Page 260 -

226 PART 3 • STRATEGY IMPLEMENTATION

The huge computer firm Dell Inc., reorganized in 2009 into two SBUs. One SBU is
Consumer Products and the other is Commercial. As part of its reorganization, Dell
deleted the geographic divisions within its Consumer Products segment. However within
its Commercial segment, there are now three worldwide units: (1) large enterprise, (2) pub-
lic sector, and (3) small and midsize businesses. Dell is also closing a manufacturing facil-
ity in Austin, Texas, and laying off more employees as the company struggles to compete.
Computer prices and demand are falling as competition increases. Atlantic Richfield
Fairchild Industries, and Honeywell International are examples of firms that successfully
use an SBU-type structure.
As illustrated in Figure 7-4, Sonoco Products Corporation, based in Hartsville, South
Carolina, utilizes an SBU organizational structure. Note that Sonoco’s SBUs—Industrial
Products and Consumer Products—each have four autonomous divisions that have their
own sales, manufacturing, R&D, finance, HRM, and MIS functions.

The Matrix Structure
A matrix structure is the most complex of all designs because it depends upon both verti-
cal and horizontal flows of authority and communication (hence the term matrix). In con-
trast, functional and divisional structures depend primarily on vertical flows of authority
and communication. A matrix structure can result in higher overhead because it creates
more management positions. Other disadvantages of a matrix structure that contribute to
overall complexity include dual lines of budget authority (a violation of the unity-of-com-
mand principle), dual sources of reward and punishment, shared authority, dual reporting
channels, and a need for an extensive and effective communication system.
Despite its complexity, the matrix structure is widely used in many industries, includ-
ing construction, health care, research, and defense. As indicated in Table 7-9, some
advantages of a matrix structure are that project objectives are clear, there are many chan-
nels of communication, workers can see the visible results of their work, and shutting
down a project can be accomplished relatively easily. Another advantage of a matrix struc-
ture is that it facilitates the use of specialized personnel, equipment, and facilities.
Functional resources are shared in a matrix structure, rather than duplicated as in a divi-
sional structure. Individuals with a high degree of expertise can divide their time as needed
among projects, and they in turn develop their own skills and competencies more than in
other structures. Walt Disney Corp. relies on a matrix structure.

FIGURE 7-4
Sonoco Products’ SBU Organizational Chart

Chief Executive Officer

Chief Chief Chief Chief VP of VP of
Strategy Finance Operating Information Human Marketing
Officer (CSO) Officer (CFO) Officer (COO) Officer (CIO) Resources

Industrial Products SBU Consumer Products SBU

Adhesive Tubes/ Paper Reels Flexible High Metal Rigid
Packaging Cores Division Division Packaging Density Film Ends Division
Division Division Division Division Division