari Gondkar 9180
Priyanka Mhatre 9196
Kirti Multani 9198

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1. Organizational Structure and controls.
2. Strategy influence Structure.
3. Firms structure implementing different types of
strategies.

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 Organization Structure..

The firm’s formal reporting relationships,

procedures, controls, and authority and
decision-making processes.

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 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.

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 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.

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 Organizational
Controls

Strategic controls Financial controls

(Subjective criteria) (Objective criteria)

Any measure of how well a

Strategic control can be defined company or department
as process of monitoring as to controls its costs, sometimes
whether to various strategies expressed as how far under or
adopted by the organization are over budget it is.
helping its internal
environment to be matched
with the external environment.

Accounting Based Market Based

Measures( ROI & ROA) Measures (EVA)

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 Relationship Between Strategy and
Structure
Strategy and structure have a reciprocal relationship:
STRATEGY STRUCTURE OPTION

Innovation A loose structure, low formalization

& decentralized

Cost Minimization Tight control, extensive work

specialization, high centralization

Therefore, when changing strategies, the firm should

simultaneously consider the structure that will be needed
to support use of the new strategy; properly matching
strategy & structure can create a competitive advantage.

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 Structure Types
All organizations require some form of organizational
structure to implement and manage their strategies.

Firms frequently alter their structure as they grow in size

and complexity.

Three basic structure types:

Simple Structure
Functional Structure
Multi-divisional Structure (M-form)
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 Multidivisional
Multidivisional
Strategy & Structure
Structure
Structure
Sales
Sales Growth
Growth Coordination
Coordination
Growth Patterns and
and Control
Control Problems
Problems

Efficient
Efficient implementation
implementation
of
of formulated
formulated strategy
strategy

Functional
Functional
Structure
Structure

Sales
Sales Growth
Growth Coordination
Coordination
and
and Control
Control Problems
Problems

Efficient
Efficient implementation
implementation
of
of formulated
formulated strategy
strategy

Simple
Simple
Structure
Structure 10
 Simple Structure
The owner manager makes all major decision & monitors all
activities while the staff serves as an extension of the manager’s
supervisory authority.

Own er M an ager

Employees Employees Employees Employees

Example: Kirana Stores 11

 Functional Structure
Each department is a function common to entire organization with
its own chain of command. All join only at the top.

LIC at Branch Level

General Manager

Business Claims
Development
Accounts Marketing HR Division
Settlement

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 Matches between..
Business Level Strategies Structural Characteristics

Cost leadership strategy  Specialization (number

and types of jobs)
Differentiation strategy
 Centralization (decision-
making authority)
Integrated cost
leadership/differentiation strategy
 Formalization (formal
rules and work procedures)

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Using the Functional Structure to
Implement a Cost Leadership Strategy
Simple reporting relationship
Few layers in decision making and authorized structure
Strong focus on process improvement through
manufacturing function.
Low cost culture.

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 Functional Structure for
Cost Leadership Strategy
Office of the President Relatively large
centralized staff
coordinates
functions
Centralized
Staff

Engineering Marketing Operations Personnel Accounting

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 Functional Structure for
Differentiation Strategy
Relatively complex and flexible reporting relationship.
Frequent use of cross-functional product development
teams.
Strong focus on marketing and R & D.
Development oriented culture.

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 Functional Structure for
Differentiation Strategy
President and
Limited Staff

R&D Marketing

New Product Human

Marketing Operations Finance
R&D Resources

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 Integrated Cost Leadership/
Differentiation strategy
Integrated form of the functional structure must
have:
Decision making pattern partially centralized

& partially decentralized.

Jobs are semi-specialized.

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 Multidivisional Structure
It consists of Operating divisions function as separate businesses
or profit centers in which top corporate officer delegates
responsibilities to division managers for day-to-day operations
and business unit strategy to Division Manager.

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 MULTIDIVISIONAL STRUCTURE
Headquarters

One solution
Business Group A Business Group B Business Group C
to problems
of managing
Finance Finance Finance activities in
multiple
markets or
Marketing Marketing Marketing
managing
multiple
Operations Operations Operations products

Example
GM is organized according to product division
(GM Trucks, Chevrolet, Buick, Cadillac,
Pontiac, Saturn, etc. Each maintains its own
finance, marketing, and other support
functions).
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 Corporate Level Strategy &
Multi-divisional Structure.
Diversification strategy requires firm to change from
functional structure to a multidivisional structure.

