MGMT 475 - Ch. 12
Solution: Delayering
The process of reducing the number of levels in a management hierarchy
Market control
The regulation of the behavior of individuals and units within an enterprise by setting up an internal market for some valuable resource(s), such as capital
matrix structure
- An organizational structure in which managers try to achieve tight coordination between functions, particularly R&D, production, and marketing --High technology firms based in rapidly changing environments will sometimes adopt a matrix structure.
Strategy, Environment and the Need for Integration
- The need for integration between functions is greater for firms that are competing through product development and innovation.
Formal Integrating Mechanisms
- There is often a need to coordinate the activities of different functions and divisions within an organization to achieve strategic objectives. - The formal integrating mechanisms used to coordinate subunits vary in complexity from simple direct contact and liaison roles, to teams, to a matrix structure. - In general, the greater the need for coordination between sub-units (functions or divisions), the more complex the formal integrating mechanisms need to be.
Tall orgs limitations
-Communication problems `Long time taken in decision-making and adherence `Distortion of commands and orders -Increases expenses
Organizational structure can be thought of in terms of three dimensions:
1. Vertical Integration 2. Horizontal Differentiation 3. Integrating Mechanisms
Centralization
: Structure in which the decision making authority is concentrated at a high level in the management hierarchy
Goal
A desired future state that an organization attempts to realize
Standard
A desired future state that an organization attempts to realize
Autonomour sub-unit
A firm's vertical differentiation determines where in its hierarchy the decision-making power is concentrated.
Centralization adn Decentralization
A firm's vertical differentiation determines where in its hierarchy the decision-making power is concentrated.
Figure 12.7
A knowledge Network
Control
A network for transmitting information within an organization that is based not on formal organization structure, but on informal contacts between managers within an enterprise and on distributed information systems.
Figure 12.8
A typical control system
Figure 12.3
A typical functional structure
multidivisional structure
An organizational structure in which a firm is divided into divisions, each of which is responsible for a distinct business area. --Allows a company to grow and diversify while reducing coordination and control problems --Uses self-contained divisions and has a separate corporate headquarters staff
ORGANIZATION ARCHITECTURE
The totality of a firm's organizational arrangements including its formal organizational structure, control systems, incentive systems, organizational culture, organization processes, and human capital.
Low Integration
Bureaucratic controls in the form of budgets are used to allocate financial resources to each function, and to control spending by the functions. Output controls will then be used to assess how well a function is performing.
High Integration
Bureaucratic controls will again be used for financial budgets and, as before, output controls will be applied to the different functions. Output controls will also be applied to cross-functional product development teams.
Bureaucratic control
Control through a formal system of written rules and procedures
Personal Control
Control through a formal system of written rules and procedures
Teams
Formation of a group that represents each division or department: - Facing a common problem - With a goal of finding a soultion to the problem
Organizational Culture
Specific collection of values and norms shared by people and groups in an organization - Culture can exert a profound influence on the way people behave within an organization, on the decisions that are made, on the things that the organization pays attention to, and ultimately, on the strategy and performance of the firm.
Output control
Goals that are set for units or individuals to achieve and monitoring performance against those goals
Figure 12.6
Integrating Mechanisms
Figure 12.9
Strategy, environment, and organization
Informal Integrating Mechanisms
Knowledge networks that are supported by an organization culture that values teamwork and cross-unit cooperation
Knowledge network
Knowledge networks that are supported by an organization culture that values teamwork and cross-unit cooperation
Decentralization
Structure in which the decision making authority is distributed to lower level managers or other employees
Strategic control systems
Mechanism that allows managers to monitor and evaluate: --whether their business model is working as intended. --how their business model could be improved.
Figure 12.1
Organizational Architecture
3. Integrating Mechanisms
Processes and procedures used for coordination subunits.
Peer Control
The pressure that employees exert on others within their team or work group to perform up to or in excess of the expectations of the organization
Figure 12.2
Tall vs flat hierarchies
Organizational Structure
The combination of the location of decision-making responsibilities, the formal division of the organization into subunits, and the establishment of integrating mechanisms to coordinate the activities of the subunits.
Incentives
The devices used to encourage and reward appropriate employee behavior
Incentives
The devices used to encourage desired employee behavior.
2. Horizontal Differentiation
The formal division of the organization into subunits.
Norms
The ideas or shared assumptions about what a group believes to be good, right and desirable
Values
The ideas or shared assumptions about what a group believes to be good, right and desirable
1. Vertical Integration
The location of decision making responsibilities within a structure, referring to centralization or decentralization, and number of layers in a hierarchy, referring to whether to organizational structure is tall or flat.
Organization Culture
The manner in which decisions are made and work is performed within the organization.
Organization Processes
The manner in which decisions are made and work is performed within the organization.
Controls
The metrics used to measure the performance of subunits and make judgments about how well managers are running them.
People
The norms and value systems that are shared among the employees of an organization.
functional structure
The organizational structure is built upon the division of labor within the firm with different functions focusing on different tasks --Thus, there might be a production function, and R&D function, a marketing function, a sales function, and so on. --A top manager, such as the CEO, or a small top management team, oversees these functions. Most single businesses of any scale are organized along functional lines.
The need for integration between functions is greater for firms that are competing through product development and innovation.
` new products are developed in a timely manner. ` that they can be efficiently produced and delivered. ` that they match consumer demands.
Basic Structure of competitive advantage
`Control and efficiency `Control and quality `Control and innovation `Control and responsiveness to customers
Ways to increase communication and coordination among functions and divisions
`Direct contact `Liaison roles ` Teams
Culture can exert a profound influence on the way people behave within an organization, on the decisions that are made, on the things that the organization pays attention to, and ultimately, on the strategy and performance of the firm.
`The business level strategy of the firm `The nature of the environment in which the firm competes
Figure 12.4
a multidivisional structure
When incentives are tied to team performance
as is often the case, they have the added benefit of encouraging cooperation between team members and fostering a degree of peer control
Figure 12.5
matrix structure in a high-tech firm
