Divisional structures are more appropriate than functional structures when
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Cognition returned to the laboratory in this period, supported in part by reliance on methodological conventions patterned on those of the behaviorists, such as rigorous separation of independent and dependent variables, in part by computer-centered models of mental processes. In contrast to the statistical inference techniques and the corresponding computational models of mind that came to be preferred in cognition research, the preferred research tools in educational psychology were the correlational methods pioneered by Galton. A comparable methodological split distinguished neobehavioristic learning theory from experimental social psychology and personality theory. Nonetheless, experimental studies of social influence on perception by Solomon Asch and of prejudice by Gordon Allport, as well as T. W. Adorno and colleagues' The Authoritarian Personality study (1950) captured the imagination of many in the field. The popularity of such studies reflected a widespread tendency of the period to psychologize, and thus individualize, social problems. Meanwhile, developmental psychology took the work of Piaget as a touchstone for numerous studies closely related to the practical needs of schools for age-related developmental norms. Show
By the 1970s, the sheer numbers of psychologists (over 70,000, over 100,000 by the end of the century) had reached levels that could not have been imagined 50 years earlier. The growth was worldwide, but more than two-thirds of the total were Americans. The openness of both discipline and profession to women continues; today more than half the doctorates in the field go to women. Gender divisions also continue, with women being most numerous in developmental and educational psychology and men in experimental, industrial, and personnel psychology. Nonetheless, the broad institutional anchorage of psychology in the USA was more than sufficient to assure that the research and professional practices instituted there would spread throughout the world, and that alternative viewpoints coming from Asia, Africa, or Latin America would generally be marginalized. The most important exceptions to the overall trend were the impact of Piaget in developmental psychology, and the reception of work by British psychologists Hans Eysenck and Raymond Catell in personality testing and diagnostics. In cognition research, the work of Bartlett and the achievements of Soviet researchers such as Alexander Luria were mobilized to lend respectability and theoretical sophistication to the resurgent field in the USA. Nonetheless, the all-pervasive influence of computer metaphors and the associated information-processing models were plainly of Anglo-American origin. The history of the psychological profession after 1945 continued to be affected by contingent local circumstances. The rise of clinical psychology in the USA was originally driven by the need to deal with large numbers of mentally ill veterans after World War II. The new field ultimately brought forth its own basic research in both clinical and academic settings, which led to the emergence of scientific communities based on methodological norms quite different from those of experimental or developmental psychologists. In addition, an eclectic, so-called ‘humanistic’ psychology movement arose in opposition to both behaviorism and psychoanalysis, and became widely popular in psychotherapy, social work, and the emerging field of counseling psychology. In Europe, the rise of clinical psychology came approximately 10 years later than in the USA. There, in contrast to the USA, the supremacy of personality diagnostics and its quantitative tools had already been established in basic research before the professionalization of the clinical field. Another important difference was that clinical training in academic settings in Europe was based far more on cognitive and behavioral techniques than on psychoanalysis. Barriers to the academic institutionalization of psychoanalytic research and training were surmounted only in exceptional cases. What had been a predominantly European field at the beginning of the twentieth century has become deeply dependent on US research styles and professional practices. US predominance has been contested by dissident local-language movements, most notably in France and Germany. Most significant, however, is the contrast between US predominance worldwide and the insecure standing of trained psychologists in the USA itself. Vagueness and confusion in the use of the term ‘psychologist’ in public discussion have been remarkably consistent over time; the term itself lacks legal protection in any case. The fact that the popularity of self-help books does not depend on whether their authors are psychologists or not indicates that even in the USA, where most of the world's psychologists live and work, trained academics and professionals can hardly claim hegemony over psychological discourse in the public sphere to the degree that physical scientists can in their fields. View chapterPurchase book Read full chapter URL: https://www.sciencedirect.com/science/article/pii/B0080430767000899 Structural Contingency TheoryL. Donaldson, in International Encyclopedia of the Social & Behavioral Sciences, 2001 4.1 Functional and Divisional StructuresAnother aspect of structure is how activities and responsibilities are grouped in the organization. In a functional structure, the managers reporting to the top manager (i.e., the CEO; chief executive officer) are specialized by function, including operational functions (e.g., manufacturing). In contrast, in the divisional structure, the senior managers are specialized by their products or services, customers, or geographical areas, and each has a broad range of operational functions within their division. A divisional structure is more specialized, formalized, and decentralized than a functional structure and so divisionalization is an extension of bureaucratization (Donaldson 2001). However, the contingency causing divisionalization is primarily diversification, with size playing a minor role (Donaldson 2001) so that the contingency determination of divisionalization differs from that of bureaucratization. Organizations vary in their levels of diversification of their