Title: Organizational Structure
1Organizational 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
2Firm Growth as Evolutionary Process
Single Business
Product Diversification (Product Diversity)
Geographic Diversification (Foreign Sales as
Total Sales)
Product and Geographic Diversification
3Horizontal Differentiation
- degree to which tasks are divided into distinct
homogeneous groups - function-wise
- geographic-wise
- product-wise
- production stage-wise
4Vertical Differentiation
- Number of levels within the organization
5Spacial Dispersion
- Degree to which activities are located in
different areas
6Structure Follows Strategy
High
Horizontal Differentiation?
Pressures for Global Efficiency and Centralization
Vertical Differentiation?
Spacial Dispersion?
Low
Low
High
Pressures for Local Responsiveness and
Decentralization
7Export
Germany
U.S.
Mexico
Malaysia
8Functional Structurew/ International Sales
Division
9Multidomestic
Germany
U.S.
Mexico
Malaysia
10Geographic Structure
11Pure Global
Germany
U.S.
Mexico
Malaysia
12Global Functional StructureFor Single-business
Firms
13Product Division StructureFor Product-diversified
Firms
14Transnational (1)
Germany
U.S.
Mexico
Malaysia
15Matrix Structure (A)
16Matrix Structure (B)
17Transnational (2)
Germany
Engines
U.S.
Steel
Mexico
Final Assembly
Malaysia
Trim, seats, glass
18Matrix Structure (B)
19Mixed Structure
20Stopford-Wells Structure Model
Hi
Product Divisions
Mixed / Matrix / Network
Product Diversity
Intl. Division
Geographic Divisions
Lo
0
100
Foreign Sales as of Total Sales
21Formalization
- 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.
22Centralization
- 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
23Data Management Control Mechanisms
- Information systems
- Measurement systems
- Resource allocation procedures
- Strategic planning
- Budgeting processes
24Managers Management Control Mechanisms
- Choice/selection of key managers
- Career paths
- Rewards and punishment systems
- Management development
- Patterns of socialization
25Organizational Learning/Conflict Resolution
Control Mechanisms
- Decision responsibility assignments
- Integrators
- Transnational teams
- Coordination committees
- Task forces
26Decentralized Federation Configuration Model
Flows? Controls?
27Changing 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
28Vertical 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
29Structural Management of a Portfolio of Processes
- Entrepreneurial process
- Competence-building process
- Renewal process
30Entrepreneurship
- 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
31Competence-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
32Renewal
- 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