Final Business Policy

Pros and Cons of Matrix Organizational Structure

*Pros* - easy to design - accommodates a wide variety of project-oriented business activities - provides good training ground for strategic managers -fosters creativity and multiple sources of diversity *Cons* - difficult to implement - dual-reporting: where business heads have 2 bosses, both playing a role in performance reviews

Pros and Cons of Product-Team Structure

*Pros* - irons out early product or process design problems -reduce costs associated with design, manufacturing, and marketing -speeds up innovation and customer responsiveness

Pros & Cons of Simple Organizational Structure

*Pros* -allows rapid responses to product/market shifts and the ability to accommodate unique customer demands without major coordination difficulties -encourage employees to multitask *Cons* -can be very demanding on the owner/manager -if successful and starts growing, causes the owner-manager to give increased attention to day-to-day concerns, which may come at the expense of time invested in stepping back and examining strategic questions about the company's future -company's reliance on owner as the central point for all decisions can limit the development of future managers capable of assuming duties that allow the owner time to be a strategist

Pros and Cons of Functional Organizational Structure

*Pros* -dividing tasks into functional specialties enables the personnel to concentrate on only one aspect of the necessary work -allows use of the latest technical skills -develops a high level of efficiency *Cons* -effective coordination of the functional units -limited perspectives and differences in the priorities of the functional units *Integrating devices (project teams or planning committees) are used in these types of firms to enhance coordination and to facilitate the understanding across functional areas

Pros and Cons of Divisional Structure

*Pros* (he had these highlighted in his text book) - Forces coordination and necessary authority down to the appropriate level for rapid response - Places strategy development and implementation in closer proximity to the unique environments of the division -Frees chief executive officer for broader strategic decision making -sharply focuses accountability for performance - retains functional specialization within each division - provides good training ground for strategic managers - increases focus on products, markets, and quick response to change *Cons* -presents problems of determining how much authority should be given to division managers - creates a potential for policy inconsistencies among divisions -increases costs incurred through duplication functions - creates difficulty maintaining overall corporate image

4. Matrix Organizational Structure

- A structure in which functional and staff personnel are assigned to both a basic functional area and to a project or product manager. - It provides dual channels of authority, performance responsibility, evaluation, and control -intended to make the best use of talented people within a firm by combining the advantages of functional specialization and product-project specialization -increases the number of middle managers who exercise general management responsibilities and, thus, broaden their exposure to organizationwide strategic concerns

Strategic Business Units (SBUs)

- An adaptation of the divisional structure in which various divisions or parts of divisions are grouped together based on some common strategic elements, usually linked to distinct product/market differences EXAMPLE: General Foods created an SBU organization along menu lines with SBUs for breakfast foods, beverages, main meals, desserts, and pet foods. -allowed for a distinct market focus for each unit and the divisions each contained

3. Divisional Structure

- chosen to meet the increased coordination and decision-making requirements that result from increased diversity and size - Structure in which a set of relatively autonomous units, or divisions, are governed by a central corporate office but where each operating division has it owns functional specialists who provide products or services different from those of other divisions -Manufacturers often organize sales into divisions based on differences in distribution channels -Strategic Business Units (SBUs) and Holding Companys

5. Product-Team Structure

- meant to take temporary advantage of a matrix-type team while preserving an underlying divisional structure - "temporary" or "flexible" overlay structure - Assigns functional managers and specialists to a new product, project, or process team that is empowered to make major decisions about their product. Team members are assigned permanently in most cases

2. Functional Organizational Structure

-A structure in which the tasks, people, and technologies necessary to do the work of the business are divided into separate "functional" groups (e.g. marketing, operations, finance) with increasingly formal procedures for coordinating and integrating their activities to provide the business's products and services -when you reach 15-25 people in your company -predominate in firms with a single or narrow product focus and that have experience success in their marketplace, leading to increased sales and an increased number of people needed to do the work behind those sales

Matrix Structure Advantages

-Increases market responsiveness, collaboration & synergies INTEGRATED KNOWLEDGE -Allows more efficient utilization of resources ALLOWS DUAL DIMENSIONS -Improves flexibility, coordination & communication -Increases professional development

Restructuring

-Redesigning an organizational structure with the intent of emphasizing and enabling activities most critical to a firm's strategy to function at maximum effectiveness

Holding Company Structure

-Structure in which the corporate entity is a broad collection of often unrelated businesses and divisions such that it (the corporate entity) acts as financial overseer "holding" the ownership interest in the various parts of the company, but has little direct managerial involvement -can provide a cost savings over the more active SBU approach

