Michael_A._Hitt,_R._Duane_Ireland,_Robert_E._Hosk

352 Part 3: Strategic Actions: Strategy Implementation

Figure 11.1 Strategy and Structure Growth Pattern

Efficient implementation

of formulated strategy

Sales Growth—

Coordination

and Control

Problems

Multidivisional

Structure

Functional

Structure

Simple

Structure

Efficient implementation

of formulated strategy

Sales Growth—

Coordination

and Control

Problems

As shown in Figure 11.1, sales growth creates coordination and control problems the

existing organizational structure cannot efficiently handle. Organizational growth creates

the opportunity for the firm to change its strategy to try to become even more successful.

However, the existing structure’s formal reporting relationships, procedures, controls,

and authority and decision-making processes lack the sophistication required to support

using the new strategy,^40 meaning that a new organizational structure is needed.^41

Firms choose from among three major types of organizational structures—simple,

functional, and multidivisional—to implement strategies. Across time, successful firms

move from the simple, to the functional, to the multidivisional structure to support

changes in their growth strategies.

11-3a Simple Structure

The simple structure is a structure in which the owner-manager makes all major deci-

sions and monitors all activities, while the staff serves as an extension of the manager’s

The simple structure is
a structure in which the
owner-manager makes all
major decisions and monitors
all activities, while the staff
serves as an extension of
the manager’s supervisory
authority.