MANA 341 - Chapter 3

What is a vertical information system?

A vertical information system is another strategy for increasing vertical information capacity. Vertical information systems include the periodic reports, written information, and computer-based communications distributed to managers.

What is a virtual team?

A virtual team is one that is made up of organizationally or geographically dispersed members who are linked primarily through advanced information and communications technologies.

What is a geographical structure?

Another basis for structural grouping is the organization's users or customers. Each geographic unit includes all functions required to produce and market products or services in that region. The national organization provides brand recognition, coordinates fundraising services, and handles some shared administrative functions, while day-to-day control and decision making is decentralized to local or regional units.

What is a divisional structure?

Another term for product structure or strategic business units. The distinctive feature of a divisional structure is that grouping is based on organizational outputs. The divisional structure promotes flexibility and change because each unit is smaller and can adapt to the needs of its environment. Moreover, the divisional structure decentralizes decision making, because the lines of authority converge at a lower level in the hierarchy. Unless effective horizontal mechanisms are in place, a divisional structure can cause real problems.

What are vertical linkages?

Are used to coordinate activities between the top and bottom of an organization, and are designed primarily for control of the organization.

Expand on functional grouping

Places together employees who perform similar functions or work processes or who bring similar knowledge and skills to bear.

What is a functional structure?

*In a functional structure, activities are grouped together by common function from the bottom to the top of the organization. *With a functional structure, all human knowledge and skills for specific activities are consolidated, providing a valuable depth of knowledge for the organization. *This structure is most effective when in-depth expertise is critical to meeting organizational goals, when the organization needs to be controlled and coordinated through the vertical hierarchy, and when efficiency is important.

What is reengineering?

*Redesign of a vertical organization along its horizontal workflows and processes. *Reengineering changes the way managers think about how work is done.

What 3 key points did Malone bring up about horizontal structure in the future?

-Information technology is the key driver of the transformation; -Managers will move from command-and-control to coordinate-and-cultivate; -Every organization needs standards.

What are the 5 strengths of the matrix?

1) Achieve coordination necessary to meet dual demands from customers 2) Flexible sharing of human resources across products 3) Suited to complex decisions and frequent changes in unstable environment 4) Provides opportunity for both functional and product skill development 5) Best in medium-sized organizations with multiple products

What are weaknesses of the matrix?

1) Causes participants to experience dual authority, which can be frustrating and confusing. 2) Means participants need good interpersonal skills and extensive training. 3) Is time consuming; involves frequent meetings and conflict resolution sessions. 4) Will not work unless participants understand it and adopt collegial rather than vertical type relationships. 5) Requires great effort to maintain power balance

What are the 4 symptoms of structural deficiency?

1) Decision making is delayed or lacking in quality: delay caused by hierarchy, when information not reaches the correct people. 2) The organization does not respond innovatively to a changing environment: departments are not coordinated horizontally, department responsibilities must be specified. 3) Employee performance declines and goals are not being met: the structure should reflect the complexity of the market environment and be straightforward to effectively work within. 4) Too much conflict is evident: organization structure should allow conflicting departmental goals to combine into a single set of goals for the entire organization.

What are the weaknesses of a horizontal structure?

1) Determining core processes is difficult and time consuming 2) Requires changes in culture, job design, management philosophy and information and reward systems 3) Traditional managers may balk when they have to give up power and authority 4) Requires significant training of employees to work effectively in a horizontal team environment 5) Can limit in-depth skill development

What are some strengths of a virtual network structure?

1) Enables even small organizations to obtain talent and resources worldwide 2) Gives a company immediate scale and reach without huge investments in factories, equipment, or distribution facilities 3) Enables the organization to be highly flexible and responsive to changing needs 4) Reduces administrative overhead costs

What is a virtual cross-functional team?

A team made up of members from various countries, to develop and market medical products and services such as electrocardiograph systems, ultrasound imaging technologies, and patient monitoring systems.

What are some weaknesses of a virtual network structure?

1) Managers do not have hands-on control over many activities and employees 2) Requires a great deal of time to manage relationships and potential conflicts with contract partners 3) There is a risk of organizational failure if a partner fails to deliver or goes out of business 4) Employee loyalty and corporate culture might be weak because employees feel they can be replaced by contract services

What are the 3 conditions for the matrix structure?

