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Strategic Management - Concept Of Corporate Strategy

Evolution of Structures - Strategic Business Unit and Functional Level Strategies

   Posted On :  25.06.2018 11:29 pm

A firm’s organizational structure is a formal configuration that largely determines what the firm will do and how it will complete its work.

Evolution of Structures
 
A firm’s organizational structure is a formal configuration that largely determines what the firm will do and how it will complete its work. Different structures are required to implement different strategies. A firm’s performance increases when strategy and structure are properly matched. Business-level strategies are usually implemented through the functional structure. The cost leadership strategy requires a centralized functional structure-one in which manufacturing efficiency and process engineering are emphasized. The evolution from the functional structure to the three types of multidivisional structure (M-form) occurred from the 1920s to the early 1970s. The cooperative M-form, used to implant the related-constrained corporate-level strategy, has a centralized corporate office and extensive integrating mechanisms. Divisional incentives are linked to overall corporate performance. The related-linked SBU M-form structure establishes separate profit centers within the diversified firm. 
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