Hitt13e PPT Ch11
Hitt13e PPT Ch11
Hitt13e PPT Ch11
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CHAPTER
11
Organizational Structure and Controls
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
LEARNING OBJECTIVES
Studying this chapter should provide you with the strategic management
knowledge needed to:
11-1 Define organizational structure and controls and discuss the difference
between strategic and financial controls.
11-2 Describe the relationship between strategy and structure.
11-3 Discuss the different functional structures used to implement business-
level strategies.
11-4 Explain the use of three versions of the multidivisional (M-form) structure
to implement different diversification strategies.
11-5 Discuss the organizational structures used to implement three
international strategies.
11-6 Define strategic networks and discuss how strategic center firms
implement such networks at the business, corporate, and international
levels.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1 Organizational Structure
and Controls
• Research evidence suggests that performance
declines when the firm’s strategy is not matched
with the most appropriate structure and controls.
• Organizational structure essentially specifies the
functions that must be completed so the firm can
implement its strategy.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1a Organizational Structure
(slide 1 of 3)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1a Organizational Structure
(slide 3 of 3)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1b Organizational Controls
(slide 1 of 4)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1b Organizational Controls
(slide 2 of 4)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1b Organizational Controls
(slide 3 of 4)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-1b Organizational Controls
(slide 4 of 4)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-2 Relationships between
Strategy and Structure (slide 2 of 2)
• Regardless of the strength of the reciprocal
relationships between strategy and structure,
those choosing the firm’s strategy and structure
should be committed to matching each strategy
with a structure that provides:
• The stability needed to use current competitive
advantages
• The flexibility required to develop future advantages
• Properly matching strategy and structure can
create a competitive advantage.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3 Evolutionary Patterns of Strategy
and Organizational Structure (slide 1 of 2)
• Sales growth creates coordination and control
problems the existing organizational structure
cannot efficiently handle.
• Organizational growth creates the opportunity
for the firm to change its strategy to become
even more successful.
• However, the existing structure’s formal reporting
relationships, procedures, controls, and authority and
decision-making processes lack the sophistication
required to support using the new strategy, meaning
that a new organizational structure is needed.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3 Evolutionary Patterns of Strategy
and Organizational Structure (slide 2 of 2)
• Firms choose from among three major types of
organizational structures to implement strategies:
1. Simple
2. Functional
3. Multidivisional
• Across time, successful firms move from the simple, to
the functional, to the multidivisional structure to support
changes in their growth strategies.
• No single organizational structure is inherently superior
to the other.
• The firm must select a structure that is a proper match for its
chosen strategy.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.1
Strategy and Structure Growth Pattern
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3a Simple Structure
• The simple structure is a structure in which the owner-manager
makes all major decisions and monitors all activities, while the staff
serves as an extension of the manager’s supervisory authority.
• Characteristics of the simple structure include the following:
• Informal relationships
• Few rules
• Limited task specialization
• Unsophisticated information systems
• Focus strategies, often used in small firms, require a simple
structure until such time that the firm diversifies in terms of products
and/or markets.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3b Functional Structure
• The functional structure consists of a chief executive
officer and a limited corporate staff, with functional line
managers in dominant organizational areas such as
production, accounting, marketing, R & D, engineering,
and human resources.
• The functional structure:
• Allows for functional specialization, thereby facilitating active
sharing of knowledge within each functional area
• Can negatively affect communication and coordination among
those representing different organizational functions
• Supports implementing business-level strategies and some
corporate-level strategies (e.g., single or dominant business)
with low levels of diversification
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3c Multidivisional Structure
(slide 1 of 2)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3d Matches between Business-Level Strategies
and the Functional Structure (slide 1 of 5)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3d Matches between Business-Level Strategies
and the Functional Structure (slide 2 of 5)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3d Matches between Business-Level Strategies
and the Functional Structure (slide 3 of 5)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.3
Functional Structure for Implementing a Differentiation Strategy
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3d Matches between Business-Level Strategies
and the Functional Structure (slide 4 of 5)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 1 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.4
Three Variations of the Multidivisional Structure
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 2 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 3 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.5
Cooperative Form of the Multidivisional Structure
for Implementing a Related Constrained Strategy
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 4 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 5 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 6 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 7 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3e Matches between Corporate-Level Strategies
and the Multidivisional Structure (slide 8 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Table 11.1
Characteristics of the Structures Necessary to Implement the Related
Constrained, Related Linked, and Unrelated Diversification Strategies
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 1 of 8)
• International strategies are increasingly important for companies’
long-term competitive success in what is today virtually a borderless
global economy.