1) Pressure exists to share scarce resources across product lines. Organization is medium sized and has a moderate number of product lines. 2) Environmental pressure exists for two or more critical outputs, such as for in-depth technical knowledge (functional structure) and frequent new products (divisional structure). 3) The environmental domain of the organization is both complex and uncertain, requiring a large amount of coordination and information processing in both vertical and horizontal directions.

What are the strengths of a horizontal structure?

1) Promotes flexibility and rapid response to changes in customer needs 2) Directs the attention of everyone toward the production and delivery of value to the customer 3) Each employee has a broader view of organizational goals 4) Promotes a focus on teamwork and collaboration 5) Improves quality of life for employees by offering them the opportunity to share responsibilities, make decisions and be accountable for outcomes

What are the 3 organization design alternatives?

1) Required work activities 2) Reporting Relationships 3) Departmental grouping options (multi)

What are some common characteristics of horizontal structure?

1) Structure is created around cross-functional core processes rather than tasks, functions or geography. Boundaries between departments are obliterated. 2) Self-directed teams, not individuals, are the basis of organizational design and performance. 3) Process owners have responsibility for each core process in its entirety. 4) People on the team are given the skills, tools, motivation and authority to make decisions central to the team's performance. 5) Teams have the freedom to think creatively and respond flexibly to new challenges. 6) Customers drive the horizontal corporation. 7) The culture is one of openness, trust and collaboration, focused on continuous improvement.

What are two versions of the matrix structure that have appeared?

1) functional matrix: the functional bosses have primary authority; 2) product matrix: the project or product managers have primary authority.

When a horizontal structure is dominant, there are...(5)

1) shared tasks and empowerment 2) relaxed hierarchy with few rules 3) horizontal (face-to-face) communication 4) many teams and task forces, 5) decentralized decision making.

When a vertical structure is dominant, there are...(5)

1) specialized tasks 2) strict hierarchy with many rules 3) vertical information system (database with reports etc) 4) few teams/task forces/integrators 5) centralized decision making.

What are the 4 strengths of a functional structure?

1. Allows economies of scale within functional departments. 2. Enables in-depth knowledge and skill development 3. Enables organization to accomplish functional goals. 4. Is best with only one or a few products

When thinking about organizational structure, the following 4 issues that are within the control of managers must be considered:

1. Division of labour: how should tasks be divided? 2. Coordination mechanisms: vertical and horizontal coordination within and among groups 3. Distribution of decision rights: how are information flows organized and who makes decisions 4. Organizational boundaries: decide what tasks to keep inside the firm, and what to do outside the boundaries of the firm.

Strengths and weaknesses of the organizational design can be evaluated based on...?

1. Efficiency of resource utilization 2. Efficiency of time utilization 3. Responsiveness to the environment 4. Adaptability over time 5. Ability to hold people accountable

What are the 4 weaknesses of a divisional structure?

1. Eliminates economies of scale in functional departments. 2. Leads to poor coordination across product lines. 3. Eliminates in-depth competence and technical specialization. 4. Makes integration and standardization across product lines difficult.

What are the 3 key components in the definition of organizational structure?

1. Organizational structure designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors. 2. Organizational structure identifies the grouping together of individuals into departments and of departments into the total organization. 3. Organizational structure includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments.

What are the 5 weaknesses of a functional structure?

1. Slow response time to environmental changes. 2. May cause decisions to pile up, hierarchy overload. 3. Leads to poor horizontal coordination among departments. 4. Results in less innovation 5. Involves restricted view of organizational goals.

What are the 6 strengths of a divisional structure?

1. Suited to fast change in unstable environment 2. Leads to customer satisfaction because product responsibility and contact points are clear. 3. Involves high coordination across functions. 4. Allows units to adapt to differences in products, regions, customers. 5. Best in large organizations with several products. 6. Decentralizes decision making.

What is a liaison?

A liaison person is located in one department but has the responsibility for communicating and achieving coordination with another department.

What is a full-time integrator?

A stronger horizontal linkage device is to create a full-time position or department solely for the purpose of coordination. A full-time integrator frequently has a title such as product manager, project manager, program manager, or brand manager. The integrator can also be responsible for an innovation or change project, such as coordinating the design, financing, and marketing of a new product.

What are task forces?