products, services, customers, or geographical areas. For brevity, product diversification will be discussed here but not service and customer diversification because similar considerations apply. Increasing diversification reduces the interdependence between the tasks involved in one product and the others. This requires less coordination between products, so each can be organized as a separate subunit acting autonomously from the other subunits and from the corporate center. Consequently, the corporate center needs to contain fewer operational functions. The greater the diversification, the greater the decentralization needs to be and thus the smaller the head office. As diversification varies from low to high, the fitting structure goes from being a pure function to a pure divisional structure. At intermediary levels of diversification, the role of the central functions decreases with each level and the role of the product heads increases. Where a firm is undiversified, such as producing only one product, then specialization by function fosters economies of scale and avoids duplication. Each function is highly interdependent on the next, so that operational coordination is needed from the CEO, producing centralization. Also, each function is a cost center, with profitability only being assessed for the firm overall. The next level of product diversification is where a firm offers products that are vertically integrated with each other. For example, an aluminum-refining firm might vertically integrate backward by acquiring the bauxite mine that supplies its feed material. It might also vertically integrate forward by creating a plant that fabricates its refined aluminum into window frames. Each stage along the value-added chain, that is, mining, refining, and fabricating, becomes an organizational subunit, which may be termed a division. Some decisions will be taken autonomously by each division, such as the types of production equipment to purchase, so that the structure is more decentralized than a functional structure. However, a large flow of materials must be coordinated between divisions. This necessitates some restrictions on divisional autonomy and the presence of corporate-level staff with expertise in transportation and the planing of production and inventory. Thus the corporate center contains many staff additional to the administrative functions such as accounting. Whereas the fabrication division is a profit center, the mining and the refining divisions should be cost centers because their sales are to other divisions making their profitability a contentious issue. Divisional general managers need to have their bonuses tied to corporate profitability to encourage them to cooperate. A medium level of diversification is where a firm has two or more related products. The relatedness between the products lies in similarities among their materials, production technologies, skills, brands, sales force, or distribution systems. Each product is organized as a division and is run quite autonomously, except where the divisions are related and so synergies may be extracted through central coordination. For example, an electronics firm has three product divisions: avionics, computers, and domestic appliances, with each focusing on their product market. But there are commonalties in the underlying technologies so that there is a large central research and development laboratory that pursues major innovations beyond those being researched in the divisions. Therefore, the corporate center contains functions beyond the merely administrative and is quite large in size. Each division is a profit center, but the transfer pricing of shared components moderates its accountability. This is also moderated by large corporate overhead charges for the central laboratories and by corporate decisions about which division receives the profitable, new products developed in the central laboratory. Divisional general managers need to have their bonuses partly tied to that of their own division and partly to corporate profitability to encourage them to cooperate with the other divisions and the corporate staff. The divisional structure boosts innovation by having functions for each product which facilitates functional interaction. However, this is at the cost of some duplication of assets across divisions. Thus, where cost pressures are paramount, the organization instead needs to use a functional structure. A high level of diversification is where a firm has two or more unrelated products, e.g., a conglomerate. There are no operating synergies to be extracted, so little central coordination of operation is required and the divisions are highly autonomous. Therefore the corporate level needs no functions beyond the merely administrative and so can be small. Each division can be straightforwardly held profit accountable. Divisional general managers need to have their bonuses tied solely to the profitability of their own division. Area diversification has similar effects. Area diversification is how far the organization contains an area that operates separately from other areas, that is, it designs, manufactures, and sells the product all within its own area. For example, area divisions are frequently found in the food industry, where low price relative to weight makes intercontinental transportation too costly. Low area diversification fits with the functional structure, while high area diversification fits with the area divisional structure. View chapterPurchase book Read full chapter URL: https://www.sciencedirect.com/science/article/pii/B0080430767042145 Small Business Development: Business Plan Development Fundamentals for the EntrepreneurPeter W. Dyro, in Clinical Engineering Handbook, 2004 Management TeamThe organization of the management team must be arranged according to the need of the particular business. Your young venture most likely will find the basic functional structure to be the most efficient. Functional structures are most effective when one product line is being manufactured, which is often the case with fledgling corporations. This structure usually includes a president who oversees R&D, manufacturing, accounting, and marketing departments. Subsequent developments upon further growth of the business and its product line may warrant evolution of the organizational tree into a matrix or divisional structure. These