• Among other benefits, firms are able to search for new markets and
then form the competencies necessary to serve them when
implementing an international strategy.
• Unique organizational structures are necessary to successfully
implement individual international strategies, given the different
cultural, institutional, and legal environments around the world.
• Forming proper matches between international strategies and
organizational structures facilitates the firm’s efforts to effectively
coordinate and control its global operations.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 2 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 3 of 8)
• Using the multi domestic strategy requires little coordination
between different country markets, meaning that formal integrating
mechanisms among divisions around the world are not needed.
• Thus, the coordination among units in a firm’s worldwide geographic
area structure that does take place is informal in nature.
• The key challenge associated with effectively using the
multi domestic strategy / worldwide geographic area structure is the
inability to create global efficiencies.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.8
Worldwide Geographic Area Structure
for Implementing a Multi domestic Strategy
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 4 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.9
Worldwide Product Divisional Structure
for Implementing a Global Strategy
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 6 of 8)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 7 of 8)
• The global matrix design:
• Brings together both local market and product expertise into teams that
develop and respond to the global marketplace
• Promotes flexibility in designing products in response to customer needs
• Places authority in the hands of managers who are most able to use it
• The global matrix design has limitations.
• It places employees in a position of being accountable to more than one
manager, thus creating loyalty issues.
• It creates complex and vague corporate reporting relationships that
make it difficult and time-consuming to receive approval for major
decisions.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3f Matches between International Strategies
and Worldwide Structure (slide 8 of 8)
• In the hybrid global design, some divisions are oriented toward
products, while others are oriented toward areas.
• In cases when the geographic area is important, division managers are
area-oriented.
• In divisions where worldwide product coordination and efficiencies are
more important, division managers are more product-oriented.
• The appropriate integrating mechanisms are less obvious for the
combination structure.
• The combination structure is difficult to organize and successfully
manage because it must be simultaneously:
• Centralized and decentralized
• Integrated and non integrated
• Formalized and non formalized
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.10
Hybrid Form of the Combination Structure
for Implementing a Transnational Strategy
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3g Matches between Cooperative Strategies
and Network Structures (slide 1 of 3)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3g Matches between Cooperative Strategies
and Network Structures (slide 2 of 3)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.11
A Strategic Network
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-3g Matches between Cooperative Strategies
and Network Structures (slide 3 of 3)
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-4 Implementing Business-Level
Cooperative Strategies (slide 2 of 2)
• The strategic center firm is obvious in vertical
complementary strategic alliances, but is not
always obvious in horizontal complementary
alliances.
• Horizontal complementary alliances are used
less often and less successfully than vertical
complementary alliances.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-5 Implementing Corporate-Level
Cooperative Strategies
• Corporate-level strategies are used to:
• Reduce costs
• Facilitate product and market diversification
• Franchising is often used as a way to extend a firm’s product
and market reach without completing a merger or acquisition.
• The potential to create synergy is a key reason
corporate-level cooperative strategies are
formed.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
11-6 Implementing International
Cooperative Strategies
• Strategic networks formed to implement international
cooperative strategies result in firms competing in
several countries.
• Differences among countries’ regulatory environments increase
the challenge of:
• Managing international networks
• Verifying that, at a minimum, a network’s operations comply with all
legal requirements
• Distributed strategic networks are the organizational structure
used to manage international cooperative strategies.
• Several regional strategic center firms are included in the distributed
network to manage partner firms’ multiple cooperative arrangements.
• Distributed strategic networks are complex and demand careful
attention to be used successfully.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Figure 11.12
A Distributed Strategic Network
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
APPENDIX
NOTE TO INSTRUCTOR: Choose from the following questions (also found in the text at the end of the chapter)
to conduct in-class discussions around key chapter concepts.
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Discussion:
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Discussion:
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Discussion:
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Discussion:
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Discussion:
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.
Discussion:
Hitt, Ireland, Hoskisson, Strategic Management: Competitiveness & Globalization: Concepts & Cases, 13e. © 2020 Cengage.
All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or part.