Strategic Management: Formulation and Implementation

Are There Too Few Or Too Many Hierarchical Levels At Either The Corporate Or Business Units Level Of Analysis?

Flat organizations, with relatively few hierarchical levels and wide spans of control, are better suited for dynamic, fastchanging environments than tall structures are. In contrast, tall organizations, with relatively numerous hierarchical levels and narrow spans of control, operate more effectively in stable, predictable environments that flat ones do. Therefore, it is important that an organization's structure match the nature of the environment in which operates.

Does The Structure Promote Coordination Among Its Parts?

Firms with multiple unrelated business units that operate fairly autonomously may find that relatively little coordination among the business unit's operations is required. However, within each business unit, management may find it essential to coordinate closely the activities of functional departments. As a rule, the more complex an organization, the more difficult coordination is to achieve.

Firms with multiple related businesses usually require greater coordination of their business unit's activities, and companies that operate in only one business generally concentrate on coordinating their functional processes.