Multidivisional Organizational Form
Multidivisional Organizational Form
The U-form structure is less suited to large organizations which offer a diversified range of goods and services. This is because each function (production, finance, marketing etc.) has to deal with a wider variety of tasks and functions. Co-ordination of resources and the transmission of information between departments become difficult and the workload facing managers can become too heavy. This can even lead to conflict between departments. Multidivisional (M) type of structure emanated from the USA in the 1930s as the scale and scope of large organizations grew.
Within this type of organizational structure, the firm is split into a number of quasi-independent operating divisions. These operating divisions can be organized by geographical location (along regional, national or international boundaries) or by product type. Each division is a quasi-firm with all the key functional areas required to deliver the given product or service. The head office of the organization oversees these divisions and is primarily involved in making longer term strategic decisions as to the future scale and scope of the organization. Such decision making would include regular monitoring of divisional performance, governing the activities of division managers and allocating finance to research and personnel development.
Overall, the M-form organisational structure removes many of the conflicts and co-ordination problems inherent in the U-form structure. A closely related type of organisational structure is the holding company or H-form organization, whereby a holding (or parent company) has an ownership stake (which is normally a controlling interest) in other companies (subsidiaries). The holding company tends to have ultimate control over the subsidiary companies, but for the most part leaves this to the senior management of these companies. This type of structure has been adopted by a large number of multinational companies.
Overall,
The U-form structure is less suited to large organizations which offer a diversified range of goods and services. This is because each function (production, finance, marketing etc.) has to deal with a wider variety of tasks and functions. Co-ordination of resources and the transmission of information between departments become difficult and the workload facing managers can become too heavy. This can even lead to conflict between departments. Multidivisional (M) type of structure emanated from the USA in the 1930s as the scale and scope of large organizations grew.
Within this type of organizational structure, the firm is split into a number of quasi-independent operating divisions. These operating divisions can be organized by geographical location (along regional, national or international boundaries) or by product type. Each division is a quasi-firm with all the key functional areas required to deliver the given product or service. The head office of the organization oversees these divisions and is primarily involved in making longer term strategic decisions as to the future scale and scope of the organization. Such decision making would include regular monitoring of divisional performance, governing the activities of division managers and allocating finance to research and personnel development.
Overall, the M-form organisational structure removes many of the conflicts and co-ordination problems inherent in the U-form structure. A closely related type of organisational structure is the holding company or H-form organization, whereby a holding (or parent company) has an ownership stake (which is normally a controlling interest) in other companies (subsidiaries). The holding company tends to have ultimate control over the subsidiary companies, but for the most part leaves this to the senior management of these companies. This type of structure has been adopted by a large number of multinational companies.
Overall,