Midea’s Re-adoption of M-form Structure

Abstract

With a focus on the alignment between business strategies and organization design, this illustrative case study describes and analyzes the evolution and reform of Midea’s organizational structure when confronting both internal and external changes. As one of China’s biggest and fastest-growing household appliance enterprises, Midea adopted, discarded and readopted an M-form1 organizational structure within a five-year period from 1997. This case study first investigates the reasons behind Midea’s reform toward decentralization and the formation of governing rules to balance centralization and decentralization. Different decentralized structures are then contrasted basing on product segments, business streams or even key subsidiaries acting as second-tier group companies. After its trial transformation into an H-form company that holds majority shares in several incorporated subsidiaries, Midea chose to switch to a group company incorporated structure soon after its leadership transition in 2012. Preceding the shortening of the group’s ownership chain was the construction, refinement, and evolution of its 9+2+4 divisional structure. This case study is prepared to provoke discussion and thoughts on the (re)design of a properly decentralized structure suitable for large-sized companies with multiple businesses and the links with external and internal factors.

Keywords

M-form structure / organizational design / structural evolution

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2016 Higher Education Press and Brill