Organizational Structure

1
Organizational Structure

• Need to create division of labor
• Need to integrate these groups to ensure
  organizational effectiveness
• Dimensions of Macro Structure
• Microstructure Management Dimensions and Processes

2
Firm Growth as Evolutionary Process
Single Business
Product Diversification (Product Diversity)
Geographic Diversification (Foreign Sales as
Total Sales)
Product and Geographic Diversification
3
Horizontal Differentiation

• degree to which tasks are divided into distinct
  homogeneous groups
• function-wise
• geographic-wise
• product-wise
• production stage-wise

4
Vertical Differentiation

• Number of levels within the organization

5
Spacial Dispersion

• Degree to which activities are located in
  different areas

6
Structure Follows Strategy
High
Horizontal Differentiation?
Pressures for Global Efficiency and Centralization
Vertical Differentiation?
Spacial Dispersion?
Low
Low
High
Pressures for Local Responsiveness and
Decentralization
7
Export
Germany
U.S.
Mexico
Malaysia
8
Functional Structurew/ International Sales
Division
9
Multidomestic
Germany
U.S.
Mexico
Malaysia
10
Geographic Structure
11
Pure Global
Germany
U.S.
Mexico
Malaysia
12
Global Functional StructureFor Single-business
Firms
13
Product Division StructureFor Product-diversified
Firms
14
Transnational (1)
Germany
U.S.
Mexico
Malaysia
15
Matrix Structure (A)
16
Matrix Structure (B)
17
Transnational (2)
Germany
Engines
U.S.
Steel
Mexico
Final Assembly
Malaysia
Trim, seats, glass
18
Matrix Structure (B)
19
Mixed Structure
20
Stopford-Wells Structure Model
Hi
Product Divisions
Mixed / Matrix / Network
Product Diversity
Intl. Division
Geographic Divisions
Lo
0
100
Foreign Sales as of Total Sales
21
Formalization

• Degree to which rules, procedure, lines of
  authority/responsibility are enunciated or
  specified
• More formality eliminates confusion and
  uncertainty, limits creativity and innovation
• Less formality imbues flexibility, creative
  solutions.

22
Centralization

• Degree to which authority and decision making is
  at higher levels of the organization
• Centralized tight org control, managers are
  order-takers
• Decentralized managers closest to product and/or
  customer able to make decisions

23
Data Management Control Mechanisms

• Information systems
• Measurement systems
• Resource allocation procedures
• Strategic planning
• Budgeting processes

24
Managers Management Control Mechanisms

• Choice/selection of key managers
• Career paths
• Rewards and punishment systems
• Management development
• Patterns of socialization

25
Organizational Learning/Conflict Resolution
Control Mechanisms

• Decision responsibility assignments
• Integrators
• Transnational teams
• Coordination committees
• Task forces

26
Decentralized Federation Configuration Model
Flows? Controls?
27
Changing Role of Top Management

• Paradoxeshow to be
• global and local
• big and small
• centralized and decentralized
• Old waystrategy-structure-systems
• chief strategist
• structural architect
• information and control systems

28
Vertical Structural Hierarchy

• Top-down view
• order, symmetry, uniformity
• neat decomposition of tasks responsibilities
• Bottom-up view
• reporting lines
• documentation
• reviews
• The organization has its face toward the CEO and
  its ass toward the customer.
• Jack Welch, CEO General Electric

29
Structural Management of a Portfolio of Processes

• Entrepreneurial process
• Competence-building process
• Renewal process

30
Entrepreneurship

• Def. externally-oriented, opportunity-seeking,
  ownership-motivated
• Employees are most important asset
• Grow and divide principal
• 25-5 rule
• The market is far better judge of new products
  than some analyst or manager

31
Competence-Building

• Traditional rolecross-unit matchmaker
• New roleinformational conduit, facilitator
  (on-line dating)
• Kaos VAN dense info network linking mfg, mkt,
  RD, engineering, etc.
• sift through data for customer clues and latent
  technologies
• Intels crisis support culture

32
Renewal

• Reduce complacency
• Groves Only the Paranoid Survive
• An organization should stretch itself to the
  point where it almost becomes unglued
• Jack Welch, CEO General Electric
• ABB Challenge business units with
  scenario-planning exercises
• New 3M CEOs 30-5 rule