Enterprise size can inhibit innovativeness, enthusiasm and personal commitment. So perhaps strategy is best implemented by reorganizing the large enterprise into modestly-sized units that have clear, distinct missions that aggregate directly into the overarching mission? How practical is this proposition?

Question

What will be an ideal response?

Answer 1

It is practical when the core value adding activities are readily scalable and distinct, and when
demand is clearly segmentable, based on application, geography or other factors. Then these niche
markets in manufacturing and in services can support, indeed may require and specialized division of
activity or labour. The risk is that by adopting this approach the enterprise has in effect created a
portfolio whose managers may see little to be gained from collaboration. Potential synergies will be
not be realised unless there are incentives and mechanisms that make this a priority. When the units
require access to common technologies and business processes, especially when these require major
investments, fragmented units are less likely to be an economically practical solution to the
challenge of maintaining innovativeness. Similarly, when demand in each unit is tending towards
standardisation and commoditisation, the logic supports integration rather than fragmentation.