Business Management Concepts

Organizational Structures

• Virtual organization: a collection of employees linked by laptops, smartphones, and global video teleconferencing who may rarely meet face-to-face, but who join and leave project teams as their skills are needed.
• Multidivisional structure: a complex organizational design that allows a company to grow and diversify while reducing coordination and control problems, using self-contained divisions and a separate corporate headquarters staff.

Self-Contained Divisions

• Defined as an independent business unit or division that contains all the value chain functions it needs to pursue its business model successfully.
• Treated as a separate financial unit, with financial controls used to establish performance goals and measure profitability (profit center).

Corporate Headquarters Staff

• A team of top executives, as well as their support staff, responsible for overseeing a company's long-term multi-business model and providing guidance to increase the value created by the company's self-contained divisions.

Challenges in Organizational Structures

• Organizational slack: the unproductive use of functional resources by divisional managers that can go undetected unless corporate managers monitor their activities.
• Information distortion: the manipulation of facts supplied to corporate managers to hide declining divisional performance.
• Transfer pricing: the problem of establishing the fair or "competitive" price of a resource or skill developed in one division that is to be transferred and sold to another division.

Integration and Innovation

• Integrating roles: managers who work in full-time positions established specifically to improve communication between divisions.
• Intrapreneurs: managers who pioneer and lead new venture projects or divisions, and act as inside or internal entrepreneurs.
• New-venture division: a separate and independent division established to give its managers the autonomy to develop a new product.

Knowledge Management and Networking

• Knowledge management system: a company-specific information system that systematizes the knowledge of all its employees and provides access to employees who have the expertise needed to solve problems as they arise.
• Business-to-business (B2B) Marketplace: an industry-specific trading network established to connect buyers and sellers through the Internet to lower costs.
• Network structure: a cluster of different companies whose actions are coordinated by contracts and outsourcing agreements rather than by a formal hierarchy of authority.