Strategic Management: Formulation and Implementation

Stage Iii

Stage III consists of organizations whose operations area large enough and scattered over a wide geographic are to justify having geographically decentralized operating units. These semiautonomous units may still be structured along functional lines.

The key difference between Stage II and Stage III, however, is that while the functional units of a II Stage organization stand or fall together (in that they are built around one business and one end market), the operating units of a Stage III firm can stand alone (or nearly so) in the sense that the operations in each geographic unit are not rigidly tied to or dependent on those in other areas.

Stage Iv

This stage includes large, diversified firms decentralized by line of business. Each separate business unit is autonomous for all practical purpose, and report to head office for information concerning organizational policies. Their corporate strategies emphasize diversification related and/or unrelated.

This description is one possible development sequence of organizational model. Another perspective onorganizational growth and the crisis of transition was described by Larry E. Greiner. He identified five phases in the growth cycle and characterized each as leading to a crisis that is resolved by a change in the form of management or organizational structure. Moreover, Jeffrey A. Hansen, found that there was a high correlation between the style of executive and his success at a particular stage.

A typical organizational growth curve is shown in Exhibit 31. This Exhibit also relates style to the life cycle of the organization. Beyond of the number of models, all of them provide useful insights into why organization structure tends to change in accordance with product customer relationships and new directions incorporate strategy. Moreover, the stages model teachesis that a reassessment of organization structure and authority is always useful whenever strategy is changed.

As an organization grows in size, complexity, and product market coverage, different strategies and organization form are used.