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Management, Hitt, Black, Porter, Vahdi Boydaş, Mensur Boydaş

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Management, Hitt, Black, Porter, Vahdi Boydaş, Mensur Boydaş

Management, Hitt, Black, Porter, Vahdi Boydaş, Mensur Boydaş

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    • 1. PowerPoint slides by Susan A. Peterson, Scottsdale Community College Chapter 7: Organizational Structure and Design m a n a g e m e n t 2e H i t t / B l a c k / P o r t e r
    • 2. © 2008 Prentice-Hall Business Publishing 2 Learning Objectives After studying this chapter, you should be able to: Explain the concepts of organizational structure and design Explain the concepts of differentiation and integration and their role in organizational structure and design Describe the concepts of formalization, informalization, centralization, and decentralization and discuss their interrelationships
    • 3. © 2008 Prentice-Hall Business Publishing 3 Learning Objectives Identify the common structures used by organizations and describe their strengths and weaknesses of each of these structures Understand how network structures help firms manage their value chain activities and contribute to achieving a competitive advantage Describe how environmental factors and the organization’s strategy influence organizational structure Explain the types of organizational structure important for firms to use when operating in international markets
    • 4. © 2008 Prentice-Hall Business Publishing 4 Principles of Organizational Structure Organizational structure The sum of ways an organization divides its labor into distinct, coordinated tasks Organizational design Assessing the organization’s strategy and environmental demands Determining the appropriate organizational structure
    • 5. © 2008 Prentice-Hall Business Publishing 5 Principles of Organizational Structure Organizational charts Illustration of relationships - Units - Lines of authority among supervisors and subordinates Illustrated by use of labeled boxes and connecting lines
    • 6. © 2008 Prentice-Hall Business Publishing 6 Suncor Energy Organizational Structure CEOCEO Executive Vice-President Oil Sands Executive Vice-President Oil Sands Executive Vice-President Marketing and Refining Executive Vice-President Marketing and Refining Executive Vice-President Natural Gas and Alternative Energy Executive Vice-President Natural Gas and Alternative Energy Senior Vice-President Major Projects Senior Vice-President Major Projects Adapted from Exhibit 7.1
    • 7. © 2008 Prentice-Hall Business Publishing 7 Differentiation Differentiation Division of tasks into subtasks that are performed by individuals with specialized skills Two types of differentiation: - Task differentiation - Cognitive differentiation
    • 8. © 2008 Prentice-Hall Business Publishing 8 Integration Integration The extent to which various parts of the organization interact, coordinate and cooperate with each other Driving forces of integration include: - Interdependence: degree to which each unit or each person depends on other units or people to accomplish a required task - Uncertainty: the extent to which future input, process, and output factors cannot be forecast accurately
    • 9. © 2008 Prentice-Hall Business Publishing 9 Levelof Appropriateness High Low Level of Uncertainty Level of Interdependence Low High Appropriateness of Rules, Goals, Values Adapted from Exhibit 7.2
    • 10. © 2008 Prentice-Hall Business Publishing 10 Formalization Formalization The official and defined structures and systems in decision making, communication, and control in an organization - Line of authority - Unity of command - Span of control
    • 11. © 2008 Prentice-Hall Business Publishing 11 Line of Authority A line of authority specifies who reports to whom CEOCEO Vice President Marketing Vice President Marketing Vice President Manufacturing Vice President Manufacturing Vice President Human Resources Vice President Human Resources Brand Manager
    • 12. © 2008 Prentice-Hall Business Publishing 12 Unity of Command CEOCEO Vice President Marketing Vice President Marketing Vice President Manufacturing Vice President Manufacturing Vice President Human Resources Vice President Human Resources Brand Manager An employee should have only one boss
    • 13. © 2008 Prentice-Hall Business Publishing 13 Span of Control CEOCEO Vice President Marketing Vice President Marketing Vice President Manufacturing Vice President Manufacturing Vice President Human Resources Vice President Human Resources The number of employees reporting to a given supervisor
    • 14. © 2008 Prentice-Hall Business Publishing 14 Factors that Influence the Span of Control Technology Ability of Management Degree of Employee Empowerment Abilities of Employees Amount of Coordination Geographic Proximity of Supervised Employees Job Similarity Job Complexity Span of Control Adapted from Exhibit 7.3
