Exam questions Essay Example | Topics and Well Written Essays - 1250 words

Exam questions - Essay Example Each division in the larger firm is responsible for the maximisation of its profits and production. The central office overlooks the other divisions with the primary responsibility for formulating the overall strategy for the entire business but not directly controlling the operations at the divisional levels. Large firms have adopted the M-form as opposed to the traditional Unitary structure (U-form) in which the operations of the business are centrally managed with no independence given to any sub-division. While Chandler’s multidivisional form advocates for growth through diversification across industries, markets and products, Williamson’s M-form does not make any reference to diversification. The multidivisional form explained by Chandler supports the delegation of complete power and authority to the divisions while that of Williamson is for the retention of control by the management at the major company. The advantage of the M-form over other divisional structures is based on its ability to combine the economies of scale and different brand benefits of a large collection while maintaining the operational flexibility. It provides the central optimisation level within a company (Besanko, 2010). Unlike other divisional structures, the M-form solves the dilemma of the differences observable in profit maximisation strategies, business needs, and output across the divisions when organisations grow to be too large. Each group, with its independence and flexibility, can be kept in the centralised profit maximisation expectation. Williamson proposes a perfect coordination between the general direction of the business and the daily operations of the divisions under the M-form structure. However, there lies a limitation on the wide adoption of the M-form that arises from Williamson’s requirements for this divisional structure. The largest