1. Chapter 8: Organizing to Implement Corporate Diversification

2. Organizational Structure
M-Form or Mutlidivisional structure
Divisions or Strategic Business Units
Profit & Loss Centers

3. Agency Theory Strategy-in-depth (p. 248) Principal-Agent relationships
Managerial Perquisites
Managerial Risk Aversion

4. Roles & Responsibilities
Board of Directors
Monitor decision-making and represent equity holders.
Audit committee
Finance committee
Nominating committee
Personnel & Compensation committee
Institutional Investors
Block Holders

5. Roles & Responsibilities
Senior Executives
CEO, COO
Corporate Staff
Division General Managers
Formulate divisional strategies
Coordinate with functional managers
Compete for corporate capital allocations
Cooperate with other division to realize economies of scope

6. Family Businesses Unique corporate governances
Still suffer from principal-agent problems.
Different strategic motivation compared to publicly traded firms
Stewardship Theory

7. Shared Activities Transfer Pricing related issues
Profit & Cost Centers
Alternative Transfer Pricing Schemes
Exchange autonomy
Mandated full cost
Mandated market based
Dual pricing
Tapered integration

8. Evaluating Divisional Performance
Accounting Measures of Divisional Performance
Economic Value Added (EVA)
EVA = adjusted accounting earnings – (weighted average cost of capital x total capital employed by a division)
Ambiguity of Divisional Performance
Allocating Corporate Capital

9. Strategy in Emerging Enterprise
Corporate Spin-Off
Managerial Buyout
Initial Public Offering
Parent firm maintains equity stake
Parent firm completely sells equity stake

10. Compensation Policies
Base salary
Stock Options
Other Perks
Ethical related issues
Jobs earned $30,000 an hour for 2003.
Mark earned $56,400 an hour for 2003.
Larry Ellison was paid $746 million and Oracle lost 54 percent of its value over the same time period.

11. Organizing in an International Context
Decentralized Federation
Multi-domestic or MNE strategy
Coordinated Federation
Centralized Hub
Global strategy
Transnational Structure
Transnational strategy