Chapter 11: Organizational Structure and Controls 363
management policies and direction that place an emphasis
on sustainable profit generation and the continuity of each
business unit.” The third goal revolves around the intention
of continuing to eliminate unnecessary managerial layers as
a means of enhancing innovation on the part of everyone
involved with each business in each unit.
Sony’s CEO is confident that the firm’s commitment to
implementing the SBU form of the multidivisional structure
as a foundation for using the related linked strategy will
yield positive outcomes. Time will tell if this is the case or
not. But, the new organizational structure that has beencreated at Sony Corporation does appear to be one with the
potential to support efforts to successfully use the related
linked strategy.Sources: 2015, Corporate Information, Sony Home Page, http://www.sony.com, May 17;
2015, Here’s Sony’s new business strategy, Business Insider, http://www.businessinsider.com,
February 21; T. Mochizuki & E. Pfanner, 2015, Sony expects profits to surge this fiscal
year, Wall Street Journal Online, http://www.wsj.com, April 30; T. Mochizuki & E. Pfanner,
How Sony makes money off Apple’s iPhone, Wall Street Journal Online, http://www.wsj.com,
April 28; E. Pfanner & T. Mochizuki, 2015, Sony’s mobile unit seeks profit, innovation,
Wall Street Journal Online, http://www.wsj.com, March 2; M. Schilling, 2015, Sony strategy
centers on splitting businesses, not selling—for now, Variety, http://www.variety.com,
February 26.competing against internal peers can be as great as the challenge of competing against
external rivals.^80 In this structure, organizational controls (primarily financial controls) are
used to emphasize and support internal competition among separate divisions and as the
basis for allocating corporate capital based on divisions’ performances.
Textron Inc., a large “multi-industry” company, seeks to identify, research, select, acquire,
and integrate companies and has developed a set of rigorous criteria to guide decision mak-
ing. Textron continuously looks to enhance and reshape its portfolio by divesting noncore
Figure 11.7 Competitive Form of the Multidivisional Structure for Implementing an Unrelated StrategyPresidentHeadquarters OfficeLegal Affairs Finance AuditingDivision Division Division Division Division DivisionNotes:- Corporate headquarters has a small staff.
- Finance and auditing are the most prominent functions in the headquarters office to manage cash flow and assure the accuracy of performance
data coming from divisions. - The legal affairs function becomes important when the firm acquires or divests assets.
- Divisions are independent and separate for financial evaluation purposes.
- Divisions retain strategic control, but cash is managed by the corporate office.
- Divisions compete for corporate resources.