strategic-management

226 PART 3 • STRATEGY IMPLEMENTATION
FIGURE 7-4
Adhesive
Packaging
Division
Tubes/
Cores
Division
The huge computer firm Dell Inc., reorganized in 2009 into two SBUs. One SBU is
Consumer Products and the other is Commercial. As part of its reorganization, Dell
deleted the geographic divisions within its Consumer Products segment. However within
its Commercial segment, there are now three worldwide units: (1) large enterprise, (2) public
sector, and (3) small and midsize businesses. Dell is also closing a manufacturing facility
in Austin, Texas, and laying off more employees as the company struggles to compete.
Computer prices and demand are falling as competition increases. Atlantic Richfield
Fairchild Industries, and Honeywell International are examples of firms that successfully
use an SBU-type structure.
As illustrated in Figure 7-4, Sonoco Products Corporation, based in Hartsville, South
Carolina, utilizes an SBU organizational structure. Note that Sonoco’s SBUs—Industrial
Products and Consumer Products—each have four autonomous divisions that have their
own sales, manufacturing, R&D, finance, HRM, and MIS functions.
The Matrix Structure
A matrix structure is the most complex of all designs because it depends upon both vertical
and horizontal flows of authority and communication (hence the term matrix). In contrast,
functional and divisional structures depend primarily on vertical flows of authority
and communication. A matrix structure can result in higher overhead because it creates
more management positions. Other disadvantages of a matrix structure that contribute to
overall complexity include dual lines of budget authority (a violation of the unity-of-command
principle), dual sources of reward and punishment, shared authority, dual reporting
channels, and a need for an extensive and effective communication system.
Despite its complexity, the matrix structure is widely used in many industries, including
construction, health care, research, and defense. As indicated in Table 7-9, some
advantages of a matrix structure are that project objectives are clear, there are many channels
of communication, workers can see the visible results of their work, and shutting
down a project can be accomplished relatively easily. Another advantage of a matrix structure
is that it facilitates the use of specialized personnel, equipment, and facilities.
Functional resources are shared in a matrix structure, rather than duplicated as in a divisional
structure. Individuals with a high degree of expertise can divide their time as needed
among projects, and they in turn develop their own skills and competencies more than in
other structures. Walt Disney Corp. relies on a matrix structure.
Sonoco Products’ SBU Organizational Chart
Chief
Strategy
Officer (CSO)
Chief
Finance
Officer (CFO)
Paper
Division
Chief Executive Officer
Chief
Operating
Officer (COO)
Reels
Division
Chief
Information
Officer (CIO)
Flexible
Packaging
Division
VP of
Human
Resources
High
Density Film
Division
VP of
Marketing
Industrial Products SBU Consumer Products SBU
Metal
Ends
Division
Rigid
Division