Lecture management a pacific rim focus chapter 10 strategic organisation design

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CHAPTER 10

STRATEGIC ORGANISATION DESIGN

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

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Lecture outline

• Assessing structural alternatives

• Matching strategy & structure

Organisation structure design

• Strategy & structure: which comes first?

– Strategy & structure are closely linked with each

other.

– Mismatches in strategy/structure lead to

difficulties.

• Factors influencing organisation design

– Contingency factors: technology, size,

environment.

– Need to promote innovation: roles, differentiation,

transfer processes.

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

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Enhanced Edition Slides prepared by David

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Organisation structure design

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

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Assessing structural

alternatives

Functional structure

Structure in which positions are grouped according

to their main functional (or specialised) area.

CEO

Manager, Distribution

Manager, Administration Manager,

Manufacturing

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

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Enhanced Edition Slides prepared by David

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Chief General

Manager Scanner products

Chief General Manager Photographic products

Chief General Manager Photographic products

Chief General Manager Industrial Imaging products

Chief General Manager Industrial Imaging products

Chief General Manager Computer Storage products

Chief General Manager Computer Storage products

Chief General Manager Marine Electronic products

Chief General Manager Marine Electronic products

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

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Enhanced Edition Slides prepared by David

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• Reduction of in-depth expertise

• Competition amongst divisions

• Limited sharing of expertise between divisions

• Innovation restricted to each

division

• Neglect of overall goals

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

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Enhanced Edition Slides prepared by David

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• Slow response to exceptional situations.

Assessing structural

alternatives

Matrix structure:

Structure superimposing a horizontal set of

divisional reporting relationships onto a hierarchical functional structure.

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

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Assessing structural

alternatives

GM, Transport

GM, Sales

GM, HRM

GM, Finance

Business C Transport, Business D Transport, Business E

Sales, Business A Sales, Business B Sales, Business C Sales, Business D Sales, Business E

HRM, Business A

HRM, Business C HRM, Business D HRM, Business E

Finance, Business A Finance, Business B Finance, Business C Finance, Business D Finance, Business E HRM,

Business B

• High administrative costs.

• Confusion over authority & responsibility (potential)

• Excessive focus on internal

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

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Enhanced Edition Slides prepared by David

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Assessing structural

alternatives

Emerging structures:

Type of departmentalisation where positions are grouped by

a complete flow of work

Form of organising where many functions are contracted out

to other independent firms & coordinated by use of

information technology networks to operate as if they were within a single corporation

Weighing contingency factors

The best structure for an organisation depends

on contingency factors such as:

• Size

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

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Weighing contingency factors

Technology:

– Unit & small batch production

– Large batch & mass production

– Continuous process production

– Pooled interdependence

– Sequential interdependence

– Reciprocal interdependence

Weighing contingency factors

With growth:

more staff positions

to assist senior management

With growth:

tendency to decentralise (enabled by

formalisation)

With growth:

tendency to decentralise (enabled by

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

Meacheam & George Sansbury

Weighing contingency factors

Stable environments,

mechanistic

tasks, hierarchical control,

continuous negotiation, network control, decision making rests with those with knowledge,

communication across & between levels, ‘supervision’ is information

& advice, commitment to organisational goals, possession of expertise

• Lawrence & Lorsch: Balance of differentiation & integration

• Lawrence & Lorsch: Balance of differentiation & integration

Matching strategy & structure

Managers must match strategy & structure to achieve effectiveness e.g:

Niche differentiation:

–narrow target market

Niche differentiation:

–narrow target market

Cost leadership:

–organisational efficiency, lower prices

Cost leadership:

–organisational efficiency, lower prices

–complex product

or service innovations

Innovative differentiation:

–complex product

or service innovations

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

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Promoting innovation

Four major means of using organisation

structure to facilitate innovation are:

© 2003 McGraw-Hill Australia Pty Ltd PowerPoint

Slides t/a Management: A Pacific Rim Focus

Enhanced Edition Slides prepared by David

Meacheam & George Sansbury

Lecture summary

– Strategy & structure closely linked.

– Factors influencing design: contingency factors, need for

innovation

• Assessing structural alternatives

– Functional, divisional, hybrid, matrix, emerging structures.

– Technology, size, environment

Lecture summary

– Structure must match chosen strategy for effectiveness.

– Structure may enhance innovation.

transfer process