CHAPTER 11 - Organizational Design: Structure, Culture, and Control

What is important is defined by _____________; which attitudes and behavior are deemed appropriate are defined by ____________.

values, norms

______________describes a firm's ability to address trade-offs not only at one point but also over time. It encourages managers to balance _____________—applying current knowledge to enhance firm performance in the short term—with______________—searching for new knowledge that may enhance a firm's future performance

Ambidexterity, exploitation, exploration

Firms using the M-form organizational structure to support a related-diversification strategy tend to

concentrate decision making at the top of the organization.

Firms that follow a single-business or dominant-business strategy at the corporate level gain at least _________ of their revenues from their primary activity; they generally employ a __________.

70 percent, functional structure

include elements such as the design and layout of physical space (e.g., cubicles or private offices), symbols (e.g., the type of clothing worn by employees), vocabulary, what stories are told, what events are celebrated and highlighted, and how they are celebrated (e.g., a formal dinner versus a casual barbecue when the firm reaches its sales target).

Artifacts

refers to the degree to which decision making is concentrated at the top of the organization.

Centralization

In these temporary teams, members come from different functional areas to work together on a specific project or product, usually from start to completion.

Cross-functional

What is true of an M-form?

Each division operates independently.

captures the extent to which employee behavior is steered by explicit and codified rules and procedures.

Formalization

For the global strategy of international, what is its functional strategy?

Functional

determines the formal, position-based reporting lines and thus stipulates who reports to whom.

Hierarchy

a firm's resistance to change the status quo, can set the stage for the firm's subsequent failure.

Inertia

What is true about blue ocean strategy?

It requires reconciling the trade-offs between differentiation and low cost.

are characterized by a high degree of specialization and formalization and by a tall hierarchy that relies on centralized decision making.

Mechanistic organizations

allow for standardization and economies of scale, and often are used when the firm pursues a cost-leadership strategy at the business level.

Mechanistic structures

define appropriate employee attitudes and behaviors.

Norms

is a framework for R&D that proposes permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from ideas and innovation from external sources.

Open innovation

also typically exhibit a higher rate of entrepreneurial behaviors and innovation.

Organic organizations

have a low degree of specialization and formalization, a flat organizational structure, and decentralized decision making.

Organic organizations

allow firms to foster R&D and/or marketing, for example, as a core competency.

Organic structures

describes the collectively shared values and norms of an organization's members.

Organizational culture

is the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization.

Organizational design

The matrix structure combines the benefits of the M-form with those of the functional structure. What are its functional structure benefits?

Responsiveness and decentralization

describes the degree to which a task is divided into separate jobs—that is, the division of labor.

Specialization

emerge when the company's core values are widely shared among the firm's employees and when the norms have been internalized.

Strong cultures

Firms that pursue either related or unrelated diversification generally employ a multidivisional structure.

True

define what is considered important.

Values

The goal for managers who want to pursue a blue ocean strategy is to build an _________________, one that enables managers to balance and harness different activities in trade-off situations.

ambidextrous organization

Corporate headquarters adds value by functioning as

an internal capital market.

A successful ____________ requires reconciliation of the trade-offs between differentiation and low cost.

blue ocean strategy

What is an example of how values and norms can act as a control mechanism?

by helping employees address unpredictable problems

A second critical drawback of the functional structure is that it

cannot effectively address a higher level of diversification, which often stems from further growth.

An organization's culture can turn from a core competency into a ____________ if a firm relies too long on the competency without honing, refining, and upgrading as the firm and the environment change

core rigidity

The goal of a ____________ is to create a competitive advantage by reducing the firm's cost below that of competitors while offering acceptable value.

cost-leadership strategy

What are tics of simple organizational structures?

decentralized decision making, low formalization, and flat hierarchies

Input controls are

designed by management before employees make any business decisions.

