Divisional & Matrix Structure
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Transcript of Divisional & Matrix Structure
Divisional & Matrix StructureDefinition, Advantages & Disadvantages
TRADITIONAL FORMS OF ORGANIZATIONAL STRUCTURE
Org Structur
e
Simple
DIVISIONAL
Functional
Matrix
DIVISIONAL STRUCTUREA.k.a. “multidivisional” / “M-form”
◦An organizational form in which products, projects, or product markets are grouped internally.
*Divisional executives determine:1. Product market and financial
objectives2. Division’s contribution to overall
corporate performance
DIVISIONAL STRUCTUREAdvantages:1. Increases strategic and operational
control, permitting corporate-level executives to address strategic issues
2. Quick response to environmental changes
3. Increases focus on products and markets
4. Minimizes problems associated with sharing resources and functional areas
5. Facilitates development of general managers
DIVISIONAL STRUCTUREDisadvantages:1. Increased costs2. Dysfunctional competition
among divisions may detract from overall corporate performance
3. Difficult to maintain uniform corporate image
4. Overemphasis on short-term performance
DIVISIONAL STRUCTURE
Let’s take a look at an example…
INTEL’s DIVISIONS (2008)Digital Enterprise – largestFlash MemoryDigital HomeMobilityDigital healthChannel Platforms
DIVISIONAL STRUCTURE
Variations:
Strategic Business
Units
Holding Company Structure
STRATEGIC BUSINESS UNIT (SBU)
◦An organizational form in which products, projects, or product market divisions are grouped into homogeneous units.
STRATEGIC BUSINESS UNIT (SBU)More related businesses, fewer
SBUsEach SBU operates as a profit
center
STRATEGIC BUSINESS UNIT (SBU)
ADVANTAGES DISADVANTAGES
More manageable planning and control
Individual businesses can react more quickly to changes in the environment
Difficulty of achieving synergies across SBUs
Increased expenses
Corporate office is further from divisions
DIVISIONAL STRUCTURE
Variations:
Strategic Business
Units
Holding Company Structure
HOLDING COMPANY STRUCTURE
◦An organizational form in which the divisions have a high degree of autonomy both from other divisions and from corporate headquarters.
HOLDING COMPANY STRUCTURE
ADVANTAGES DISADVANTAGES
Cost savingsAutonomy
increases motivational level of divisional executives; enables them to respond quickly to market opportunities and threats
Inherent lack of control and dependence
Very little “bench strength”
If problems arise, may be difficult to turn around individual businesses
TRADITIONAL FORMS OF ORGANIZATIONAL STRUCTURE
Org Structur
e
Simple
MATRIX
Divisional
Functional
MATRIX STRUCTURE◦an organizational form in which there are multiple lines of authority and some individuals report to at least two managers.
Combination of functional & divisional structures
MATRIX STRUCTUREAdvantages:1. Increases market responsiveness
through collaborations & synergies among professional colleagues
2. Allows more efficient utilization of resources
3. Improves flexibility, coordination & communication
4. Increases professional development through a broader range of responsibility
MATRIX STRUCTUREDisadvantages:1. dual-reporting relationships can
result in uncertainty regarding accountability
2. Intense power struggles may lead to increased levels of conflict
3. Excessive reliance on group processes and teamwork may impede timely decision making
MATRIX STRUCTURE
Let’s take a look at an example…
MATRIX STRUCTURE
Nike Matrix Organization (before 2009 Financial Crisis)
CorporateFunctions:HR/Finance/IT/Etc.
Equipment
Apparel
Footwear
USA Europe Asia/Pacific
The America
s
Regions
Pro
duct
Type
Nike Matrix Organization(Post 2009 Financial Crisis)
CorporateFunctions:HR/Finance/IT/Etc.
Basketball
Soccer
Running
NorthAmerica
WesternEurope
Eastern Europe
ChinaGeographic Locations
Categories
Japan Emerging Markets
Training
Wm’s Fitness
Sports Culture
Other