1. Simple Organizational Structure

-Used in the smallest business enterprise/businesses that serve a simple, local product/market or narrow niche -There is an owner and, usually, a few employees and where the arrangement of tasks, responsibilities, and communication is highly informal and accomplished through direct supervision. -all strategic and operating decisions are made by the owner or a small owner-partner team -there is little need to formalize roles, communication, and procedures -strategic concern= survival -this structure maximizes owner's control -most businesses in this country and around the world are of this type

Strategy Formulation Process

1. Gather information 2. Analyze information and make decision 3. Implement the decision

Advantages of outsourcing as a means to create an agile, virtual organization

1. It can lower costs incurred when the activity done in-house in outsourced 2. It can reduce the amount of capital a firm must invest in production or service capacity 3. The firm's managers and personnel can concentrate on mission-critical activities 4. This concentration and focus allow the firm to control and enhance the source of its core competitive advantage 5. Careful selection of outsourced partners allows the firm to potentially learn and develop its abilities through ideas and capabilities that emerge from the growing expertise and scope of work done by the outsource partner for several firms.

The 5 Types of Traditional Organizational Structures

1. Simple Organizational Structure 2. Functional Organizational Structure 3. Divisional Structure ---SBU's ---holding company 4. Matrix Organizational Structure 5. Product-Team Structure

Cons of outsourcing as a means to create an agile, virtual organization

1. outsourcing involves loss of some control and reliance on "outsiders" 2. Outsourcing can create future competitors 3. Skills important to a product or service are "lost" 4. Outsourcing may cause negative reaction from the public and investors 5. Crafting good legal agreements, especially for services, is difficult 6. The company may get locked into long-term contracts at costs that are no longer competitive 7. Costs aren't everything: What if my supplier underbids? 8. Outsourcing can lead to increasingly fragmented work cultures where low-paid workers get the work done with little initiative or enthusiasm 9. Intellectual property development and ownership can be complicated

Average number of Directors on the Board

11

Average Board of Director sits on how many Boards

3

Business Process Reengineering

A *customer-centric* restructuring approach. It involves fundamental rethinking and radical redesigning of a business process so that a company can best create value for the customer by eliminating barriers that create distance between employees and customers -intended to place the decision-making authority that is most relevant to the customer closer to the customer, in order to make the firm more responsive to the needs of the customer. -IBM provides a good example of reengineering

Agile Organization

A firm that identifies a set of business capabilities central to high profitability operations and then builds a virtual organization around those capabilities allows the agile firm to build its business around the core, high-profitability information, services, and products

Lattice

A metaphor used to describe the reality of the nature & structure of work in organizations today- a 3-dimensional structure extending vertically, horizontally, and diagonally whereby people communicate and work with others anywhere, anytime, to provide answers, ideas, form teams, and solve problems

Corporate Lattice- a book

A model of how work, careers and communication get done in twenty-first century organizations up, down and across organizational levels and positions vs. a "corporate ladder" tradition that views work, careers, and communication as predominantly hierarchical driven

Virtual Organization

A temporary network of independent companies- suppliers, customers, subcontractors, and even competitors- linked primarily by information technology to share skills, access to markets and costs

Which type of organizational structure is best identified as having a set of relatively autonomous units or divisions that are governed by a central corporate office yet each unit or division has its own functional specialists who provide services or products that are different from the other units. A) Divisional structure B) Matrix C) Simple D) Formal

A) divisional structure

All of the following except which one would be classed as true statements regarding the matrix organizational structure? A) It is fairly simple to implement within an organization. B) The functional and staff personnel are assigned to both a basic functional area and to a project or product manager. C) It combines the advantages of functional specialization and product-project specialization. D) It is rather easy to design.

A) it is fairly simple to implement within an organization

network structure (virtual organization)

Administration is the primary function, and most other functions are contracted out to other firms

Modular Organization

An organization structure via outsourcing where the organization's final product or service is based on the combination of several companies' self-contained skills and business capabilities EXAMPLE: Dell because it uses outsourced manufacturers and assemblers to provide parts and assemble its computers. also uses outsources customer service providers in different parts of the world to provide most of its customer service and support activities

matrix structure

An organizational structure that simultaneously groups people and resources by function and by product.

Self-management

An outcome of downsizing was increased self-management Allowing work groups or work teams to supervise and administer their work as a group or team without a direct supervisor exercising the supervisory role. These teams set parameters of their work, make decisions about work-related matters, and perform most of the managerial functions previously done by their direct supervisor

Strategic Alliances

Arrangements between 2 or more companies in which they both contribute capabilities, resources, or expertise to a joint undertaking, usually with an identity of its own, with each firm giving up overall control in return for the potential to participate in and benefit from the joint venture relationship Alliances with suppliers, partners, contractors, and other providers that allow partners in the alliance to focus on what they do best, farm out everything else, and quickly provide value to the customer different than outsourcing because the firm gives up overall control to the joint alliance in which they become a partner can be long term or short term

multinational corporation (MNC)

As one of the primary agents of globalization, this business has headquarters in one country and production facilities in one or more other countries; sometimes called a transnational corporation.

