2. Organizational Structure Organizational Structure: the
formalized patterns ofinteractions that link a firms tasks,
technologies, andpeople 4 types of organizational structure1.
Simple2. Functional3. Divisional4. Matrix
3. Simple Structure Simple Structure: the oldest, and most
commonstructure which the owner makes most of the decisions
Advantage: highly informal and the coordination oftasks is
accomplished by direct supervision Disadvantage: informality may
lead to problems,unclear of responsibilities
4. Functional Structure Functional Structure: major functions
of the firm aregrouped internally Advantage: able to enhance its
coordination andcontrol within each of the functional areas
Disadvantage: differences in values and orientationsamong
functional areas may impede communication andcoordination
5. Divisional Structure Divisional Structure: a form in which
products,projects, or product markets are grouped internally
Advantage: by having separate divisions to manageindividual product
markets, there is a separation ofstrategic and operating control
Disadvantage: expensive, due to operations, andinvestment since
each division must staff multiplefunctional departments
6. Matrix Structure Matrix Structure: combination of functional
anddivisional structures Advantage: facilitates the use of
specialized personnel,equipment, and facilities Disadvantage:
dual-reporting structures can result inuncertainty and lead to
intense power struggles andconflict
7. International Operations:Implications for
OrganizationalStructure Three major contingencies that influence
the chosenstructure: Type of strategy that is driving a firms
foreignoperations Product Diversity Extent to which a firm is
dependent on foreign sales
8. Primary Structures Used to manage a firms international
operation: International division Geographic-area division
Worldwide functional Worldwide product division Worldwide
matrix
9. Multi-domestic Strategies Driven by political and cultural
imperatives requiringmanagers within each country to respond to
localconditions. International division structure Geographic-area
division structure
10. Global Strategies Driven by economic pressures that require
managers toview operations in different geographic areas to
bemanaged for overall efficiency. Worldwide Functional Structure
Worldwide Product Division Structure
11. How an OrganizationsStructure Can InfluenceStrategy
Formulation Strategy follows structure. The strategy that a firm
chooses dictates such structuralelements as the division of tasks,
the need forintegration of activities, and authority
relationshipswithin the organization. However, an existing
structurecan influence strategy formulation. Once a firms structure
is in place it is very difficult andexpensive to change.
12. Global Start Ups: A NewPhenomenon Global Start-Up Defined:
a business organization that,from inception, seeks to derive
significant advantagefrom the use of resources and the sale of
outputs inmultiple countries. Geographical Boundaries of
nation-states areirrelevant for a global start up. Being Global
necessarily involves highercommunication, coordination, and
transportationcosts.
13. Linking Strategic Reward andEvaluation Systems Rewards and
evaluation system Key role in motivating management to conform
with: Organization strategies. Achieve performance targets. Close
the gap between organizational andindividual goals. Improper design
Detrimental to organizational performance. Lower employee morale.
Employee dissatisfaction.
14. Business-Level Strategy Overall Cost Leadership Strategy
Product Lines remain stable. Innovation deals mostly with product
process. Firms competing on cost. Incentives are based on meeting
financial targets. Differentiation Strategy Development of
innovative products or services. Requires to the use of experts to
ID crucial elements. Difficult to evaluate using quantitative data
Based on collaboration and info. sharing.
15. Corporate-Level Strategy Related Diversification Strategy
Use core competencies and sharing across differentbusinesses. Ex.
Sporting Goods Store that buys retail store tocarry other product
lines. Use of promotion based on seniority and skills. Helps to
ensure long-term > short-term. Unrelated Diversification
Strategy Keeping acquired business as additions to the family.
Rewards based on individual accountability.
16. Boundaryless OrganizationalDesign Organizations in which
the boundaries, includingvertical, horizontal, external, and
geographic arepermeable. These include: Barrier-Free Organization
Modular Organization Virtual Organization
17. Barrier-Free Organization An organization design in which
firms bridge realdifferences in culture, function, and goals. Find
common ground that facilitates information sharingand other forms
of cooperative behavior. Pros Leverages talent of employees,
enhancescooperation, enables quicker response to
marketschanges.
18. Barrier-Free Organization Cont. Cons Can be difficult to
overcome political and authorityboundaries. Lacks strong leadership
and common vision. Time-consuming and difficult to manage
democraticprocesses.
19. Modular Organization An organization in which non-vital
functions areoutsourced, uses the knowledge and expertiseof outside
suppliers while retaining strategiccontrol. Ex. Nike and Reebok.
Pros Able to direct firms managerial and technical talentto most
critical activates. Maintains full strategic control over
corecompetencies. Achieves best in class performance for each link
inthe value chain.
20. Modular Organization Cont. Cons Inhibits common vision
through reliance onoutsiders. Diminishes future competitive
advantages if criticaltechnologies are outsourced. Increases the
difficulty of bringing back into firmactivities that now add value
due to market shifts.
21. Virtual Organization A continually evolving network of
independentcompanies that are linked together to shareskills,
costs, and access to one anothersmarket. Pros Enables the sharing
of costs and skills. Enhances access to global markets. Increases
market responsiveness.
22. Virtual Organization Cont. Cons Harder to determine where
one company ends andanother begins, due to close
interdependenciesamong players. Leads to potential loss of
operational control amongplayers. Results in loss of strategic
control.
23. Making BoundarylessOrganizations Work Achieving the
coordination and integrationnecessary to maximize the potential of
anorganizations human capital involves muchmore than creating a new
structure. Some Factors to consider: Common culture and shared
values. Horizontal organizational structures. Horizontal systems
and Processes. Communications and information technologies (IT).
Human resource Practices.
24. Ambidextrous OrganizationalDesign Manager must be able to
maintain: Adaptability When changes are rapid and unpredictable
Alignment Ability to exploit assets and competencies. Very
difficult to accomplish Study of different organizational studies
found: Were effective Launched breakthrough products and services.
Improved existing business performance.