The Nature and Consequences of the Multidivisional Structure

The Nature and Consequences of the Multidivisional Structure

The Nature and Consequences of the Multidivisional Structure

The Nature and Consequences of the Multidivisional Structure

Synopsis

A research-based analysis of the benefits to be gained from the multidivisional organizational structure and its superiority in certain contexts to the standard functional form.

Excerpt

Organizations have a variety of options available to them in their choice of an organizational structure. The question of whether there is a preferred, possibly optional, structure for managing large, diverse (multiproduct) firms has been a recurrent topic in the administrative sciences literature. The multidivisional structure, also known as the multidimensional form (M-form), has recently emerged as the organizational structure of first choice of large domestic and international firms. Most of the time the choice is justified by the benefits and consequences resulting from the implementation of the M-form.

The purpose of this book is to identify these benefits and consequences following the implementation of the M-form. They are of a descriptive, narrative, and/or empirical nature. The nature of these benefits and the conditions required for a successful implementation of the M-form are explored in each of the book's six chapters. The objective is to help organizations in their implementation of the M-form and consider the benefits and consequences resulting from this important organizational structure decision.

The book shows that the choice of the M-form as an organization structure can, under specific circumstances, be very beneficial to both large domestic and international firms. It is a superior organizational structure as it overcomes the problems of strategic direction and control found in the standard functional structure (Chapter 1). It is a wealth-increasing corporate decision, although the market reaction (risk changes and/or abnormal returns) to the announced implementation of the M-form structure is contingent on the firm's diversification strategy (Chapter 2). Its implementation affects profitability and productivity differently, depending upon which diversification strategy existed prior to the . . .

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