    • 15. © 2008 Prentice-Hall Business Publishing 15 Tall Organizational Structures Levels = 4 Span of Control = 3 Total Employees = 40 Adapted from Exhibit 7.4
    • 16. © 2008 Prentice-Hall Business Publishing 16 Flat Organizational Structures Levels = 3 Span of Control = 7 Total Employees = 57 Adapted from Exhibit 7.4
    • 17. © 2008 Prentice-Hall Business Publishing 17 Informalization Informal organization Unofficial but influential means of communication, decision making, and control The Japanese and the Chinese rely more heavily on informalization - Nemawasi: informal decision making that occurs outside of meetings in Japan - Guanxi: informal, reciprocal business relationships in China
    • 18. © 2008 Prentice-Hall Business Publishing 18 Centralization and Decentralization Centralized organizations Restrict decision making to fewer individuals, usually at the top of the organization Centralized organizations Restrict decision making to fewer individuals, usually at the top of the organization Decentralized organizations Tend to push decision- making authority down to the lowest level possible Decentralized organizations Tend to push decision- making authority down to the lowest level possible
    • 19. © 2008 Prentice-Hall Business Publishing 19 Combinations of Formal/Informal and Centralized/Decentralized U.S. MilitaryU.S. Military Philips Electronics Philips Electronics MitsubishiMitsubishi Club MedClub Med CentralizedCentralized DecentralizedDecentralized FormalFormal InformalInformal Adapted from Exhibit 7.5
    • 20. © 2008 Prentice-Hall Business Publishing 20 Functional Structure CEOCEO Vice President Marketing Vice President Marketing Vice President Sales Vice President Sales Vice President Manufacturing Vice President Manufacturing Vice President Human Resources Vice President Human Resources Market Research Advertising Promotion East region South region West Region Purchasing Operations Logistics Recruiting Training Compensation Adapted from Exhibit 7.6
    • 21. © 2008 Prentice-Hall Business Publishing 21 Functional Structure Strengths Small- to medium-sized firms with limited product diversification Specialization of functional knowledge Less duplication of functional resources Facilitates coordination within functional areas Weaknesses Weak coordination across functional groups Restricted view of overall organizational goals Limits customer attention Slower response to market changes Burdens chief executives with decisions
    • 22. © 2008 Prentice-Hall Business Publishing 22 Product Structure CEOCEO Vice President Product A Vice President Product A Vice President Product B Vice President Product B Vice President Product C Vice President Product C Vice President Product D Vice President Product D Marketing Operations Sales Marketing Operations Sales Marketing Operations Sales Marketing Operations Sales Adapted from Exhibit 7.7
    • 23. © 2008 Prentice-Hall Business Publishing 23 Product Structure Strengths More focus on products and customers Easier to evaluate performance of the product Product responsiveness to market changes Less burden on the top executive in making operating decisions Weaknesses Duplication and lack of economies of scale Problems for customers purchasing across multiple product groups Conflicts between product group and corporate objectives Conflict between product groups
    • 24. © 2008 Prentice-Hall Business Publishing 24 Division Structure CEOCEO Vice President Medical Systems Vice President Medical Systems Vice President Bioscience Vice President Bioscience Vice President Clinical Vice President Clinical Anesthesia Hypodermic Infusion Labware Cell Biology Immunology Vacutainer Diagnostics Consulting Adapted from Exhibit 7.8
    • 25. © 2008 Prentice-Hall Business Publishing 25 Division Structure Strengths Reduced functional duplication Customer focus can increase Cross-product coordination is eased Cross-regional coordination is often eased Weaknesses Most appropriate only for diversified, large companies with many products and product families May inhibit cross-division coordination Coordination difficulties between division and corporate objectives
    • 26. © 2008 Prentice-Hall Business Publishing 26 Customer Structure CEOCEO Vice President Retail Vice President Retail Vice President Industrial Vice President Industrial Vice President Military Vice President Military Small Midsize Domestic International Army Navy Adapted from Exhibit 7.9
    • 27. © 2008 Prentice-Hall Business Publishing 27 Customer Structure Strengths In-depth understanding of specific customers Responsiveness to changes in customer preferences and needs Responsiveness to moves by competitors to better serve customers Weaknesses Duplication of functional resources in each customer unit Coordination between customer units and corporate objectives Failure to leverage technology or other strengths in one unit across other units