Different levels of diversification create the need for

implementation of a unique form of the
multidivisional structure.

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 Three Variations of the
Multi-Divisional Structure
Multi-Divisional
Multi-Divisional
Structure
Structure
(M-form)
(M-form)

Cooperative
Cooperative
Form
Form

Related-
Constrained
Strategy

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Cooperative form of the multidivisional structure
for implementing a related constrained strategy

Example: HUL
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 Three Variations of the
Multi-Divisional Structure
Multi-Divisional
Multi-Divisional
Structure
Structure
(M-form)
(M-form)

Cooperative
Cooperative Strategic
Strategic Business
Business Unit
Unit
Form
Form (SBU)
(SBU) Structure
Structure

Related- Related-Linked
Constrained Strategy
Strategy

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 SBU form of the Multidivisional for
implementing a Related Linked Strategy

Example : Godrej 25
 Three Variations of the
Multi-Divisional Structure
Multi-Divisional
Multi-Divisional
Structure
Structure
(M-form)
(M-form)

Cooperative
Cooperative Strategic
Strategic Business
Business Unit
Unit Competitive
Competitive
Form
Form (SBU)
(SBU) Structure
Structure Form
Form

Related- Related-Linked Unrelated

Constrained Strategy Diversification
Strategy Strategy

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 Competitive form of the Multidivisional Structure
for implementing an Unrelated Strategy

Example:- The Tata’s in Beverages (Tata Tea), Service Provider

(Tata Docomo), Power distribution (Tata Power in Mumbai), and even
Electronics retail (Croma).
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 International Strategies and
Worldwide Structures
International strategies allow the firm to search for new:
Markets
Resources
Core competencies
Technologies
Structure facilitates the firm’s efforts to effectively
coordinate and control its global operations.

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 Three Variations of the
Worldwide Structure
Worldwide
Worldwide
Structure
Structure

Geographic
Geographic Area
Area
Structure
Structure

Multi-domestic
Strategy

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Worldwide Geographic Area Structure: Implementing a
Multi-domestic Strategy
Example: McDonald
Asia

United
Europe
States
Multinational
Headquarters

Canada Japan

 Worldwide Geographic Area Structure

 Emphasizes national interests
 Facilitates the firm’s efforts to satisfy local or cultural differences 30
 Three Variations of the
Worldwide Structure
Worldwide
Worldwide
Structure
Structure

Geographic
Geographic Area
Area Product
Product Divisional
Divisional
Structure
Structure Structure
Structure

Multi-domestic Global
Strategy Strategy

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 Worldwide Product Divisional Structure
Example: Adidas
Worldwide
Product
Division

Worldwide Worldwide
Product Product
Division Division

Global
Corporate
Headquarters.

Worldwide Worldwide
Product Product
Division Division

Centralizes decision-making authority in the worldwide division headquarters.

Headquarters coordinates and integrates decisions and actions among divisional business units.

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Three Variations of the Worldwide Structure

Worldwide
Worldwide
Structure
Structure

Geographic
Geographic Area
Area Product
Product Divisional
Divisional Combination
Combination
Structure
Structure Structure
Structure Structure
Structure

Multi-domestic Global Trasnational

Strategy Strategy Strategy

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Matches Between Cooperative Strategies
and Network Structures
•A Strategic Network is a grouping of organizations that has
been formed to create value via participation in a set of
cooperative arrangements (such as a strategic alliance).
•A Strategic Centre firm often manages the network.

•The Strategic Centre firm identifies actions that increase the

opportunity for each firm to achieve success through its
participation in the network.
•The Strategic Centre firm creates incentives that reduce the
probability of any single firm taking advantage of its network
partners.

Example: IBM – Airtel- GTL Corp

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Network Structure

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Implementation of the Co-operative Strategies in
Strategic Network

Strategic
Strategic
Networks
Networks

Business
Business Level
Level International
International
Corporate
Corporate Level
Level Co-operative
Co-operative
Co-operative
Co-operative Level
Level Co-operative
Co-operative
Strategy
Strategy
Strategy
Strategy Strategy
Strategy

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A Distributed Strategic Network

Main
Main
Strategic
Strategic
Centre
Centre
Firm
Firm

Distributed Strategic Centre Firms

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ORGANIZATION
STRUCTURE IS PREETY
SIMPLE, WE DO THE
WORK THEY TAKE THE
CREDIT..

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