KNOWLEDGE OBJECTIVES
     NOWLEDGE BJECTIVES
   K               O
     Studying this chapter should provide you with the strategic 
     management knowledge needed to:
     1. Define organizational structure and controls and discuss 
     1. Define organizational structure and controls and discuss 
         the difference between strategic and financial controls.
         the difference between strategic and financial controls.
     2. Describe the relationship between strategy and 
     2. Describe the relationship between strategy and 
         structure.
         structure.
     3. Discuss the functional structures used to implement 
     3. Discuss the functional structures used to implement 
         business-level strategies.
         business-level strategies.
     4. Explain the use of three versions of the multidivisional 
     4. Explain the use of three versions of the multidivisional 
         (M-form) structure to implement different diversification 
         (M-form) structure to implement different diversification 
         strategies.
         strategies.
     © 2007 Thomson/South-Western. All rights reserved.                   11–2
   KNOWLEDGE OBJECTIVES (cont’d)
                                  (cont’d)
     NOWLEDGE BJECTIVES 
   K               O
     Studying this chapter should provide you with the strategic 
     management knowledge needed to:
     5. Discuss the organizational structures used to implement 
     5. Discuss the organizational structures used to implement 
         three international strategies.
         three international strategies.
     6. Define strategic networks and discuss how strategic 
     6. Define strategic networks and discuss how strategic 
         center firms implement such networks at the business, 
         center firms implement such networks at the business, 
         corporate and international levels.
         corporate and international levels.
     © 2007 Thomson/South-Western. All rights reserved.                    11–3
    Organizational Structure and Controls
     Organizational Structure and Controls
     • Organizational structure specifies:
        Organizational structure specifies:
         The firm’s formal reporting relationships, procedures, 
            The firm’s formal reporting relationships, procedures, 
            controls, and authority and decision-making 
            controls, and authority and decision-making 
            processes
            processes
         The work to be done and how to do it, given the firm’s 
            The work to be done and how to do it, given the firm’s 
            strategy or strategies
            strategy or strategies
     • It is critical to match organizational structure to 
        It is critical to match organizational structure to 
        the firm’s strategy.
        the firm’s strategy.
     © 2007 Thomson/South-Western. All rights reserved.                   11–4
     Organizational Structure
     Organizational Structure
     • Effective structures provide:
        Effective structures provide:
         Stability
            Stability
         Flexibility
            Flexibility
     • Structural stability provides: 
        Structural stability provides: 
         The capacity required to consistently and predictably 
            The capacity required to consistently and predictably 
            manage daily work routines
            manage daily work routines
     • Structural flexibility provides for:
        Structural flexibility provides for:
         The opportunity to explore competitive possibilities
            The opportunity to explore competitive possibilities
         The allocation of resources to activities that shape 
            The allocation of resources to activities that shape 
            needed competitive advantages
            needed competitive advantages
     © 2007 Thomson/South-Western. All rights reserved.                     11–5
    Organizational Controls
     Organizational Controls
     • Purposes of Organizational Controls:
        Purposes of Organizational Controls:
         Guide the use of strategy.
            Guide the use of strategy.
         Indicate how to compare actual results with expected 
            Indicate how to compare actual results with expected 
            results.
            results.
         Suggest corrective actions to take when the 
            Suggest corrective actions to take when the 
            difference between actual and expected results is 
            difference between actual and expected results is 
            unacceptable.
            unacceptable.
     • Two Types of Organizational Controls
        Two Types of Organizational Controls
         Strategic controls
            Strategic controls
         Financial controls
            Financial controls
     © 2007 Thomson/South-Western. All rights reserved.                   11–6