By: David A. Garvin and Lynne C. Levesque
Abstract
A multiunit enterprise is a geographically dispersed organization built from standard units (stores, restaurants, or branches) that are aggregated into larger geographic groupings (districts, regions, and divisions). Although this organizational structure has become the norm in several industries, it has received little attention from academics and consultants. Garvin and Levesque set out to fill that gap in management thinking with their research. The authors closely studied the office supply company Staples for two years and then collected data from 12 other multiunit enterprises. In this article, they discuss the unique problems that such corporations face, describe how managers tackle those challenges, and offer lessons that will help all types of organizations execute strategy. In a multiunit enterprise, four tiers of management constitute the field organization: store, district, regional, and divisional heads. All these managers are responsible for meeting targets set by corporate headquarters and implementing strategy. To do so, they adhere to five principles of organizational design. First, the field organization's different tiers have overlapping responsibilities; together they create a multilayered net to catch any problems that arise. Second, managers at all levels serve as integrators, coordinating diverse activities and optimizing the efforts of the whole organization rather than its parts. Third, higher-level managers filter data from headquarters to frontline managers, who otherwise might feel overwhelmed by a constant stream of initiatives. Fourth, regional and divisional heads in particular act as translators, defining in concrete terms how the field organization can roll out initiatives. Finally, all managers share responsibility for talent development.
Keywords
Citation
Garvin, David A., and Lynne C. Levesque. "The Multiunit Enterprise." Harvard Business Review 86, no. 6 (June 2008).
FAQs
A multiunit enterprise is a geographically dispersed organization built from standard units (stores, restaurants, or branches) that are aggregated into larger geographic groupings (districts, regions, and divisions).
What is a multi-business company? ›
Answer and Explanation:
A multi-business corporation is a firm with several businesses running in different domains and several offices for each business.
Why is organizational structure important? ›
Organizational structures provide direction and clarity to employees, helping them better understand their roles and responsibilities within the organization. This structure also helps reduce uncertainty by providing clear expectations for how tasks are completed and decisions are made.
What does an enterprise business unit do? ›
Enterprise unit: An enterprise unit is a business unit comprising one premise or multiple premises, engaging in one kind or multiple kinds of economic activities, deciding its own business strategies and use of funds, etc., possessing business account books, and bearing responsibility for its own profits or losses.
What are the four types of organizational structure? ›
Types of organizational structures include functional, divisional, flatarchy, and matrix structures. Senior leaders should consider a variety of factors including the business's goals, industry, and culture before deciding which type of organization is best for their businesses.
What is a good organizational structure? ›
Functional organizational structures are best for small businesses because they allow for clear decision-making hierarchies. Each team operates as an individual “silo.” Once teams grow, they benefit from making these functional structures less rigid. Teams often move faster and collaborate better with more overlap.
What is the difference between enterprise and business unit? ›
The primary difference between an enterprise and a small business lies in their scale and complexity. An enterprise is a large-scale organization engaged in commercial activities, often involving a complex network of operations, departments, and divisions.
What is multi-unit structure? ›
Multi-unit structure means a structure containing three (3) or more separate units, whether residential, commercial, or mixed-use. Based on 10 documents. 10. Multi-unit structure means any structure having a single civic address and multiple occupancies each with their own entrance.
What is multi-unit retail? ›
Answer and Explanation: The multi-unit retail company deals with selling goods and services to buyers at different geographical sites. The goods and services dealt with are common only that they operate from different places because the company wants to increase its sales.
What is a midsize enterprise? ›
Gartner defines midsize enterprise (MSE) as those organizations that have between $50 million and $1 billion in annual revenues and/or 100 to 1000 employees. This is a vendor driven segmentation scheme and segmenting midsize enterprises by revenues or number of employees is arbitrary.
