Transcript Access Document - University of Hawaii at Hilo

Chapter Eight
The Structure and
Culture of a Business
Organization
McGraw-Hill/Irwin
Introduction to Business
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Learning Objectives
1. Discuss why organizational structure and
culture are important determinants of a
company’s ability to pursue a profitable
business model.
2. Identify the relationship between organizational
design, structure, culture and the environment.
3. Identify the main types of organizational
structure companies can choose from to group
their activities, employees and resources.
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Learning Objectives
4. Explain why the need to coordinate functions
and divisions is an important element in
organizational design and list the main
methods companies use to coordinate their
activities.
5. Identify the nature and sources of
organizational culture and understand the way
it influences and shapes employee behavior
and attitudes.
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Structure, Culture, and the
Organization’s Business Model
• Organizational structure
- the framework of task-and-authority
relationships in a company that coordinates
and motivates employees to work together
toward a common goal
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Structure, Culture, and the
Organization’s Business Model
• Organizational culture
- the set of shared company values and
norms that shape the way employees and
groups interact
with one another
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Structure, Culture, and the
Organization’s Business Model
• Organizational design
- the process of creating an organizational
structure and culture so that a company
can pursue its business model profitably
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The Contingency Approach to
Organizational Design
• Contingency Approach to
Organizational Design
- a type of organizational design that
depends on the changing forces in a firm’s
competitive environment
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Implementing
a Profitable
Business
Model through
Organizational
Structure and
Culture
Figure 8.1
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Question?
What structure groups people together
because of their expertise?
A. Functional
B. Divisional
C. Procedural
D. Geographic
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Functional Structures
• Functional Structure
- a structure that groups people together
because of their expertise or the type of
activity they do (typically into departments)
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Grouping Activities by Function
Figure 8.2
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Chantal Cookware’s Functional
Structure
Figure 8.3
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Advantages of a Functional
Structure
• Coordination advantages
• Motivational advantages
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Disadvantages of a Functional
Structure
1. When the range of goods and services a
company makes increases
2. As companies attract customers with
different needs
3. As companies expand nationally and
globally
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Divisional Structures: Product,
Market, and Geographic
• Divisional structure
- a structure that groups employees by
function but allows them to focus their
activities on a particular product line or type
of customer
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Divisional Structures: Product,
Market, and Geographic
• Product structure
- a structure that groups functions into
divisions that specialize in certain products
• Market structure
- a structure that groups functions into
divisions that serve different types of
customers
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Dell’s Market Structure
Figure 8.5
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Divisional Structures: Product,
Market, and Geographic
• Geographic structure
- a structure in which divisions are created to
serve the needs of customers in a
particular region, country, or world area
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Geographic Structure
Figure 8.6
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Advantages of a Divisional
Structure
• Coordination
advantages
• Motivational
advantages
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Disadvantages of a Divisional
Structure
• Operating costs are much higher
• Having more managers can result in
communications problems, slower decision
making, and lower performance
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Question?
Which structure groups people and
resources in two ways simultaneously?
A. Product
B. Process
C. Matrix
D. Environmental
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Matrix Structure
• Matrix Structure
- a structure that groups people and
resources in two ways simultaneously: by
function and by product
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Matrix
Structure
Figure 8.7
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Matrix Coordination Advantages
1. The company can develop new products
more rapidly
2. It can maximize communication and
cooperation between team members
3. Innovation and creativity are the key to
the company’s competitive advantage
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Disadvantages of a Matrix
Structure
• Dual reporting relationships
• Bosses come into conflict over precisely
who is in charge of which team members
and for how long
• Employees feel the lack of a stable “home
base”
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Coordinating Functions and
Divisions
1. Allocating authority
2. Specifying work rules
3. Using formal integrating mechanisms
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Allocating Authority
• Tall and flat hierarchies
• Minimum chain of command
• Centralization and decentralization of
authority
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Tall and Flat Structures
Figure 8.8
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Problems in Companies with Too
Many Levels in the Hierarchy
Figure 8.9
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Allocating Authority
• Minimum chain-of-command principle
- the principle that a company’s structure
should be designed with as few managerial
levels as possible
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Work Rules and Standard
Operating Procedures
• Management by exception
- the use of rules and standard operating
procedures to coordinate operations
whereby managers only intervene to take
corrective action
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Integrating Mechanisms
• Integrating Mechanisms
- organizing tools that managers use to
increase communication and coordination
among a company’s functions and divisions
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Integrating Mechanisms
• Direct contact
• Liaison roles
• Task forces
• Cross-functional teams
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Four Kinds of Integrating
Mechanisms
Figure 8.10
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Sony’s Cross-Functional
Product Teams
Figure 8.11
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Values and Norms
• Company values
- the shared standards a company’s
members use to evaluate whether or not
they have helped the company achieve its
goals
• Company norms
- beliefs, attitudes, and behaviors that
specify how a company’s members should
behave
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Sources of a Company’s Culture
• Values of the founder
• Organizational socialization
• Ceremonies and rites
• Stories and language
Read about one company’s
shared values
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Sources of a Company’s Culture
Figure 8.12
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Organizational Socialization
• Organizational socialization
- the process by which newcomers learn and
absorb a company’s values and norms and
acquire the work behaviors and attitudes
necessary to perform their jobs effectively
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Characteristics of a Strong Culture
• Cohesive sets of values and norms that
work together to motivate employees
• Companies communicate with employees
their desire to invest in them
• Rewards are directly linked to an
employee’s performance and to the
performance of the company as a whole
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Video: NBB
•
•
NBB is a high tech, environmentally
conscious brewery that produces a world
class beer. The corporate culture of NBB
is strong and pervasive.
What are the sources of a company’s
corporate culture? Is this true at NBB?
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