Fat and Slow Verses Lean and Agile Business Structure: Who Will Win? You will be amazed
For years, companies have been trying to create the right balance between a robust and agile organization. During the 1970s, companies multiplied their own infrastructure each time they expanded into international markets, but left strategic decision-making to headquarters management alone. This organizational structure made the company cumbersome and not as agile. Today, the structure of a company is built on local management teams that are subordinate to regional management, which in turn is managed by headquarters. This structure simplifies the decision-making process and reduces bureaucracy, while giving the headquarters in the mother country full control.
Today it is important for a company to be agile, because it gives it the ability to compete in the global market. In the near future, the headquarters of the parent companies or companies will no longer have full control over their own branches or subsidiaries, and will be much smaller and independent. However, this structure has yet to develop in its final stage where the opposite situation will happen …
The global market operates in two parallel directions:
R. A very competitive direction that forces companies to be at the top of their game, that is, to be innovative, with attractive prices and service oriented. This is all because to cope, a company must have a quick mindset and an excellent execution process.
B. The last direction is the process of a widening gap between large and small businesses. This is created because large companies are swallowing medium-sized companies to avoid competitive forces. As part of this process, large companies will buy or merge with midsize companies that fit their own long-term strategic needs. As a result, large companies will grow and the number of medium-sized companies will shrink. In addition, the number of small companies will increase, as more people seek independence. In this expansion of the global market, it will be difficult to maintain a medium-sized company for a long time.
Ten years ago, top managers said that if you are not number one, two, or even three in your own country, you need to change the direction of business strategy, because it just isn’t working. Today, if you are not one, two or three in the global market, then strategically you should do something different. Large companies have already started this new thought process, using and implementing a subsidiary structure that allows them to control more than one market segment at a time, from food to plastics to minerals and cosmetics.
This market trend will create 5-10 large imperial companies that will control most of the global market. Therefore, strategic and operational flexibility will not be as important as today.