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McGraw-Hill/Irwin
Strategic Management: Text and Cases, 4e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Traditional Forms of
Organizational Structure
• Organizational structure refers to formalized patterns of linking interactions
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Structure provides a means of balancing two conflicting forces
Need for the division of tasks into meaningful groupings
Need to integrate the groupings for efficiency and effectiveness
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• Simple structure is the oldest and most common organizational form
Direct supervision of all tasks
Decision making is highly centralized
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Functional Structure
•
Functional Structure is found where there is a single or closely related product or service, high production volume, and some vertical integration
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Advantages? Disadvantages?
Adapted from Exhibit 10.2 Functional Organizational Structure

Dominant Growth Patterns of Large Corporations
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Adapted from Exhibit 10.1 Dominant Growth Patterns of Large Corporations
Source: Adapted from J. R. Galbraith and R. K. Kazanjian, Strategy Implementation: The Role of Structure and Process , 2nd ed. (St. Paul, MN: West Publishing Company, 1986), p. 139.

Divisional Structure
•
Organized around products, projects, or markets
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Divisions are relatively autonomous and consist of products and services that are different from those of other divisions
Adapted from Exhibit 10.3 Divisional Organizational Structure
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Divisional Structure
• What are some advantages of the divisional structure?
•
What are some disadvantages of the divisional structure?
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Divisional Structure
Strategic business unit (SBU) structure
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Divisions with similar products, markets, and/or technologies are grouped into homogenous SBUs
• Appropriate when the businesses in a corporation’s portfolio do not have much in common
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Matrix Structure
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Adapted from Exhibit 10.4 Matrix Organizational Structure

Matrix Structure
• A combination of the functional and divisional structures
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Individuals who work in a matrix organization become responsible to two managers
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Some advantages and disadvantages of matrix structure?
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Boundaryless Organizational Designs
• Boundaries that place limits on organizations
Barrier-free type of organization
•
Permeable internal boundaries
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Boundaryless Organizational Designs
• Boundaries that place limits on organizations
Barrier-free type of organization
Permeable internal boundaries
•Outsources non-vital functions
Modular type of organization

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Boundaryless Organizational Designs
• Boundaries that place limits on organizations
Barrier-free type of organization
Permeable internal boundaries
Outsources non-vital functions
Modular type of organization
Virtual type of organization
•Continually evolving network of independent companies linked together

Boundaryless Organizations:
Making Them Work
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• What are some factors facilitating effective coordination and integration of boundaryless structures?

Other
• Two contradictory challenges faced by firms
Adaptability
Alignment
•
International Organizations
Strategy
Product Diversity
% Foreign Sales
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