Luck Company
Product diversification increases the information processing, coordination, and control complexities of the firm as it enters new lines of business. Effective management therefore requires an organizational structure that supports the implementation of distinct SBU strategies and enables corporate leaders to oversee various divisions. A multidivisional structure (M-form) for corporate-level strategies can be devised in three possible ways, including:
– Cooperative Form – facilitates interdivisional cooperation and the sharing of SBU competencies through horizontal integration to develop economies of scope
-SBU Form – is appropriate when few linkages exist between one business unit and another
– Competitive Form – does not promote the sharing of common corporate strengths or utilize integrating devices, but enables independent operations that actually compete for corporate resources and capital allocations
The most suitable structure for Luck Companies is the SBU Form of the multidivisional structure, using a moderate level of integration mechanisms, a mixture of strategic and financial controls, and compensation linkages to both corporate and divisional performance goals.
