This chapter discusses contemporary organization designs and their key factors. It describes organic and mechanistic structures, different types of technological interdependence, and four information processing strategies: vertical information design, lateral information design, slack resources design, and self-contained design. It also explains three contemporary designs - matrix organization, network organization, and virtual organization - and provides examples.

1. Chapter 11
Contemporary Organization
Designs
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2. 11.1
Learning Objectives
After reading this chapter, you should be able to:
State the role of strategic and environmental factors in the
development and adoption of contemporary organization
designs
Describe the role of technology in organization design
Discuss the impact of two basic information processing factors
in the use of four design strategies
Explain the features of three contemporary organization designs
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3. 11.2
Key Factors in Contemporary Organization Design
Strategic and
Environmental
Factors
Contemporary Designs
Technology •Matrix Organization
Factors •Network Organization
•Virtual Organization
Information
Processing
Factors
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Adapted from Figure 11.1

4. 11.3
Characteristics of Organic Structure
Tasks tend to be interdependent
Tasks are continually adjusted and redefined
through interaction and as situations change
Generalized roles are accepted
Network structure of control, authority, and communication
Communication and decision making are both vertical and
horizontal depending on where needed information and expertise
reside
Communication emphasizes the forms of mutual influence and
advice among all levels
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Adapted from Table 11.1

5. 11.4
Characteristics of Mechanistic Structure
Tasks are highly specialized
Tasks tend to remain rigidly defined unless changed by top
management
Specific roles are prescribed for each employee
Hierarchical structure of control, authority, and
communication
Communication and decision making are primarily vertical,
top-down
Communication emphasizes directions and decisions issued
by superiors
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Adapted from Table 11.1

6. 11.5
Three Types of Technological Interdependence
Output
Input Output
Input Input Input
a) Pooled interdependence b) Sequential interdependence
Input Output Input Output
Input Output
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c) Reciprocal interdependence
Adapted from Figure 11.2

7. 11.6
Service Technology
High B
A
C Reciprocal Service
u Sequential Customized
s
t Service
o Psychotherapy
m Car repair
i Alcohol/drug rehab
z Dry cleaning
a Legal assistance
t Freight transportation
i
o
n C
D
o
f Sequential Standardized
Pooled Service
s Service
e
r Banking
v Laundromat
Car Rental
i Fast-food restaurant
c Insurance
e Self-service convenience
Low store
Low High
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Adapted from Figure 11.3

8. 11.7
Information Processing Strategies
Factors Strategy
Increase the Vertical information design
organization’s ability to Lateral information design
process information
Decrease the need to Slack resources design
process information Self-contained design
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Adapted from Table 11.3

9. 11.8
Vertical Information Design Strategy
Information processing
Sends information up and down
the organizational chain of
command
Provides the right information at
the right time
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10. 11.9
Lateral Information Design Strategy
G Fosters horizontal
communications and
decision making
E F
Creates new positions
A B C D to integrate information
and decision making
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11. 11.10
Slack Resources Design Strategy
Stockpiling of resources to better respond to
environmental changes
Includes materials, funds, and time
Minimizes the problems that are likely to
arise
Can reduce the need to process information
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12. 11.11
Self-Contained Design Strategy
Assigns all activities concerning a specific project,
product, or geographical region to one group, team,
or strategic business unit (SBU)
Emphasizes product or place versus function
Allows greater flexibility and adaptability
Reduces the amount of information a manager
needs to process
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13. 11.12
Matrix Organization Design
High
R
e Product department’s
l
a influence in decision
t making
i
v
e
I
n
f
l Functional
u department’s influence
e
n in decision making
c
e
Low
Functional organization Matrix organization Product organization
Functional authority structure Dual authority Product authority structure
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Adapted from Figure 11.4

14. 11.13
A Three-Firm Alliance Network
Disney
Formal long- Formal
term alliance marketing
alliance
McDonalds Coca-Cola
Common Vision
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Adapted from Figure 11.5