Organizational Structure

U-form unitary form - split functional responsibilities Mfg. Marketing , Personnel, Finance etc When firms got too larger especially when the diversified firm made it ineffective. In response Duport, GM etc developed the Multi-divisional M-form that allowed semi-autonomous divisions each with its own set of functions based on Brand, Product or Regional Lines. Successful because Execs could focus on Corporate Strategy

Advantages of M-form

• 1. Addition / deletion is easier
• 2. Accountability,
• 3. Comparison

Chandler says these can lead to Scales / Scope advantages but also higher admin costs.

Organizational structures

• Functional - Centralized around key functions
• Functional Holding - core centralized around key function - rest is decentralized
• Holding - Highly decentralized
• Multi-divisional, centralized strategically, decentralized ops

Criticisms

• 1. No academic link between relatedness and performance more to do overcoming issues with Industry structure and firm specific characteristics
• 2. Prahalad and Hamel decry the tyranny of the SBU as it does not facilitate complex interactions. See The Core Competency of the Organization