44.All of the following are disadvantages of a divisional type of organizational structureexceptA)it can be very expensive compared to a functional organizational structure.B)there is a strong tendency for divisions to focus on short-term performance.C)there can be dysfunctional competition among divisions.D)there is separation of strategic and operating control.Answer: D
45.An organization such as ConAgra that has dozens of different divisions with similarproducts will probably have the greatest success with which form of organizationstructure?
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Dess/Lumpkin, Strategic Management: Text & Cases, 2/e384
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Chapter 7 International Strategy:Creating Value in Global Markets46.All of the following are advantages of a strategic business unit (SBU) type oforganizational structureexcept
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47.Important advantages of a holding company structure include
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48.Strategic business unit (SBU) and holding company structures result from extensiveA)diversification.B)vertical integration.C)international expansion.D)organizational flattening.Answer: A
49.Complete the following sentence: “Strategic business unit (SBU) structures are bestsuited for corporations pursuing _________________________, whereas holdingcompany structures are best suited for companies with ________________________strategies.”
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Dess/Lumpkin, Strategic Management: Text & Cases, 2/e385
Chapter 7 International Strategy:Creating Value in Global Markets
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Skip to contentThe types of organizational structures in business are just as important as its products, marketing plan and long-term strategy. Businesses need a sturdy structure to attract and retain talented employees, as
well as create a workable organizational hierarchy. Typically, businesses choose from four types of organizational structure. Each comes with its own set of advantages and disadvantages. Choosing the right one for your business is imperative because poor organizational structure leads to confusion among employees, poor decision-making among managers and, ultimately, less than ideal results for a business. Students in Point Park University’s online
Bachelor of Arts in Organizational Leadership classes learn about management strategies and approaches to organizational design as part of a curriculum that prepares them for success as business leaders. While there are variations, most companies are created based on one of the following four organizational structures. The goal for
business leaders is picking the structure that works best for their particular situation. A functional structure is the most traditional approach. It calls for grouping together people who do similar tasks based on their area of specialty. In other words, you’ll find all the accountants in finance and all the marketers in marketing. Managers led each area and report up to a director or executive who may oversee multiple departments. The advantage here is clear: it
provides those with similar abilities the ability to easily communicate and work on projects together. That’s also the reason this is the most popular business structure. The disadvantage is that teams may get “siloed,” unaware of what is happening in other areas of a company. In a divisional structure, people are grouped together based on the product or service they provide, not the work they do. For example, a large corporation such as General Electric has divisions
for electronics, transportation, and aviation, each with its own team of accountants, marketers, etc. Global corporations may have divisions based on different geographic areas. On a smaller scale, a restaurant that also provides catering services may have separate divisions to oversee weddings, corporate
events and business within the main restaurant. A matrix structure is a hybrid of the functional and divisional structures. It may involve employees reporting to different bosses depending on their current assignment. For example, a software design specialist may report to her boss in IT, but she’s also brought onto specific projects because of her expertise. When that happens, she will report to a different boss as long as that project continues. The disadvantage is
that employees may find it confusing to report to multiple bosses. But clear communication on priorities at all levels can eliminate these issues. The matrix structure requires a great deal of planning but can allow for the creation of the best possible teams to tackle the biggest challenges. The flat structure dispenses with the usual hierarchy of a functional structure, decentralizing management and doing away with the need for middle manager bosses. Employees essentially
act as their own boss, giving them the ability to communicate directly with peers on ideas and projects. The advantage is a lot more freedom for employees, which requires a group of self-starters who don’t need managers checking up daily on their work. A flat structure is common in incubators and startups where the focus is on product and services design, not production or top-down management structures. All four types of organizational structures in business can work well in the
right situations. While most companies will choose from the functional or divisional approaches, a flat approach is becoming increasingly popular with modern companies.The Four Major Types of Organizational Structures in Business
Picking The Right Organizational Structure
Functional
Divisional
Matrix
Flat
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