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This assignment is intended to improve your understanding of the concepts presented in Chapters 3 and 4, and help you understand the application of these concepts to organizations.Answer attached 20 questions using attached chapters 3 and 4 for reference.
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Chapter 3
1. What is the definition of organization structure? Does organization structure appear on
the organization chart? Explain.
2. When is a functional structure preferable to a divisional structure?
3. Large corporations tend to use hybrid structures. Why?
4. What are the primary differences in structure between a traditional, mechanistic
organization designed for efficiency and a more contemporary, organic organization
designed for learning?
5. What is the difference between a task force and a team? Between liaison role and
integrating role? Which of these provides the greatest amount of horizontal
coordination?
6. As a manager, how would you create an organization with a high degree of relational
coordination?
7. What conditions usually have to be present before an organization should adopt a
matrix structure?
8. The manager of a consumer products firm said, “We use the brand manager position to
train future executives.” Why do you think the brand manager position is considered a
good training ground? Discuss.
9. Why do companies using a horizontal structure have cultures that emphasize openness,
employee empowerment, and responsibility? What do you think a manager’s job would
be like in a horizontally organized company?
10. Describe the virtual network structure. What are the advantages and disadvantages of
using this structure compared to performing all activities in-house within an
organization?
Chapter 4
1. Define organizational environment. Would the task environment of a new Internetbased company be the same as that of a large government agency? Discuss.
2. What are some forces that influence environmental uncertainty? Which typically has the
greatest impact on uncertainty—environmental complexity or environmental
dynamism? Why?
3. Name some factors causing environmental complexity for an organization of your
choice. How might this environmental complexity lead to organizational complexity?
Explain.
4. Discuss the importance of the international sector for today’s organizations, compared
to domestic sectors. What are some ways in which the international sector affects
organizations in your city or community?
5. Describe differentiation and integration. In what type of environmental uncertainty will
differentiation and integration be greatest? Least?
6. How do you think planning in today’s organizations compares to planning 25 years ago?
Do you think planning becomes more important or less important in a world where
everything is changing fast and crises are a regular part of organizational life? Why?
7. What is an organic organization? A mechanistic organization? How does the
environment influence organic and mechanistic designs?
8. Why do organizations become involved in interorganizational relationships? Do
these relationships affect an organization’s dependency? Performance?
9. Assume you have been asked to calculate the ratio of staff employees to production
employees in two organizations—one in a simple, stable environment and one in a
complex, shifting environment. How would you expect these ratios to differ? Why?
10. Is changing the organization’s domain a feasible strategy for coping with a
threatening environment? Explain. Can you think of an organization in the recent
news that has changed its domain?
CHAPTER
3
Fundamentals of
Learning Objectives
After reading this chapter you should be
able to:
Organization Structure
Information-Sharing Perspective on Structure
1.
organization structure.
2.
Organization Design Alternatives
3.
in organization structure.
4.
Functional, Divisional, and Geographic Designs
5.
6.
structural forms.
Matrix Structure
7.
within an organization.
Horizontal Structure
Virtual Networks and Outsourcing
Hybrid Structure
Applications of Structural Design
86
Design Essentials
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 3: Fundamentals of Organization Structure
Before reading this chapter, please check whether you agree or disagree with
each of the following statements:
1
A popular form of organizing is to have employees work on what they want in
whatever department they choose so that motivation and enthusiasm stay high.
I AGREE
2
Committees and task forces whose members are from different departments are
often worthless for getting things done.
I AGREE
3
I DISAGREE
I DISAGREE
Top managers are smart to maintain organizational control over the activities of
key work units rather than contracting out some work unit tasks to other firms.
I AGREE
I DISAGREE
Carlos Ghosn brought Nissan back from the brink of bankruptcy in the late
1990s, but his skills at restructuring were put to the test once again when Japan’s
Number 2 automaker began showing surprisingly weak profit and declining market
share in 2013. Top executives pinpointed the cause. It wasn’t in the design studio or
on the factory floor, they say, or even in the planning office. The problem was the
organization structure, with one chief operating officer overseeing a rapidly expanding
number of opportunities and investments around the globe. In the new structure,
three executive vice presidents will oversee planning and execution. They will work
closely together from the beginning, which will enable them to spot problems quickly,
balance resources, and coordinate investments among regions. The primary goal of
the new structure is to improve coordination so that problems can be solved quickly.
