A multi-unit enterprise has its own unique characteristics which differentiate them from other multinationals and especially, multidivisional companies. According to David Garvin and Lynne Levesque of Harvard Business School, this enterprise may be defined as “a geographically dispersed organization built from standard units such as branches, service centres, hotels, restaurants, and stores, which are aggregated into larger geographic groupings such as districts, regions, and divisions.”

Some good examples might be retail chains, banks, hotel and restaurant chains, mobile service providers, etc.

From a functional standpoint, these enterprises have several levels of management, with their own financial and operating objectives to achieve that become broader and more extensive as you go up the corporate ladder. All of these units report to a corporate headquarters where there are several departments which deal exclusively in setting policies, creating programs and defining strategy, budgeting, pricing and marketing plans. Unlike multidivisional enterprises, these enterprises are quite centralised and are clearly managed and directed from a centralised decision-making centre.

The traditional multi-divisional structure is clearly different. Under this model, each division acts independently of one another and may even specialise in different product lines and services.

The challenges facing each organisation are quite different, but here we will discuss those related to the multi-unit enterprise:

1. How to maintain consistency. This is perhaps the most difficult objective to achieve. These organisations are composed of thousands of employees, with branch offices in several territories. But they promise each consumer the same brand experience, which requires each centre to have uniform operating procedures and strategies.

2. Some degree of personalisation or adaptation. Different branch offices located in specific geographic areas must respond to the market conditions of that specific location. It is quite different to be the leader in one region and take second place in another. Maintaining the same amount of resources etc. may lead to a loss of market share in one or the other.

3. Field organisation versus Corporate Headquarters. There is always friction between field managers and execs at headquarters. Both are necessary, but they both have quite different job responsibilities. Corporate Headquarters (HQ) make strategic decisions on marketing, budgeting, product lines and markets, etc. Field managers, however, have to deliver revenue increases, roll out initiatives and implement plans of action.

4. Finally, defining field manager responsibilities. This is where most multi-unit companies either make or break the grade. Field managers are not upper management, but they are not middle management either. They make decisions on budgeting, but don’t set budgets. They manage profits and losses, but are not responsible for pricing. They coordinate tasks, but do not design or define the mission to accomplish.

In a nutshell, the multi-unit company structure is complex and trying to tame the “corporate monster” is not an easy job by any stretch of the imagination. The companies that tackle the challenges mentioned above have proven to be the most successful organisations around the world.

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