The document discusses organizational structures and their advantages and disadvantages. It compares using a network structure versus an internal hierarchy to perform organizational activities. Networks allow bringing in external resources to reduce costs and increase quality without a complex structure. They also allow access to foreign inputs and a flat, flexible structure. However, networks have less control over divisions and employees, and some ethical issues can arise from outsourcing. The document then discusses a university example and how its formal structure may no longer be appropriate as students require more, funding is scarce, and flexibility is needed to adapt.

1. NOTES FOR BUILDING MANAGEMENT SKILLS
UNDERSTANDING ORGANIZING
Compare the pros and cons of using a network structure to perform organizational
activities and performing all activities “in house” or within one organizational hierarchy.
The advantages of using a network structure to perform organizational activities are:
(1) It allows the organization to bring resources together on a long-term basis to find new
ways to reduce costs and increase the quality of their products, without the high costs
of operating a complex organizational structure
(2) It allows companies to gain access to low cost foreign sources of inputs
(3) It allows companies to keep their organizational structure flat and flexible.
Think of an organization with which you are familiar, perhaps one you have worked in it—such
as a store, restaurant, office, church, or school—and answer the following questions:
1. Which contingencies are most important in explaining how the organization is organized.
Do you think it is organized in the right way?
A large university will be used as an example of an organization. The environment is
important in explaining why a university is usually operated under a formal structure.
Historically, universities have served the purpose of higher education, with adequate
faculty and support staff. The environment was not subject to a high level of uncertainty,
and resources were readily available. Most universities adopted the same strategy, perhaps
differentiating some programs, but most were comparable in services and courses offered.
Technology has emerged as a new standard, though computers are becoming increasingly
prevalent in all aspects of teaching and administration. Human resources is less of a factor
because the range is typically great, from professors, to custodial staff, to administrative
staff.
This formal, functional structure may not be the most appropriate for universities that
hope to succeed in the coming years. Students are requiring more from schools, funding is
scarce, and many schools need to learn to do more with less. A more flexible structure, at
least in some departments, may help universities respond to the changing academic
environment.

2. The disadvantages of using a network structure include:
(1) Less control over divisions and employees
(2) some ethical questions may arise, such as in the Nike example.
Consumers may see outsourcing to low wage countries as unethical to those workers and to citizens of this
country, from whom jobs may be taken.
WHY WOULD A SUCCESSFUL FIRM PAY FOREIGNERS SUCH LOW WAGES?
1.
•Boundaryless organization is composed of people who are linked
bycomputers, faxes, computer-aided design systems, and video
teleconferencing andwho rarely see one another face-to-face.
2.
•Many researchers and consultants have popularized the idea of a
boundaryless organization.
• Knowledge management system is a company-specific information
system that allows workers to share their knowledge and expertise and
find others to help solve ongoing problems.
3.
•Business to business (B2B) network is a group of organizations that join
togetherand use IT to link themselves to potential global suppliers to
increase efficiency and effectiveness.
•Designing organizational architecture is becoming an increasingly
complexmanagement function.