ADM 1100 Lecture Notes - Lecture 13: Organizational Architecture, Railways Act 1921

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Lecture 13 - organizational structure and design: the legally-mandated decision-making hierarchy. Main purpose is to protect the interest of sharholders. A functional manager controls the costs of their activities. To measure the performance of any manager you have to implify what does them manager controls. Functional manager has only partial influence on the profits. Presumption that each line of business performs better as part of corporation than if it were a stand-alone single-business firm. New lines of business arise through internal development or through acquisition. Corporate strategy requires a multi-divisional structure, business strategy a functional structure. Within each division there will be a functional structure. No distinction between corporate strategy and business strategy if just one line of business. As a firms grow they tend to follow a strategy of diversification. When different lines of business are in different industries. Related diversification: lines of business are in industries that satisfy fairly similar needs.

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