Sarbanes-Oxley Act

Audit Commitee for all independent Directors

Which one of the following would not be classed as one of the major trends driving decisions about effective organizational structures in the 21st century? A) Globalization B) Diversity C) Speed of decision making D) The Internet

B) diversity

The ________ structure is where the corporate entity is a broad collection of often unrelated businesses and divisions such that the corporate entity must act as a financial overseer. A) divisional B) holding company C) matrix D) external interface

B) holding company

Strategic advantages of a functional organization structure would include all but which one of the following? A) Delegation of day-today operating decisions B) Promotes functional rivalry C) Tightly links structure to strategy D) Retains centralized control of strategic decisions

B) promotes functional rivalry

Which of the following is best identified as being an adaptation of the divisional structure in which various divisions are grouped together based on some common elements? A) Holding companies B) Strategic business units C) Vertical boundaries D) Modular organizations

B) strategic business units

Balanced Score Card

Balances 1 Past and Future 2 Short and Long Term 3 Financial and Non Financial

Of the following, which one is least likely to be considered a strategic advantage derived from a matrix organizational structure? A) It gives middle management broader exposure to strategic issues. B) It fosters creativity and multiple sources of diversity. C) It can trigger turf battles. D) It provides excellent training ground for strategic managers.

C) it can trigger turf battles

Strategic disadvantages associated with a divisional organizational structure would include all of the following except _________. A) creates a potential for policy inconsistencies among divisions B) increases cost through duplication functions C) retains functional specialization within each division D) creates difficulty maintaining overall corporate image

C) retains functional specialization within each division

Matrix Structure Disadvantages

Can cause uncertainty and lead to intense power struggles Working relationships become more complicated Decisions may take longer

Stakeholder Measures

Creditors Investors Customers Employees Suppliers

Of the following, which one is false regarding a functional organizational structure? A) The tasks, people, and technologies necessary to do the work of the business are divided into separate groups. B) Functional structures predominate in firms with single or narrow product lines. C) Marketing, operations, and finance would be considered groups found within this type of structure. D) An organization using this type of structure has no need for integrating activities.

D) An organization using this type of structure has no need for integrating activities

Tom's sandwich shop in Livingston, New Jersey is likely to most effectively engage in which of the following types of organizational structure? A) Functional B) Divisional C) Matrix D) Simple

D) Simple

Stages of internationalization

Domestic Co exports some through corporate headquarters Domestic Co with Export Division No middleman has sales office in other countries Domestic Co with international div. has manufacturing in addition to sales MNC with multi-domestic emphasis Ford of Britain expands product line local manufacturing capabilities R&D Fin Sales Mkg acquires other businesses MNC Global emphasis - world wide global considerations all managers deal with domestic relations

Share holder value

EVA Economical Value Addded The firm has paid its Operating and Capital Cost and created wealth MVA Market Shares take into account the future above 1 you are gaining value below 1 you are losing value

Social Responsibility Friedman

Economist Make Money and Don't Break the Law Invisible Hand everyone should do what theya are supposed to do

Downsizing

Eliminating the number of employees, particularly middle management, in a company the arrival of a global marketplace, information technology, and intense competition caused many companies to reevaluate middle management activities--> led to downsizing

Transactional Structure

Exploits Knowledge across Borders Gets the best of Multi-domestic and global strategy High Local responsiveness High Gloval Coordination National units operate independently but share ideas Achieve greater scale of economy Corporate centre manages global network

Balanced Score Card Strategic Priorities

Financial Customer Internal Learning and Growth

4. External Interface Boundaries

Formal and informal rules, locations, and protocol that separate and/or dictate the interaction between members of an organization and those outside the organization- customers, suppliers, partners, regulators, associations, and even competitors

Traditional Financial Measures

Increase in Assets Profitability Sales Productivity Profit Margins ROU EPS Ratios Increase in Operating Cash Flow

Villigant

Independent of the Organization are better but may not have the know how

Multinational Structure

International Divisions have Low local independence and responsiveness Low Global Coordination there is no synergy no Cost go up Don't take advantage of new markets has no business being a big co. Global Product Divisions - High Global Coordination Low Local independence and responsiveness Car Companies Have Economy of Scale High level of Standardization Local Subsidiaries High Local Independence and responsiveness Low Global Coordination different demands differentiation Low level standardization No economy of scale Transnational Corporations Caterpillar High Global Coordination High Local Independence and responsiveness Acer tried but couldn't standardize Caterpillar Common Parts Shared achieve local parts and local responsiveness

achieving synergy

Is ROI greataer than if it were an independent business

3. Geographic Boundaries

Limitations on interaction and contact between people in a company based on being at different physical locations domestically and globally