structures allow for product-intensive management of the business (Daft, 2000). List the key management personnel and their relevant skills and experiences as outlined in the executive summary. Include not only resumes of the principal management players, but also an in-depth analysis of their management performance. This analysis will help to determine their value to the company, which will translate directly to monetary form, as should be indicated in this section of the plan. List the salaries to be paid and the amount of equity to be given to each. Run the salaries of the management team against salaries earned at their last jobs, to show any contrasts and to emphasize dedication. Investors will want to know with whom they are dealing, including other investors. List anyone who has invested in the company and what type of equity they own. List any employment agreements being negotiated and their corresponding compensation packages. Describe your plan for the board of directors. Indicate the ideal size and the representation you would like on the board. Also list any board members you have already chosen, along with a brief description of why. Your young company may find it necessary to outsource much of the legal, consulting, advertising, marketing research, banking, or accounting. Be sure to include those whom you have chosen for these tasks, and why. View chapterPurchase book Read full chapter URL: https://www.sciencedirect.com/science/article/pii/B978012226570950154X Introduction to Negotiating Mergers and AcquisitionsDonald DePamphilis, in Mergers and Acquisitions Basics: Negotiation and Deal Structuring, 2011 Deal StructuringFundamentally, the deal-structuring process is about satisfying as many of the primary objectives (or needs) of the parties involved as necessary and determining how risk will be shared. Common examples of high-priority buyer objectives include paying a “reasonable” purchase price, using stock in lieu of cash (if the acquirer's stock is believed to be overvalued), and having the seller finance a portion of the purchase price by carrying a seller's note. Buyers may also want to put a portion of the purchase price in an escrow account, defer a portion of the price, or make a certain percentage of the purchase price contingent upon realizing some future event to minimize risk. Common closing conditions desired by buyers include obtaining employee retention agreements and noncompete agreements. Sellers that are also publicly traded companies are typically driven to maximize purchase price. However, their desire to maximize price may be tempered by other considerations such as the perceived ease of doing the deal or a desire to obtain a tax-free transaction—those in which the seller receives primarily buyer stock for its stock. The transaction is tax free for the selling firm's shareholders until they actually sell the buyer's stock. Private or family-owned firms may be less motivated by price than by other factors such as protecting the firm's future reputation and current employees, as well as obtaining rights to license patents or to utilize other valuable assets. Risk sharing refers to the extent to which the acquirer assumes all, some, or none of the liabilities, disclosed or otherwise, of the target. The appropriate deal structure is that which satisfies, subject to an acceptable level of risk, as many of the primary objectives of the parties involved as necessary to reach overall agreement. The process may be highly complex in large transactions involving multiple parties, approvals, forms of payment, and sources of financing. Decisions made in one area inevitably affect other areas of the overall deal structure. Containing risk associated with a complex deal is analogous to catching a water balloon. Squeezing one end of the balloon simply forces the contents to shift elsewhere. Key Components of the Deal-Structuring ProcessExhibit 1-5 summarizes the deal-structuring process, which begins with addressing a set of key questions that help define initial negotiating positions, potential risks, options for managing risk, levels of tolerance for risk, and conditions under which the buyer or seller will “walk away” from the negotiations. These questions are listed on the left side of Exhibit 1-5 and grouped according to the part of the deal-structuring process to which they apply. Exhibit 1-5 Mergers and Acquisitions Deal-Structuring Process  The various components of the deal-structuring process denoted in Exhibit 1-5 are defined next. The form of payment or total consideration may consist of cash, common stock, debt, or a combination of all three. The payment may be fixed at a moment in time, contingent on future performance of the acquired unit, or payable over time. The form of payment influences the selection of the appropriate form of acquisition and postclosing organization. The form of acquisition reflects what is being acquired (stock or assets) and, as such, tax considerations. The form of acquisition also defines how the ownership of assets will be conveyed from the seller to the buyer, either by rule of law as in a merger or through transfer and assignment as in a purchase of assets. Tax considerations entail tax structures and strategies that determine whether a transaction is taxable or nontaxable to the seller's shareholders and influence the choice of postclosing organization, which affects the potential for double taxation and the allocation of losses to owners. Transactions in which the form of payment is primarily acquirer stock generally are tax free to the selling firm's shareholders. Accounting considerations refer to the potential impact of financial reporting requirements on the earnings volatility of business combinations due to the need to periodically revalue acquired assets to their fair market value as new information becomes available. The legal form of the selling entity (i.e., whether it is a C or S chapter corporation, LLC, or partnership) also has tax implications. The acquisition vehicle refers to the legal structure created to acquire the target company. The postclosing organization or structure is the organizational and legal framework used to manage the combined businesses following the consummation of the transaction. Commonly used structures for both the acquisition vehicle and postclosing organization include the corporate or