reThis structure is used when a firm diversifies its product/service lines, utilizes unrelated market channels or begins to serve heterogeneous customer groups.This is often as a result of the functional structure being unable to meet the increased coordination and decision-making requirements that result from increased diversity and size.Examples of this structure can be seen in CMC Motors, Unga Limited and Nation Media Group.Advantages1.Forces coordination and authority down to the appropriate level for rapid response2.Places strategic development and implementation in close proximity to the unique environment of each division.3.It frees the CEO to be involved in broader strategic decision-making.4.Shortly focuses accountability for performance5.It helps retain functional specialization within each division6.It provides a good training ground for strategic managersDisadvantages1.It fosters potentially dysfunctional competition for corporate level resources2.It presents the problem of determining how much authority should be given down to divisional managers.3.Creates a potential for policy inconsistencies among divisions4.It presents the problem of determining how to distribute corporate overhead costs in a way acceptable to divisional managers.3.2.5Strategic Business UnitsThis structure arises in order to counter difficulties in evaluating and controlling the operations of the divisions and the diversity, size and number of units continues to increase.To deal with this a firm may need to add another layer of management to improve strategy implementation, to promote synergy and to gain control over the firms diverse business interests.This can be accomplished by creating groups that combine various divisions in terms of common strategic elements. These groups are known as Strategic Business Units and are usually based on the independent product-market segments served by the firm.Examples of this can be seen in Unilever, Sameer Group, ...
