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Luxottica that is consistent with its strategic vision and will allow it to take advantage of
opportunities in a competitive global market of growing complexity and changing compet-
itive dynamics.” A current market opportunity for Luxottica is its collaboration with Google
to work on the next version of Google Glass, the firm’s futuristic eyewear product. Google’s
partnership with Luxottica is a result of Google’s dissatisfaction with the results of its initial
version of the product.
With respect to competitive dynamics, perhaps the co-CEO structure will help Luxottica
compete against Warby Parker, the online eyeglass retailer that continues growing and that
recently raised a round of capital that valued the firm at roughly $1.2 billion. The low price
of Warby Parker’s products is thought to be a competitive challenge for Luxottica given the
higher costs of its differentiated eyewear.
Although unusual, the co-CEO structure may work for Luxottica. In the final analysis though,
Luxottica’s board must carefully monitor the firm’s performance under a dual CEO structure
and be prepared to make a change to that structure if evidence suggests that such an action
would be in the firm’s best interest.
Sources: 2015, Company profiles, Luxottica Home Page, http://www.luxottica.com, May 12; 2015, Our business model,
Luxottica Home Page, http://www.luxottica.com, May 12; D. Macmillan, 2015, Eyeglass retailer Warby Parker is valued at
$1.2 billion, Wall Street Journal Online, http://www.wsj.com, April 30; M. Mesco, 2015, Luxottica’s profit surges as sales rise in
North America, Wall Street Journal Online, http://www.wsj.com, May 4; M. Mesco, 2015, Italian eyewear maker Luxottica working
on new version of Google Glass, CEO says, Wall Street Journal Digits, http://www.blogs.wsj.com, April 24; M. Mesco, 2015,
Luxottica reports profit but looks for areas of growth, Wall Street Journal Online, http://www.wsj.com, March 2; 2014, Luxottica
announces the implementation of a new governance structure based on a co-CEO model, Luxottica Home Page,
http://www.luxottica, September 1.A
s we explained in Chapter 4, all firms use one or more business-level strategies.
Luxottica uses the differentiation strategy for its eyewear that is differentiated on
the competitive dimensions of design, manufacturing, and brand name. In Chapters 6
through 9, we discussed other strategies that firms may choose to use (corporate-level,
merger and acquisition, international, and cooperative), depending on the decisions
made by those leading individual organizations. After being selected, strategies must be
implemented effectively for organizations to achieve intended outcomes.
Organizational structure and controls, this chapter’s topic, provide the framework
within which strategies are implemented and used in both for-profit organizations and
not-for-profit agencies.^1 However, as we explain, separate structures and controls are
required to successfully implement different strategies. In all organizations, top-level
managers have the final responsibility for ensuring that the firm has matched each of
its strategies with the appropriate organizational structure and that both change when
necessary. The match or degree of fit between strategy and structure influences the
firm’s attempts to earn above-average returns.^2 Thus, the ability to select an appropriate
strategy and match it with the appropriate structure is an important characteristic of
effective strategic leadership.^3 In this sense, it will be interesting to see if the co-CEO
structure Luxottica recently put into place will prove to be an effective match with the
firm’s strategies.
This chapter opens with an introduction to organizational structure and controls. We
then provide more details about the need for the firm’s strategy and structure to be prop-
erly matched. The influence of strategy and structure on each other affects firms’ efforts
to match individual strategies with their appropriate structure.^4 As we discuss, strategy
has a more important influence on structure, although once in place, structure influences
strategy.^5 Next, we describe the relationship between growth and structural change suc-
cessful firms experience. We then discuss the different organizational structures firms