divisional, holding company, joint venture (JV), partnership, limited liability company (LLC), and employee stock ownership plan (ESOP) structures. The choice of acquisition vehicle and postclosing organization has liability, tax, and financing implications that are discussed in more detail later in this book. Although the two structures are often the same before and after completion of the transaction, the postclosing organization may differ from the acquisition vehicle depending on the acquirer's strategic objectives for the combined firms. An acquirer may choose a corporate or divisional structure to purchase the target firm and to rapidly integrate the acquired business to realize synergies. Alternatively, the acquirer may opt to undertake the transaction using a JV or partnership vehicle to share risk. When the operation of the acquired entity is better understood, the acquirer may choose to buy out its partners and to operate within a corporate or divisional structure. Similarly, the acquirer may complete the transaction using a holding company legal structure. The acquirer may operate the acquired firm as a wholly owned subsidiary to preserve the attractive characteristics of its culture for an extended time period and later move to a more traditional corporate or divisional framework. All of these terms in bold type will be explained in considerably greater detail in the remaining chapters of this book. Common Linkages within the Deal-Structuring ProcessFor simplicity, many of the linkages or interactions that reflect how decisions made in one area affect other aspects of the deal are not shown in Exhibit 1-5. Common linkages or interactions among various components of the deal structure are illustrated through examples described next and are explained in more detail later in this book. Form of Payment Influences Choice of Acquisition Vehicle and Postclosing Organization (Exhibit 1-5: Arrows 1–2)If the buyer and seller agree on a price, the buyer may offer a purchase price that is contingent on the future performance of the target. The buyer may choose to acquire and operate the acquired company as a wholly owned subsidiary within a holding company during the term of the “deal-structuring process,” which facilitates monitoring the operation's performance and minimizes the potential for litigation following the deal-structuring process initiated by deal-structuring process participants. Form of Acquisition (Exhibit 1-5: Arrows 3–6) Affects Numerous Components of the Deal Structure• Choice of Acquisition Vehicle and Postclosing Organization: If the form of acquisition is a statutory merger, all known and unknown or contingent liabilities are transferred to the buyer. Under these circumstances, the buyer may choose to change the type of acquisition vehicle to one better able to protect the buyer from the liabilities of the target, such as a holding company arrangement. Acquisition vehicles and postclosing organizations that facilitate a sharing of potential risk or of the purchase price include JV or partnership arrangements. •Form, Timing, and Amount of Payment: The assumption of all seller liabilities through a merger also may induce the buyer to change the form of payment by deferring some portion of the purchase price to decrease the present value of the cost of the transaction. The buyer also may attempt to negotiate a lower overall purchase price. •Tax Considerations: The transaction may be tax free to the seller if the acquirer uses its stock to acquire substantially all of the seller's assets or stock in a stock for stock or stock for assets purchase. Tax Considerations (Exhibit 1-5: Arrows 7–8) Affect Purchase Price and Selection of Postclosing Organization• Amount, Timing, and Composition of the Purchase Price: If the transaction is taxable to the target's shareholders, it is likely that the purchase price will be increased to compensate the target's shareholders for their tax liability. The increase in the purchase price may affect the form of payment. The acquirer may maintain the present value of the total cost of the acquisition by deferring some portion of the purchase price by altering the terms to include more debt or installment payments. •Selection of the Postclosing Organization: The decision as to what constitutes the appropriate organizational structure of the combined businesses is affected by the desire to minimize taxes and passthrough losses to owners. The S corporation, LLC, and partnership eliminate problems of double taxation. Moreover, current operating losses, loss carry forwards or carry backs, or tax credits generated by the combined businesses can be passed through to the owners if the postclosing organization is a partnership or a LLC. Legal Form of Selling Entity Affects Form of Payment (Exhibit 1-5: Arrow 9)Because of the potential for deferring shareholder tax liabilities, target firms that qualify as C corporations often prefer to exchange their stock or assets for acquirer shares. In contrast, owners of S corporations, LLCs, and partnerships are largely indifferent as to whether the transaction is taxable or nontaxable because 100 percent of the proceeds of the sale are taxed at the shareholders' ordinary tax rate. How divisional structure is different from functional structure?Functional structure refers to grouping of jobs of similar nature under one department. Divisional structure refers to grouping of jobs related to one product under one department. It is formed on the basis of function. It is formed on the basis of product.
Why would a firm use a divisional organizational structure instead of a functional organizational structure?These are the main advantages of a divisional organization: The different departments have some flexibility to operate separately from the company at large. It's more adaptable to customer needs. Individual departments have more autonomy and room for innovation.
What are the advantages of a divisional structure?The divisional structure allows decision-making to be shifted downward in the organization, which may improve the company's ability to respond to local market conditions.
Which is an advantage of the divisional structure quizlet?there is little duplication of services across divisions. Which is an advantage of the divisional structure? -it increases employee participation.
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