Case Summary: The Multiunit Enterprise

Multiunit Enterprise is a geographically dispersed organization built from standard units such as
branches, service center, hotels, restaurants and stores which are aggregated into larger geographic
groupings such as districts, regions, and divisions. Multiunit Enterprise has become norm in the several
industries and employ four level of field manages with carefully defined responsibilities. There are
several challenges of multiunit enterprises:
1) Multiunit enterprise find it hard to maintain consistency, because they are agglomerations of hundred,
thousands of branches, service centers, hotels, restaurant, and stores, They must focus on aligning
priorities, plans and practices across highly dispersed field organization.
2) Multiunit organization must ensure some degree of customization even as they pursue standardization.
They must respond to the distinctive features of local and regional markets to achieve best results.
3) The sharp division of responsibilities between corporate headquarters and the field organization causes
many problems.
4) Multiunit enterprises often struggle to get the best out of field managers who are hard to classify.
To overcome these challenges, multiunit enterprises try to define the roles of field managers and
distribute responsibilities. All field managers work on the same problems, taking on some roles, sharing
others, and dispersing responsibilities across level. Rather than featuring specialized jobs, it creates a set
of general management jobs with overlapping responsibilities. Together managers form a multilayered
net to catch all of the problems that can affect the strategy implementation. Researcher has found for
some companies that they studied employ the structure that consist of four levels from bottom to top:
store managers, district managers, regional vice presidents, and division presidents or senior vice
presidents.
Store managers must ensure coordination and integration activities at a single sire; they
responsible both a-day-to-day operations and executions of new initiatives. District managers must
ensure the consistent execution, improving performance, and developing bench strength in all their
stores. District manager often serves as connectors because they provide links to people who can fix a
problem immediately or they bring the issue to the attention of senior executives. Regional vice
presidents must ensure coordination and integration of product offerings and competitive positioning
across their market areas. They are critical intermediaries between the field organization and
headquarters, linking stores with company goals. They serves as aggregators because they synthesizing
information from diverse sources. Division presidents and senior vice presidents must ensure
coordination and integration of staff and line department between headquarters and their field
organizations; they must cope with multidepartment management. When companies launch new
programs, division presidents and senior vice presidents must share the corporate vision with the field.
Divisional heads ensure alignment among people, policies, and programs. From the paper, I can
summarize the requirements to implement multiunit enterprise are:
Distribute the roles and responsibilities to each four level of managers, by having managers on
different tiers of the field organization focus on the same issues. This creates a multilayered net
that prevents problems from slipping through.
Integration is a way to guaranteeing consistency, by share the information and update the
activities together with at all level will create a customization with standardization.
District manager need to balance monitoring with coaching is important to store managers and
staffs to improve performance and ensure they can implement the strategy very well
Regional vice presidents have to reinforcing corporate priorities and recognizing patterns and
regional differences.
Divisional heads need to come to the field/store so they can see directly and encourage the staff
and managers, share the vision and recognize the needs of corporate and develop close
relationship with them.
The practical implications of this study is we can know that the low to top managers has its own
responsibilities to implementing the strategy and the low to middle manager has key role as people who
ran their store, summarized its performance, and connected it back to Headquarter and to other parts of
the company. They connect people to each other, and translate high-level directives into low-level action.
With the structures, four levels of managers are able to integrate with one another - sharing information,
diagnosing issues, coordinating efforts, identifying needed new initiatives. When that happens it
strengthens the leadership performance of all levels and gaining a market power.

Lesson Learned
By having the well design organization that involves assigning roles and responsibilities in ways to
prevent breakdown in policy formulation, communication, and delivery, multiunit enterprise makes an
effective implementation at the top of its priorities and provides a model companies of every sort. At
multiunit enterprise each fields managers assigned into responsibilities and able to spot and tackle
problems effectively. Managers through the organizations can integrate diverse activities and optimize
the whole rather than the parts. Matching strategy and structure of company can create a competitive
advantage.