A task force is a temporary committee composed of representatives from each organizational unit affected by a problem. Task forces are an effective horizontal linkage device for temporary issues. They solve problems by direct horizontal coordination and reduce the information load on the vertical hierarchy.

What is an organization chart?

An organization chart is the visual representation of a whole set of underlying activities and process in an organization at a particular point in time.

Expand on matrixed grouping

An organization embraces two structural grouping alternatives simultaneously. These structural forms are often called matrix. An organization may need to group by function and product division simultaneously or perhaps by product division and geography.

What is a process?

An organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers.

What are information systems?

Computerized information systems can enable managers or front-line workers throughout the organization to routinely exchange information about problems, opportunities, activities or decisions.

Expand on Required work activities...

Departments are created to perform tasks considered strategically important to the company. Work activities fall into a range of functions that help the organization accomplish its goals, such as a human resource department to recruit and train employees.

What is a virtual network structure?

Extends the concept of horizontal coordination and collaboration beyond the boundaries of the traditional organization. With a virtual network structure (modular structure) the firm subcontracts many or most of its major processes to separate companies and coordinates their activities from a small headquarters organization.

What is direct contact?

One way to promote direct contact is to create a special liaison role. A liaison person is located in one department but has the responsibility for communicating and achieving coordination with another department.

Expand on Departmental grouping options

Five possible options for departmental groupings are a 1) functional grouping, 2) divisional grouping, 3) multi focused (or matrixed) grouping, 4) horizontal grouping, and 5) virtual network grouping.

Expand on virtual network grouping

Is the most recent approach to departmental grouping. With this grouping, the organization is a loosely connected cluster of separate components. In essence, departments are separate organizations that are electronically connected for the sharing of information and completion of tasks.

What is departmental grouping?

It affects employees because they share a common supervisor and common resources, are jointly responsible for performance, and tend to identify and collaborate with one another.

What is a functional structure with horizontal linkages?

Managers improve horizontal coordination by using information systems, direct contact between departments, full-time integrators or project managers, task forces or teams.

What is a hybrid structure?

Many structures in the real world do not exist in the pure forms that are outlined in this chapter. Organizations often use a hybrid structure that combines characteristics of various approaches tailored to specific strategic needs.

Expand on horizontal grouping

Means employees are organized around core work processes, the end-to-end work, information, and material flows that provide value directly to customers.

Expand on divisional grouping

Means people are organized according to what the organization produces.

What is a horizontal structure?

Organizes employees around core processes. Organizations typically shift toward a horizontal structure during reengineering (or business process reengineering).

What are teams?

Project teams tend to be the strongest horizontal linkage mechanism. Teams are permanent task forces and are often used in conjunction with a full-time integrator. A cross-functional team is often the solution. Special project teams may be used when organizations have a large-scale project, a major innovation, or a new product line

What are horizontal linkages?

Refers to the amount of communication and coordination horizontally across organizational departments. Designed primarily for learning. Horizontal communication overcomes barriers between departments and provides opportunities for coordination among employees to achieve unity of effort and organizational objectives.

Expand on Reporting Relationships...

Reporting relationships, often called the chain of command, are represented by vertical lines on an organization chart. The chain of command should be an unbroken line of authority that links all persons in an organization and shows who reports to whom.

What is a matrix structure? When is a matrix structure required?

The matrix can be used when both technical expertise and product innovation and change are important for meeting organizational goals. *The matrix structure often is the answer when organizations find that the functional, divisional, and geographical structures combined with horizontal linkage mechanisms will not work. *The matrix is a strong form of horizontal linkage. The matrix structure is similar to the use of full-time integrators or product managers described earlier in this chapter, except that in the matrix structure the product managers (horizontal) are given formal authority equal to that of the functional managers (vertical).

How should an organization be designed?

The organization should be designed to provide both vertical and horizontal information flow as necessary to accomplish the organization's overall goals. If the structure does not fit the information requirements of the organization, people either will have too little information or will spend time processing information that is not vital to their tasks, thus reducing effectiveness. While vertical linkages are designed primarily for control, horizontal linkages are designed for coordination and collaboration.

What is the formal structure lens?

The vertical and horizontal groupings of people, their activities and responsibilities (i.e., parts), and the formal subsystems and relationships to control and coordinate among those parts in the system as a whole.

What is outsourcing?

To contract out certain corporate functions, such as manufacturing, information technology, or credit processing to other companies.