Strategic management planing for domestic and global cometition 14th john robinson chapter 11

Describe the product-team structure and explain why it is a prototype for a more open, agile organizational structure 3.. Simple Organizational Structure• A simple organizational structu

Structure

Chapter 11

Learning Objectives

1 Identify five traditional organizational structures

and the pros and cons of each

2 Describe the product-team structure and explain

why it is a prototype for a more open, agile

organizational structure

3 Explain five ways improvements have been

sought in traditional organizational structures

4 Describe what is meant by agile, virtual

organizations

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Learning Objectives (contd.)

5 Explain how outsourcing can create agile, virtual

organizations, along with its pros and cons

6 Describe boundaryless organizations and why they

are important

7 Explain why organizations of the future need to be

ambidextrous learning organizations

Organizational Structure

formalized arrangement of interaction

between and responsibility for the tasks,

people, and resources in an organization

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Simple Organizational Structure

• A simple organizational structure is one where there

is an owner and a few employees and where the

arrangement of tasks, responsibilities, and

communication is highly informal and accomplished through direct supervision

• This type of structure can be very demanding on the owner-manager

• Most businesses in this country and around the

Functional Organizational Structure

• A functional organizational structure is one on

which the tasks, people, and technologies

necessary to do the work of the business are

divided into separate “functional” groups (such

as marketing, operations, and finance) with

increasingly formal procedures for coordinating and integrating their activities to provide the

business’s products and services

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Ex 11.3 Functional Organization Structures

Divisional Structure

• A divisional organizational structure is one in which

a set of relatively autonomous units, or divisions, are governed by a central corporate office but where

each operating division has its own functional

specialists who provide products or services different from those of other divisions

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Divisional Structure (contd.)

• This structure expedites decision making in

response to varied competitive environments

• The division usually is given profit

responsibility

Ex 11.4 Divisional Organization Structure

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Strategic Business Unit

• The strategic business unit (SBU) is an

adaptation of the divisional structure whereby

various divisions or parts of divisions are

grouped together based on some common

strategic elements, usually linked to distinct

product/market differences

• The advantages and disadvantages of the SBU

form are very similar to those identified for

divisional structures

Holding Company Structure

• A final form of the divisional organization is the

holding company structure, where the

corporate entity is a broad collection of often

unrelated businesses and divisions such that it

(the corporate entity) acts as financial overseer

“holding” the ownership interest in the various parts of the company but has little direct

managerial involvement

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Matrix Organizational Structure

• The matrix organizational structure is one

in which functional and staff personnel are

assigned to both a basic functional area

and to a project or product manager

• The matrix form is intended to make the

best use of talented people within a firm by

combining the advantages of functional

specialization and product-project

specialization

Ex 11.5 Matrix Organizational Structure

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Ex 11.5 (adapted) Matrix Organizational Structure

(contd.)

Product-Team Structure

• The product-team structure seeks to simplify

and amplify the focus of resources on a narrow but strategically important product, project,

market, customer, or innovation

• The product-team structure assigns functional

managers and specialists to a new product,

project, or process team that is empowered to make major decisions about their product

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Ex 11.7 The Product-Team Structure

Trends Affecting Organizations in the 21 st Century

• Globalization

• The Internet

• Speed

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Ex 11.9 What a Difference a Century can Make

Efforts to Improve Traditional Structures

• Redefine the role of corporate headquarters

from control to support and coordination

• Balance the demands for control/differentiation

with the need for coordination/integration

• Restructure to emphasize and support

strategically critical activities

• Reengineer strategic business processes

• Downsize and self-manage

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Restructure to Emphasize and Support

Strategically Critical Activities

• Restructuring: Redesigning an organizational

structure with the intent of emphasizing and

enabling activities most critical to a firm’s strategy to function at maximum effectiveness

• Business Process Reengineering: A customer-centric

restructuring approach It involves fundamental

rethinking and radical redesigning of a business

process so that a company can best create value for

Restructure to Emphasize and Support

• Downsizing: Eliminating the number of employees,

particularly middle management, in a company

• Self-management: Allowing work groups or work

teams to supervise and administer their work as a group or team without a direct supervisor exercising the supervisory role These teams set parameters of their work, make decisions about work-related

matters, and perform most of the managerial

functions previously done by their direct supervisor

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Creating Agile, Virtual Organizations

• Virtual organization: a temporary network of

independent companies—suppliers, customers,

subcontractors, even competitors—linked

primarily by information technology to share skills, access to markets, and costs

• An agile organization is one that identifies a set of

business capabilities central to high-profitability operations and then builds a virtual organization around those capabilities

Outsourcing—Creating

a Modular Organization

• Outsourcing is simply obtaining work previously

done by employees inside the companies from

sources outside the company

• A modular organization provides products or

services using different, self-contained specialists

or companies brought together—outsourced—to contribute their primary or support activity to

result in a successful outcome

• Business process outsourcing (BPO) is the most

rapidly growing segment of the outsourcing

services industry worldwide

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Strategic Alliances

• Alliances with suppliers, partners, contractors, and other providers that allow partners in the alliance to focus on what they do best, farm out everything else, and quickly provide value to the customer

Types of Boundaries

• Horizontal boundaries—between different

departments or functions in a firm

• Vertical boundaries—between operations and

management, and levels of management,

between “corporate” and “division”

• Geographic boundaries—between different

physical locations; between different countries or regions of the world and between cultures

• External interface boundaries—between a

company and its customers, suppliers, partners,

regulators, and competitors

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Becoming Boundaryless

• Jack Welch coined the term “boundaryless” to

illustrate his vision for GE

• Outsourcing, strategic alliances, product-team

structures, reengineering, restructuring—all are ways to move toward boundaryless organization

• Technology, particularly driven by the Internet,

has and will be a major driver of the

boundaryless organization

Ex 11.14 From Traditional Structure to B-Web Structure

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Ambidextrous Learning Organization

• The evolution of the virtual organizational

structure as an integral mechanism managers use has brought with it recognition of the central role knowledge plays in implementation

• The shift from exploitation to exploration (Rangan)

indicates the growing importance of organizational

structures that enable a learning organization to

allow global companies the chance to build

competitive advantage

• An ambidextrous organization emphasizes

• Downsizing

• External interface boundaries

• Functional organizational structure

• Geographic boundaries

• Holding company structure

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Key Terms (contd.)

Key Terms (contd.)