Chapter 11: Structure and Controls with Organizations
Organizational structure and the controls are a part of the structure affect firm performance. In
particular, evidence suggest that performance declines when the firmss strategy is not matched with
the most appropriate structure and controls.
Organizational structure specifies the firms formal reporting relationships, procedures, controls,
and authority and decision making process. When a structures element are properly aligned with
one another, the structure facilities effective use of the firms strategies. Thus, organizational
structure is a critical component of effective strategy implementation process.
Organizational controls guide the use of strategy, indicate how to compare actual results, and
suggest corrective actions to take when the difference is unacceptable. Firms use both strategic
controls and financial controls to support the implementation and use of their strategies. Both
strategic and financial controls are important aspects of each organizational structure; any
structures effectiveness is determined by using a combination of strategic and financial controls.

Strategy and structure have a reciprocal relationships, this relationship highlights the
interconnectedness between strategy formulation and strategy implementation. Research shows that
strategy has much more important influence on structure than the reverse. When changing strategies,
the firm should simultaneously consider the structure that will be needed to support use of the new
strategy; properly matching strategy and structure can create a competitive advantage. The existing
structures formal lack of the sophistication required to support using the new strategy. A new
structure is needed to help decision makers gain access to knowledge and effectively integrate and
coordinate actions to implement the new strategy.

Firms choose among three major types of organizational structure to implement strategies, there are:
Simple Structure is a structure in which the owner-manager makes all major decisions and
monitors all activites while the staffs serves as an extension of the managers supervisory
authority.
Functional Structure consists of a chief executive officer and a limited corporate staff, with
functional line managers in dominant organizational areas such as production, accounting,
marketing, R&D, engineering, and human resources.
Multidivisional Structure consits of a corporate office and operating divisions, each operating
division representing a separate business or porfit center in which the top corporate officer
Simple
Structure
Sales Growth-
Coordination
and Control
Problems
Functional
Structure
Sales Growth-
Coordination
and Control
Problems
Multidivisional
Structure
delegates responsibilities for day-to-day operations and business unit strategy to division
managers.
Firms using the functional structure to implement the cost leadership strategy sell large quantities of
standardized products to an industrys typical customer; they need a structure and capabilities that
allow them to achieve efficiencies. Decision making authority is centralized in a staff function to
maintain a cost reducing emphasis within each organizational function (Figure 1).
Firms using the differentiation strategy produce products that customers perceive as being different in ways
that create value for them. With this strategy, the firm wants to sell non standardized products to customers
with unique needs. Relatively complex and flexible reporting relationships, frequent use of cross-functional
product development teams, and a strong focus on marketing and product R&D rather than manufacturing and
process R&D. The authority and responsibility is more decentralized and lack of specialization (Figure 2).
Corporate level strategies have different degrees of product and market diversification. The demands
created by different levels of diversification highlight the need for a unique organizational structure to
effectively implement each strategy (Figure 3).
The Cooperative Form is an multidivisional-form structure in which horizontal integration is used to
bring about interdivisional cooperation. Divisions in a firm using related constrained diversification
strategy commonly are formed around products, markets, or both. Product divisions used as a part of
the representation of the cooperative form of multidivisional structure (Figure 4). Market division
could be used instead of or in addition to product divisions to develop the figure.
The Strategic Business Unit (SBU) form is an M-form structure consisting of three levels; corporate
headquarters, strategic business units (SBUs), and SBU divisions (Figure 5). The SBU structure is
used by large firms and can be complex given associated organization size and product and market
diversity.
The Competitive Form is an M-form structure characterized by complete independence among the
firms divisions which compete for corporate resources (Figure 6). Unlike the divisions included in
the corporate structure, divisions that are part of the competitive structure do not share common
corporate strengths. Because strengths are not shared, integrating devices are not developed for use by
the divisions included in the competitive structure.
The worldwide geographic area structures emphasize national interest and facilitate the firms efforts
to satisfy local differences, and in the worldwide product divisional structure, decision making
authority is centralized in the worldwide division headquarters to coordinate and integrate decisions
and actions among divisional business units.