Linked Horizontal Units and
Similar Horizontal Units
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Template for: Linked Horizontal Units & Similar Horizontal Units
In most companies, the relationships between horizontal units and the
business units they serve are well understood. The objectives of the SBUs
serve as the framework to guide the performance of the SHUs. Typically, an SBU
will request services from an SHU and budget for those services. Discussions
regarding performance expectations and expected results occur as part of the
normal negotiations that often take place during the budgeting cycle.
However, the relationship between horizontal units is often less clear. There
may not be any formal arrangement or process whereby the two units attempt to
optimize the results of the corporation (or group).
The purpose of this section is to discuss the relationship between the
horizontal unit under discussion and other horizontal units which perform
activities that are either linked to activities performed by this unit, or
similar to the activities performed by this unit. Both types of situations
should be analyzed; and both are discussed below.
Linked Horizontal Units
Linkages are the relationships between the way one value activity is
performed and the impact on cost or performance of another activity. For
example, the better marketing analyzes customer needs, the better the
development of the product should be. The better the product is designed and
built, the easier the product should be to sell, and the fewer customer
complaints there should be per customer.
Within most firms there are many linkages between activities where
performance of one activity affects another. These linkages should be documented
and analyzed.
For example, a common linkage in many firms exists between the centralized
human resource department and the centralized information systems department.
The human resource department should identify in their statement of direction
their linkage and dependence upon the I/S department (to build a customized
employee tracking system, for example).
Similar Horizontal Units
Similar horizontal units are those cost centers which perform the same
activity in different parts of the organization.
For example, consider a company of thirty businesses which are grouped into
three divisions with each division having its own applications development unit.
Each of these three applications development teams (which develop systems for
their respective division) should be aware of the activities of the other two
development groups with the goal of sharing information and software where
appropriate.
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