Suggest one (1) way to mitigate each limitation stated below for the multidivisional structure. Information from the scenario must be included to support the discussion. Firstly, divisions can become so specialized and self-sufficient that they are de facto independent businesses – but carrying the costs of the corporate centre of the company. The second type of problem may occur for the opposite reason. Divisions have created their own ‘corporate centres’ without having all the parenting skills needed to add value to their business units. The result is that the business units carry the costs of this divisional centre but are not as well supported as they would be by the ‘real’ corporate centre of the company where these skills do exist.
Peter is considering operating a local business in the textile, clothing and footwear sector. Peter has completed research into the operations of similar businesses both locally and regionally and intends to market and sell his products both at the local and regional level at the same time. Peter understands that to shape the business’s overall strategy there are various strategic drivers both internally and externally which must be considered and wants expert advice on these drivers relevant to his business. He is also struggling with deciding on the best structure for the organization, as well as the most effective ways of marketing his products to ensure that they are more attractive to buyers than the current options. Peter is considering a strategic alliance but is not sure if to form links among non-competitive firms or associate with firms in an un-related activity. He is also aware that even other types strategic alliances exist but does not have a good grasp on this area to make an informed choice. Peter is aware of internal and external tools which businesses use to understand the operating environment but is unsure which ones are feasible for his business or will provide the most relevant information. Peter wants to go global in the future. He was listening to a radio program and they mentioned that there are drivers that shape strategies when persons are considering going global but he is not familiar with what these are. Whilst Peter has a lot of ideas, he recognizes the need for help to ensure his success.
Suggest one (1) way to mitigate each limitation stated below for the multidivisional structure. Information from the scenario must be included to support the discussion.
- Firstly, divisions can become so specialized and self-sufficient that they are de facto independent businesses – but carrying the costs of the corporate centre of the company.
- The second type of problem may occur for the opposite reason. Divisions have created their own ‘corporate centres’ without having all the parenting skills needed to add value to their business units. The result is that the business units carry the costs of this divisional centre but are not as well supported as they would be by the ‘real’ corporate centre of the company where these skills do exist.
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