    • 28. © 2008 Prentice-Hall Business Publishing 28 Geographical/Regional Structure CEOCEO Vice President North America Vice President North America Vice President Europe Vice President Europe Vice President Southeast Asia Vice President Southeast Asia Vice President Latin America Vice President Africa Adapted from Exhibit 7.10
    • 29. © 2008 Prentice-Hall Business Publishing 29 Geographical/Regional Structure Strengths: Facilitates local responsiveness Develops in-depth knowledge of specific regions/countries Creates accountability by region Facilitates cross-functional coordination within regions Weaknesses: Often creates cross-regional coordination difficulties Can inhibit ability to capture global scale economies Duplicates resources and functions across regions
    • 30. © 2008 Prentice-Hall Business Publishing 30 Matrix Structure Adapted from Exhibit 7.11: Matrix Structure CEOCEO HealthHealth BeautyBeauty CleaningCleaning FoodFood NANA APAP EMEAEMEA LALA Adapted from Exhibit 7.11
    • 31. © 2008 Prentice-Hall Business Publishing 31 Matrix Structure Strengths Information flow Decision quality Suited to a changing and complicated business environment Flexible use of human resources Weaknesses Complexity of performance evaluations Inhibited ability to respond to changing conditions Diffused accountability Conflicts between differing perspectives and objectives
    • 32. © 2008 Prentice-Hall Business Publishing 32 Mixed (or Hybrid) Structure CEOCEO Vice President Finance Vice President Finance Vice President Human Resources Vice President Human Resources Vice President Operations Vice President Operations Vice President Product A Vice President Product A Marketing Accounting Treasury Recruiting Training Compensation Purchasing Manufacturing Logistics Retail Industrial Vice President Product B Education Government Adapted from Exhibit 7.12
    • 33. © 2008 Prentice-Hall Business Publishing 33 Mixed (or Hybrid) Structure (cont.) CEOCEO Vice President North America Vice President North America Vice President Latin America Vice President Latin America Vice President Asia/Pacific Vice President Asia/Pacific Vice President EMEA Vice President EMEA Marketing Operations Sales Marketing Operations Sales Marketing Operations Sales Marketing Operations Sales Adapted from Exhibit 7.12
    • 34. © 2008 Prentice-Hall Business Publishing 34 Networked Structures Formal or informal relationships among units or organizations (along the firm’s value chain) Low-networked: - Quantity and magnitude of externally networked activities is limited High-networked: - Larger quantity and magnitude of externally networked activities
    • 35. © 2008 Prentice-Hall Business Publishing 35 Outsourced to EDS Outsourced Structure Primary Activities Support Activities Adapted from Exhibit 7.13
    • 36. © 2008 Prentice-Hall Business Publishing 36 Network Structure Adapted from Exhibit 7.14: Network Structure Adapted from Exhibit 7.14
    • 37. © 2008 Prentice-Hall Business Publishing 37 Environment Complexity Breadth and depth of differences and similarities in an organization’s external environment Geography Suppliers Competitors Technology Customers Products Environmental Complexity Dimensions of Environmental Complexity
    • 38. © 2008 Prentice-Hall Business Publishing 38 Organizational Uncertainty Low uncertainty Low demands placed on structure to facilitate extent or speed of coordination Low uncertainty Low demands placed on structure to facilitate extent or speed of coordination Moderate uncertainty Low demands placed on structure for broad coordination, high for speed of coordination Moderate uncertainty Low demands placed on structure for broad coordination, high for speed of coordination High uncertainty High demands placed on structure to facilitate both extent and speed of coordination High uncertainty High demands placed on structure to facilitate both extent and speed of coordination Moderate Uncertainty High demands placed on structure to facilitate extent or speed of coordination, low demand on speed Moderate Uncertainty High demands placed on structure to facilitate extent or speed of coordination, low demand on speed Adapted from Exhibit 7.15: Matrix of Organizational Uncertainty Static DynamicStatic Dynamic Simple Complex Simple Complex Adapted from Exhibit 7.15
    • 39. © 2008 Prentice-Hall Business Publishing 39 International Strategy and Structure Geographic Structure Matrix Structure Worldwide Product Division International Division Adapted from Exhibit 7.15: Matrix of Organizational Uncertainty Low International Product Diversity High International Product Diversity High Foreign Sales Low Foreign Sales Adapted from Exhibit 7.16