Product-specific decisions at the lower level

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Even before the metals and manufacturing companies described earlier, U.S. railroads in the nineteenth century were M-form organizations based on geography. Why might a large railroad be better organized as M-form than U-form?

The key difference between the U-form and the M-form is that the divisions in an M-form company are organized by brand or geographical region and not by their function as they are in the U-form. Each division actually operated its own set of functionally organized departments, which were overseen by a divisional manager, meaning the divisions themselves often behaved like small U-form companies. Each brand was in control of its own advertising, manufacturing, and accounting procedures, so long as they were able to operate effectively and to the level of production that had been approved by the central office. The M-form keeps decisions at the divisional level that would be sent to headquarters in a U-form firm. Product-specific decisions at the lower level are made by those who are most likely to have the relevant information at hand and know how evaluate it.

Reference no: EM13159610

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