A key consideration in devising an organizational structure concerns the divisions.

Note whether the

divisions (if any) of a firm presently are established based upon geography, customer, product, or
process. If the firm’s organizational chart is not available, you often can devise a chart based on the titles
of executives. An important case analysis activity is for you to decide how the divisions of a firm should
be organized for maximum effectiveness. Even if the firm presently has no divisions, determine whether
the firm would operate better with divisions. In other words, which type of divisional breakdown do you
(or your group or team) feel would be best for the firm in allocating resources, establishing objectives,
and devising compensation incentives? This important strategic decision faces many midsize and large
firms (and teams of students analyzing a strategic-management case). As consumption patterns become
more and more similar worldwide, the divisionalby-product form of structure is increasingly the most
effective. Be mindful that all firms CHAPTER 7 • IMPLEMENTING STRATEGIES: MANAGEMENT AND
OPERATIONS ISSUES 229 FIGURE 7-6 Typical Top Managers of a Large Firm CEO CFO CSO CIO HRM CIO
COO PRESIDENT DIVISION 1 Notes: Titles spelled out as follows. Chief Executive Officer (CEO) Chief
Finance Officer (CFO) Chief Strategy Officer (CSO) Chief Information Officer (CIO) Human Resources
Manager (HRM) Chief Operating Officer (COO) Chief Legal Officer (CLO) Research & Development Officer
(R&D) Chief Marketing Officer (CMO) Chief Technology Officer (CTO) Competitive Intelligence Officer
(CIO) Maintenance Officer (MO) PRESIDENT DIVISION 2 PRESIDENT DIVISION 3 PRESIDENT DIVISION 4
CLO R&D CMO CTO MO have functional staff below their top executive and often readily provide this
information, so be wary of concluding prematurely that a particular firm utilizes a functional structure. If
you see the word “president” in the titles of executives, coupled with financial-reporting segments, such
as by product or geographic region, then the firm is divisionally structured. If the firm is large with
numerous divisions, decide whether an SBU type of structure would be more appropriate to reduce the
span of control reporting to the COO. Note in Figure 7-4 that the Sonoco Products’ strategic business
units (SBUs) are based on product groupings. An alternative SBU structure would have been to base the
division groupings on location. One never knows for sure if a proposed or actual structure is indeed most
effective for a particular firm. Note from Chandler’s strategy-structure relationship (p. 221) illustrated
previously in this chapter that declining financial performance signals a need for