How do the recommended functional structures vary between the cost leadership strategy and the differentiation strategy?

Question

What will be an ideal response?

Answer 1

The cost leadership strategy needs a functional structure with highly centralized authority in the corporate staff. Jobs are highly specialized and organized into homogenous subgroups. Highly formalized rules and procedures are established. The most important function in the structure is operations. All these aspects of the structure contribute toward efficiency.

The differentiation strategy needs a functional structure that has decentralized authority, less specialized jobs, and fewer formal rules and processes. The most important functions are R&D and marketing. All of these aspects of the structure contribute toward communication among employees, innovation, and close interaction with the customer.