Does not imply that all internal and external boundaries vanished completely. Although boundaries may continue to exist in some form, they become more open and permeable.
Creating effective organizational design (1)
CREATING EFFECTIVEORGANIZATIONAL DESIGN
Traditional Forms of Organizational Structure• Organizational Structure refers to formalized patterns of interactions that link the tasks, technologies, and people of a firm.• Structure are designed to ensure that resources are used most effectively toward accomplishing an organizations mission.• Structure provides managers with a means of balancing two conflicting forces: a need for division of tasks into meaningful groupings and the need to integrate such groupings in order to ensure organizational efficiency and effectiveness.• Structure identifies the executive, managerial, and administrative organization of a firm as well as indicating responsibilities and hierarchical relationships.
Patterns of growth of large CorporationsStrategies leading to newstructure Dominant growth path for U.S firms
Functional StructureAdvantages Disadvantages•Pooling of specialists •Differences in functional areaenhances coordination and orientation impedecontrol communication and•Centralized decision making coordination.enhances an organizational •Tendency for specialist toperspective across functions. develop short term•Efficient use of managerial perspective and narrowand technical talent. functional orientation. •Functional areas may overburden toplevel decision makers. •Difficult to establish uniform performance standards
Divisional StructureAdvantages Disadvantages•Increases strategic and •Increased cost incurredoperational control, through duplication ofpermitting corporate-level personnel, operations, andexecutives to address strategic investment.issues. •Dysfunctional Competition•Quick response to among divisions may detractenvironmental changes. from overall corporate•Increased focus to products performanceand markets. •Difficulty in maintaining•Minimized problems uniform corporate image.associated with sharing •Overemphasis on short-termresources across functional performance.areas.•Facilitates development ofgeneral managers.
MATRIX STRUCTUREuse to combine products groups and geographical units.
Matrix StructureAdvantage Disadvantages•Increases market responsiveness •Dual reporting relationships canthrough collaboration and synergies result in uncertainty regardingamong professional colleagues. accountability.•Allows more efficient utilization of •Intense power struggles may lead toresources. increased levels of conflict.•Improves flexibility, coordination and •Working relationships maybe morecommunication. complicated and human resources•Increases professional development duplicated.through a broader range of •Excessive reliance on groupresponsibility. processes and teamwork may impede timely decision making.
INTERNATIONAL OPERATIONS: IMPLICATIONS FORORGANIZATIONAL STRUCTURE
3 major contingencies that seem to influence the structure adopted by firms with international operations. The type of strategy that is driving a firm’s foreign operations Product diversity The extent to which a firm is dependent on foreign sales.
The primary types of structures to manage a firms international operations: International Division Geographic-area Division Worldwide Functional Worldwide product Division Worldwide Matrix
Boundaryless Organizational Design Replace the traditional forms of Organizational structure.
3 different types of boudaryless Organization Barrier-free Organization Modular Organization Virtual Organization