Firms that pursue a ______________ at the business level frequently have an organic structure.

differentiation strategy

The goal of a ___________ is to create a competitive advantage by offering products or services at a higher perceived value, while controlling costs.

differentiation strategy

The inability to effectively deal with higher levels of _______________, a common result of growth, is a weakness of the functional structure.

diversification

The lack of linkage between functions is the reason, for example, why R&D managers often _________ directly with marketing managers.

do not communicate,

The goal is to design an organization that allows managers to

effectively translate their chosen strategy into a realized one.

Motivation that is driven by external factors, such as rewards or punishments, is called ____________ motivation

extrinsic

A global matrix structure also allows the firm to

feed local learning back to different SBUs and thus diffuse it throughout the organization.

Often, company founders define and shape an organization's culture, which can persist for many decades after their departure. This phenomenon is called

founder imprinting

Companies pursuing business-level like cost leadership, differentiation, and integration should organize using a ____________ structure

functional

When a firm covers a limited geographic area and is narrowly focused in terms of product/service offerings, a ___________ structure is recommended

functional

As sales increase, firms generally adopt a _____________ which groups employees into distinct functional areas based on domain expertise.

functional structure

Effective strategy implementation is critical to

gaining and sustaining competitive advantage

Firms tend to use a ______________to pursue a transnational strategy, in which the firm combines the benefits of a multidomestic strategy (high local responsiveness) with those of a global-standardization strategy (lowest-cost position attainable).

global matrix structure,

For the global strategy of transnational, what is its functional strategy?

global matrix, balance of centralized and decentralized decision making, two layers of hierarchy (geographic and product)

_________, is a situation in which opinions coalesce around a leader without individuals critically evaluating and challenging that leader's opinions and assumptions.

groupthink

Top-down strategic planning takes place in

highly centralized organizations.

Which are examples of strategic control-and-reward systems?

input / output controls and organizational culture

What is true of the network organizational structure?

it enables firms to access communities of practice and it should be supported by uniform, company-wide policies and procedures

A firm that is organized according to SBUs but also is decentralized in that different geographic locations are fully functional is likely organized in the

matrix structure

To reap the benefits of both the M-form and the functional structure, many firms employ a mix of these two organizational forms, called a

matrix structure

Planned emergence is found in

more decentralized organizations.

The _______________ consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility.

multidivisional structure (or M-form)

For the global strategy of multidomestic, what is its functional strategy?

multidivisional with divisions according to geographic areas; decentralized decision making

For the global strategy of global standardization, what is its functional strategy?

multidivisional with divisions according to products, centralized decision making

Firms using the M-form structure to support an unrelated-diversification strategy

often decentralize decision making.

In particular, a(n) _______________ defines how jobs and tasks are divided and integrated, delineates the reporting relationships up and down the hierarchy, defines formal communication channels, and prescribes how individuals and teams coordinate their work efforts.

organizational structure

What has a major influence on employee conformity and performance?

peer control

One of the disadvantages of matrix structure is that

reporting structures are often unclear

Although the functional structure facilitates rich and extensive communication between members of the __________ department, it frequently lacks effective communication channels ___________ departments.

same, across

generally is used by small firms with low organizational complexity.

simple structure

Centralized decision making often correlates with

slow response time and reduced customer satisfaction.

Employees learn about an organization's culture through _____________, a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations.

socialization

__________ concerns the organization, coordination, and integration of how work gets done

strategy implementation

Managers employ these three levers to coordinate work and motivate employees across different levels, functions, and geographies.

structure, culture, and control

The key components of organizational design are

structure, culture, and control.

For firms that pursue either related or unrelated diversification,

the M-form is the preferred organizational structure

Single business, dominant business, related diversification, and unrelated diversification are

the four types of corporate diversification

In a global matrix structure,

the geographic divisions are charged with local responsiveness and learning.

What is true about open innovations?

the sharing of ideas and inventions from within the firm and from outside sources can go both ways.

What is the goal of an internal capital market?

to allocate capital more efficiently than would happen in an external capital market

In an ambidextrous organization, a __________ such as __________ must take on the necessary coordination and integration work.

top-level manager, the CEO

The functional structure results in difficulty communicating across departments

true