founder of Panasonic, devised a
system, dividing the company into three autonomous business units: radios,
lighting & batteries, and synthetic resins/electro-thermal products...
Hewlett-Packard set the pattern for a
divisional structure of an
long ago. Divisions aggregated into units such as Test and Measurement
Organization are the core dominant organizational entities of the company.
When John Chambers, President and CEO of Cisco Systems looked around for
large-scale organizational models that sustained
satisfaction, he found Hewlett-Packard to be the best.
reduced or removed central functions, and business units were empowered to
chose their own routes to implement changes.
The units aim at accomplishing the overall
strategy of BP, but enjoy complete autonomy in their operations.
They are free to develop their own processes
and solutions according to their local requirements.
In order to integrate the efforts of the
business units engaged in the same business activities, they were organized
into peer groups. They met periodically to discuss the performance of their
businesses. The purpose of the reorganization was to
facilitate knowledge sharing and build
i.e. to exchange knowledge and synergize creative capabilities and expertise
of the employees working in different business units of BP.
initially started as a sales concept to most effectively meet the
needs of different groups of customers. It soon evolved into a
series of complete business units, each with its own sales, service,
finance, IT, technical support, and manufacturing arms.
"It really makes sense for our business," says
Michael Dell, the Founder of
Dell Computer Corporation.3 "Our direct connection to our
customers enables us to understand the different needs of different
customers. Segmentation takes closed
loops and makes it even smaller and more intimate. It refines our
relationship with our customers."