ORGANIZATIONA

L STRUCTURE
CHAPTER 11
LUXOTTICA’S
DUAL CEO
STRUCTURE:
A KEY TO LONG-TERM
SUCCESS OR A CAUSE FOR
CONCERN?

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 STRUCTURE: A KEY TO
LONG-TERM SUCCESS OR A CAUSE
FOR CONCERN?
⊹ Luxottica dominatesall phases of the eyewear
industry. One reason for this dominance is that the
firm is vertically integrated in that it designs its own
products, produces them through manufacturing
facilities located throughout the world, and sells
them in outlets such as those mentioned above. In the
view of those leading the firm, Luxottica’s extensive
degree of vertical integration is a competitive
advantage.
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 STRUCTURE: A KEY TO
LONG-TERM SUCCESS OR A
CAUSE FOR CONCERN?
Founded in Italy in 1961, Luxottica is the world’s
largest eyewear company, controlling over 80 percent
of major eyewear brands. Alain Mikli, Arnette, Oakley,
and Persol are some of the company’s proprietary
brands. Luxottica also makes products under license
for a large number of well-known companies such as
Armani, Bulgari, Burberry, Coach, Tiffany & Co., Tory
Burch,
and Versace, to name only a few
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Late in 2014, Luxottica changed its organizational structure
in a major way, as demonstrated by the fact that co-CEOs
were appointed.

Although unusual, the co-CEO structure may work for

Luxottica. In the final analysis though, Luxottica’s board
must carefully monitor the firm’s performance under a dual
CEO structure and be prepared to make a change to that
structure if evidence suggests that such an action would be
in the firm’s best interest.

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 Organizational
11- Structure and
1 Controls
 In particular, evidence suggests that
“ performance declines when the firm’s strategy
is not matched with the most appropriate
structure and controls.

Even though mismatches between strategy and

structure do occur, research indicates that
managers try to act rationally when forming or
changing their firm’s structure.
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11-1a Organizational
Structure
Organizational structure specifies the
firm’s formal reporting relationships,
procedures, controls, and authority and
decision-making processes.

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When a structure’s elements (e.g., reporting relationships,
procedures, etc.) are properly aligned with one another, the
structure increases the likelihood that the firm will operate in ways
that allow it to better understand the challenging cause/effect
relationships it encounters when competing against its rivals

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Appropriately designed organizational structures provide the
stability a firm needs to successfully implement its strategies and
maintain its current competitive advantages while simultaneously
providing the flexibility to develop advantages it will need in the
future.

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 STRUCTURA
L STABILITY
structural stability provides the capacity the
firm requires to consistently and predictably
manage its daily work routines

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 STRUCTURAL
FLEXIBILITY
structural flexibility makes it possible for the
firm to identify opportunities and then allocate
resources to pursue them as a way of being
prepared to succeed in the future

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Changing
McDonald’s
Organizational
Structure:
A Path to Improved Performance?

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Changing McDonald’s
Organizational Structure: A Path
to Improved Performance?
Operating close to 37,000 restaurants worldwide
and with annual sales closing in on $90 billion,
McDonald’s is huge. In fact, it is several times
larger than Burger King and Wendy’s its closest
competitors. In addition to the United States and
Canada, McDonald’s has a significant presence in
France, German, Russia, and the United Kingdom.
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Changing McDonald’s Organizational
Structure: A Path to Improved
Performance?

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 Organizational
11-
1b Controls
 ORGANIZATIO
NAL
CONTROLS
Organizational controls guide the use of strategy, indicate how to
compare actual results with expected results, and suggest
corrective actions to take when the difference is unacceptable.

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 STRATEGIC
CONTROLS
Strategic controls are largely subjective criteria intended to verify
that the firm is using appropriate strategies for the conditions in
the external environment and the company’s competitive
advantages

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 FINANCIAL
CONTROLS
Financial controls are largely objective criteria used to measure
the firm’s performance against previously established quantitative
standards. When using financial controls, firms evaluate their
current performance against previous outcomes as well as against
competitors’ performance and industry averages.
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