OB lecture 6 systems or network structure

Network and systems structure: Like team Advantages Flexible, dynamic Disadvantages Lack stability => Network structure: It is increasingly the structure for the Modern organizations in fast moving and competitive environment. It is also the design for multinational companies.

Systems or Network Structure

Lecture 6

Unit 3 Organizations and Behaviour

Systems Structure = Network

Structure

Systems Structure– called by Drucker - as

a

relationship focused structure

(note the ‘s’ in Systems)

Network Structure – used by your text

book – page 73, 74,

75, 76, 77

Original of Network/Systems

• 1960s – NASA to put a man on the

moon before the decade end

• Japanese companies have used this system with their suppliers for a long time

Today, organizations are faced with a Dynamic and turbulent environment

If simple structure is no structure,

Then network Structure is non organization

(see text book page 73)

Increasingly, companies focus on their

core competencies, and outsource

other functions to other companies

e.g Apple focuses on product development and marketing - their core competences

Network structure is studied as

‘outsourcing’ in international business

“

Core firm

Supplier 3 Supplier 2

Supplier 1

Distributor

2

Distributor

1

Network Structure

‘Economy’ of Network

Structure

Toyota

Division Producing

‘Windscreen’ Division (Assembly)

An internal division producing windscreen will sell only to in-house

It will be less motivated as business is guaranteed.

‘Economy’ of Network

Structure

If ‘outsource’ or Use

Network

Supplier

Nissan Honda

Supplier sell to Toyota, Honda, and Nissan

Specialization and economy of scale

achieved This leads to lower cost.

Why Systems or outsourcing

is feasible now

Advances in technologies:

1.Communication

2.Transport

Communication

Techonology Internet

Optical fibre

Submarine cable

Skype

Steve Merkell used Skype to coordinates production in Ningbo (China) and USA from Singapore

Communication Technology

Mr Aung Kyaw Using a set of amplifier, he simply turns on Gtalk for the whole duration of 8 to 10 hours when he is in the office to communicate with his colleague, Mr Kyaw Win in Myanmar,

as if they were in the same office

Transport Technology

- Aircraft 1911, Jet Engine 1945

- Containerization

Singapore

Haiphong

3 days

While aircraft and jet engine are sophisticated technology,

a simply inventor – container drastically reduces sea-freight cost

Without Container With Container

Loading 7 days 1 day

Unloading 7 days 1 day

Containerization Reduces

Cost

1 Without containerization

7+7+3+7+7 = 31 days

2 With Containerization

1+1+3+1+1= 7 days

Throughput of a ship is increased by 31/7 =

4 times !

“Network” is Team Structure

Team is made up of individuals

Network is made up of organizations

As such, the elements of a team

apply:

1)Clear missions or objectives

2)Complementary roles, or skills

3)Performance standards

Network and Systems

Structure Like team

Advantages

Flexible, dynamic

Disadvantages

Lack stability

To make Network Structure

Work

The crucial importance of face-to-face personal, of constant meeting, and of bringing people into decision making Process.

NASA initially thought such system

would

be run by computer based system

Members must make efforts to know what

Was happened throughout the whole system

Network Structure

It is increasingly the structure for the Modern organizations in fast moving and

competitive environment

It is also the design for multi-national companies