2. Vertical Boundaries

Limitations on interaction, contact, and access between operations and management personnel; between different levels of management; and between different organizational parts like corporate versus divisional units

Social Responsibility Carrol

Make Money Dont Break the Law plus social responsibility Be Ethical what you should do & Discretionary what you might do let a comany know you are closing the doors - give a raise or offer health benefitis

Outsourcing

Obtaining work previously done by employees inside the companies from sources outside the company helps companies enhance their competitive advantage

Ambidextrous Organization

Organization structure most notable for its lack of structure wherein knowledge and getting it to the right place quickly are the key reasons for organization. Managers become knowledge "nodes" through which intricate networks of personal relationships-inside and outside the formal organization- are constantly, and often informally, coordinated to bring together relevant know-how and successful action

Learning Organization

Organization structured around the idea that it should be set up to enable learning, to share knowledge, to seek knowledge, and to create opportunities to create new knowledge. It would move into new markets to learn about those markets rather than simply to bring a brand to it, or find resources to exploit in it

You will make more money if _____________, _______________, & _____________ are in place

Organizational Structure Policies Procedures

Boundaryless Organization

Organizational structure that allows people to interface with others throughout the organization without need to wait for a hierarchy to regulate that interface across functional, business, and geographic boundaries 4 types of boundaries/borders: 1. Horizontal boundaries 2. Vertical boundaries 3. Geographic boundaries 4. External interface boundaroes

Stakeholders analysis

Primary Directly influenced Secondary Indirectly influenced Effecgt of strategic decision on stakeholders groups

structure follows strategy Minzberg

Recipricol Relationship

Organizational Structure

Refers to the formalized arrangements of interaction between and responsibility for the tasks, people, and resources in an organization Most often seen as a chart (pyramidal chart)

1. Horizontal Boundaries

Rules of communication, access, and protocol for dealing with different departments or functions or processes within an organization -salespeople are different from administrative people or operating people or engineering people. -one division is separate from another

Forms of Synergy

Shared know-how Coordinated strategies Shared tangible resources Economies of scale or scope Pooled negotiating power New business creation

Incentives

Stock Based Compensation

structure follows strategy

Strategy follows structure it is reciprocal

Geographical area structure

Structured geographically

Non-Villigiant

Tesla have members with conflict of interest

Corporate Governance

The role of a corporation's executive staff and board of directors in ensuring that the firm's activities meet the goals of the firm's stakeholders

strategical Performances

Traditional Fianancial Measures Stakeholder Measures Shareholder Value Balance Score Card

Implementation

Who are the people who will carry ou tthe strategic plan What needs to be done to align the companies in the new direction work to establish synergy Programs 6 sigma matrix of change to see how quickly change should take place Feasibility Budget last real check on feasibility Procedures SOP organizational routines

Are all independent Directors outsiders?

Yes

CFO and CEO must certify financial information

Yes

Balanced Scorecard

a combination of performance measures directed toward the company's long and short term goals and used as the basis for awarding incentive pay Stake Holers Measures Checks to see if internal operations are being sacrificed Marketing and R& D

Evaluation and Control

a process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance EXAMINE COMPARE TAKE CORRECIVE ACTION

Strategy Implementation

actions made by firms that carry out the formulated strategy, including strategic controls, organizational design, and leadership

multi-divisional structure

bureaucratic organizational forms in which employees are grouped into divisions around products, geographic regions, or clients Evolving into SBU's to reflect product market considerations Diverse product lines in numerous industries Unlimited resources A conglomerate structure has a collection of functional strategies for autonomy Disadvandate Additional cost of Centre Duplication of Divisions Fragmentation and non co operation

Structure follows strategy Chandler

changes in corporate strategy lead to changes in organizational structure

Product Groups Structure

establish product groups based on the similarity of manufacturing processes

Issues in Implementation

fidelity, dosage/intensity, quality, participant responsiveness, program differentiation, monitoring of control conditions, program reach, and adaptation

Functional Structure

groups together people with similar skills who perform similar tasks Concentration and specialization CEO Must learn to delegate All eggs in one basket

Simple Structure

has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization

A virtual, agile organization structure

involves outsourcing, strategic alliances, a boundaryless structure, an ambidextrous learning approach and Web-based organization

Business Process Outsourcing (BPO)

the most rapidly growing segment of the outsourcing services industry worldwide Having an outside company manage numerous routine business management activities previously done by employees inside the company such as HR, supply procurement, finance and accounting, customer care, supply-chain logistics, engineering, R&D, sales and marketing, facilities management, and management/development

network structure advantages

• Lower costs due to fewer full-time employees. • Better access to expertise through specialized alliance partners and contractors. • Easy to grow or shrink with market conditions.