Organizational Structure Need to create division of labor Need to integrate these groups to ensure organizational effectiveness Dimensions of Macro Structure Microstructure.
Download ReportTranscript Organizational Structure Need to create division of labor Need to integrate these groups to ensure organizational effectiveness Dimensions of Macro Structure Microstructure.
Organizational Structure Need to create division of labor Need to integrate these groups to ensure organizational effectiveness Dimensions of Macro Structure Microstructure Management Dimensions and Processes Firm Growth as Evolutionary Process Single Business Geographic Diversification (Foreign Sales as %Total Sales) Product Diversification (Product Diversity) Product and Geographic Diversification Horizontal Differentiation degree to which tasks are divided into distinct homogeneous groups – – – – function-wise geographic-wise product-wise Mkt production stage-wise CEO Prod 1 Prod 2 Prod 3 Prod 4 CEO Mfg Finance R&D Logistics Vertical Differentiation CEO Number of levels within the organization EVP EVP EVP Sr. VP Sr. VP VP VP VP Asst. VP Asst. VP Asst. VP Branch Mgr. Asst. Branch Mgr Branch Mgr. Spacial Dispersion Degree to which activities are located in different areas HQ Finance US Pacific Eur. Support Mfg. Mfg Prod 1 Prod 2 R&D Legal Pressures for Global Efficiency and Centralization Structure Follows Strategy High Horizontal Differentiation? Vertical Differentiation? Spacial Dispersion? Low Low High Pressures for Local Responsiveness and Decentralization Export Germany U.S. Mexico Malaysia Functional Structure w/ International Sales Division HQ Fin./Acct. Manufacturing Marketing Logistics International Sales R&D Multidomestic Germany U.S. Mexico Malaysia Geographic Structure HQ N. Amer. Mkt. Mfg. Eur. R&D Latin Amer. Pac.Rim Prod. A Prod. B Prod. C Pure Global Germany U.S. Mexico Malaysia Global Functional Structure For Single-business Firms HQ U.S. Fin./Acct. Manufacturing Mexico Marketing Germany R&D Malaysia Product Division Structure For Product-diversified Firms HQ Product A Mfg. Product B Mkt. R&D Mfg. Product C Mkt. R&D Mfg. Mkt. R&D Transnational (1) Germany U.S. Mexico Malaysia Matrix Structure (A) HQ U.S. R&D Marketing US Eur Mexico Malaysia Manufacturing Mexico Matrix Structure (B) HQ Geographic Areas US Eur Asia Product 1 Product 2 Product 3 Product 4 Transnational (2) Germany U.S. Engines Steel Mexico Final Assembly Malaysia Trim, seats, glass Matrix Structure (B) HQ R&D Integrated Functions Logistics Drivetrain Body/ Frame Glass/ Plastic Final Assembly Germany US Malaysia Mexico Marketing Marketing Marketing Marketing Mixed Structure HQ PCs US Europe Pacific Mfg. Faxes Faxes Faxes Mkt. Mobil Phones Mobil Phones Mobil Phones R&D Copiers Copiers Copiers Stopford-Wells Structure Model Product Diversity Hi Lo Product Divisions Intl. Division 0% Mixed / Matrix / Network Geographic Divisions 100% Foreign Sales as % of Total Sales Formalization Degree to which rules, procedure, lines of authority/responsibility are enunciated or specified More formality: eliminates confusion and uncertainty, limits creativity and innovation Less formality: imbues flexibility, creative solutions. Centralization Degree to which authority and decision making is at higher levels of the organization Centralized: tight org control, managers are order-takers Decentralized: managers closest to product and/or customer able to make decisions Data Management Control Mechanisms Information systems Measurement systems Resource allocation procedures Strategic planning Budgeting processes Managers’ Management Control Mechanisms Choice/selection Career of key managers paths Rewards and punishment systems Management development Patterns of socialization Organizational Learning/ Conflict Resolution Control Mechanisms Decision responsibility assignments Integrators Transnational teams Coordination committees Task forces Decentralized Federation Configuration Model Flows? Controls? Changing Role of Top Management Paradoxes…how to be: – global and local – big and small – centralized and decentralized Old way…strategy-structure-systems: – chief strategist – structural architect – information and control systems Vertical Structural Hierarchy Top-down view: – order, symmetry, uniformity – neat decomposition of tasks & responsibilities Bottom-up view: – reporting lines – documentation – reviews The organization has its face toward the CEO and its ass toward the customer. – Jack Welch, CEO General Electric Structural Management of a Portfolio of Processes Entrepreneurial process Competence-building process Renewal process Entrepreneurship Def.: externally-oriented, opportunityseeking, ownership-motivated Employees are most important asset Grow and divide principal 25-5 rule The market is far better judge of new products than some analyst or manager Competence-Building Traditional role…cross-unit “matchmaker” New role…informational conduit, facilitator (on-line dating) Kao’s VAN: dense info network linking mfg, mkt, R&D, engineering, etc. – sift through data for customer clues and latent technologies Intel’s “crisis support” culture Renewal Reduce complacency Groves: Only the Paranoid Survive An organization should stretch itself to the point where it almost becomes unglued – Jack Welch, CEO General Electric ABB: Challenge business units with scenario-planning exercises New 3M CEO’s: 30-5 rule