Multiunit Enterprises Receive a Surprisingly

Multiunit enterprises receive a surprisingly small amount of scholarly attention considering their significant effects on corporations. According to David a. Garvin and Lynne C. Levesque, 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)."

This organizational structure has become increasingly common across many different industries.

The multiunit enterprise has and will continue to have many ramifications on operational efficiency, corporate strategy, and management structure. Garvin and Levesque mention consistency and customization as the two major challenges. Thesis:

Problem

Consistency - Multiunit enterprises can encounter consistency issues because they consist of numerous and distant units. The disparate nature of the units makes implementation difficult because of communication barriers between the units.

2) Customization - Each unit within the organization retain the ability its customize its operations. This is necessary for individual units not only for dealing with unique challenges but for taking advantage of unique opportunities.

3) Communication - the division of responsibilities between units can make communication of the corporate agenda to each unit difficult.

Proposed Solution

Garvin and Levesque propose five principles to guide the re-organization of a multi-unit enterprise in solving problems with Consistency, Customization and Communication:

1) Create a multilayered net of different field units to catch any problems that arise.

2) Have managers at all levels serve as integrators, coordinating diverse activities and optimizing the efforts of the whole organization rather than its parts.

3) Have higher-level managers filter data from headquarters to frontline managers.

4) Have all divisional heads act as translators, defining in concrete terms how the field organization can roll out initiatives.

5) Managers at all levels share responsibility for talent development.

Analysis

Garvin and Levesque's principles are problematic because they are restricted by the hub-node conception of the organization. Multi-unit organizations naturally organize as hubs and nodes, typically a central corporate headquarters and field offices. This structure requires all new information passing from the nodes to be processed by the hubs before passing to the nodes.

The hub-node framework in the multiunit context both adds risk and precludes opportunities for improvement. The principle suggesting that "higher-level managers filter data from headquarters to frontline managers" runs the risk of that information will be lost in the process. The principles envision nodes as useful merely for detection and notification of problems, ignoring the executive potential of nodes. The hub-node structure precludes nodes from passing new information to other nodes.

Also, Garvin and Levesque's proposed solutions to the problem may ultimately prove too cumbersome for the average organization to execute well. Their suggestions actually promise to make more work for the higher-level managers. This is ironic because the key justifications for organizational expansion are economies of scale and operational efficiency.