The goals are achievable, Ghosn says, with the right management structure in place so
that people are collaborating. “We need a management team that delivers,” he said.1
Organization structure is one factor that helps companies execute their strategies
and achieve their goals. Lack of coordination and collaboration is a tremendous
problem for many organizations today, as it was at Nissan. The World Bank,
for example, recently conducted a survey of employees that revealed a “terrible”
environment for collaboration at the huge economic development institution that
works in more than 100 countries.2 Many companies use structural innovations
such as teams and matrix designs to achieve the coordination and flexibility they
need. Teams, for example, are part of the strategy used by the Federal Bureau of
Investigation (FBI) to combat terrorism. Like other organizations, the FBI must find
ways to accomplish more with limited resources. One innovation was the creation of
Flying Squads, which are teams of volunteer agents and support staff from various
offices who are ready to spring into action when minimally staffed FBI offices
around the world request assistance.3 Jeff Bezos of Amazon organizes around the
concept of the “two-pizza team.” The company, he said, should be organized into
autonomous groups of fewer than 10 people—small enough that, when working
late, the team could be fed with two pizzas.4
Because of the complexity of today’s environment, many organizations are more
complex and amorphous than they used to be. Wyeth Pharmaceuticals formed a
joint venture with Accenture called the Alliance for Clinical Data Excellence designed
to “bring together the best of both Wyeth and Accenture” for managing Wyeth’s
entire clinical testing operation—from protocol design to patient recruitment to site
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
87
88
Part 2: Organization Purpose and Structural Design
monitoring.5 Accenture doesn’t have a formal headquarters, no official branches, no
permanent offices. The company’s chief technologist is located in Germany, its head of
human resources is in Chicago, the chief financial officer is in Silicon Valley, and most of
its consultants are constantly on the move.6 Wyeth and Accenture reflect the structural
trend among organizations toward outsourcing, alliances, and virtual networking.
Still other firms continue to be successful with traditional functional structures
that are coordinated and controlled through the vertical hierarchy. Organizations
use a wide variety of structural alternatives to help them achieve their purpose and
goals, and nearly every firm needs to undergo reorganization at some point to help
meet new challenges. Structural changes are needed to reflect new strategies or
respond to changes in other contingency factors introduced in Chapters 1 and 2:
environment, technology, size and life cycle, and culture.
Purpose of This Chapter
This chapter introduces basic concepts of organization structure and shows
how to design structure as it appears on the organization chart. First, we define
structure and provide an overview of structural design. Next, an informationsharing perspective explains how to design vertical and horizontal linkages to
provide needed information flow and coordination. The chapter then presents
basic design options, followed by strategies for grouping organizational activities
into functional, divisional, matrix, horizontal, virtual network, or hybrid structures.
The final section examines how the application of basic structures depends on
the organization’s situation (various contingencies) and outlines the symptoms of
structural misalignment.
Organization Structure
The following three key components define organization structure:
BRIEFCASE
As an organization
manager, keep these
guidelines in mind:
Develop organization
charts that describe
task responsibilities,
reporting relationships,
and the grouping of
individuals into departments. Provide sufficient documentation
so that all people within
the organization know
to whom they report
and how they fit into
the total organization
picture.
1. Organization structure designates formal reporting relationships, including
the number of levels in the hierarchy and the span of control of managers and
supervisors.
2. Organization structure identifies the grouping together of individuals into departments and of departments into the total organization.
3. Organization structure includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments.7
These three elements of structure pertain to both vertical and horizontal aspects of
organizing. For example, the first two elements are the structural framework, which
is the vertical hierarchy.8 The third element pertains to the pattern of interactions
among organizational employees. An ideal structure encourages employees to provide horizontal information and coordination where and when it is needed.
Organization structure is reflected in the organization chart. It isn’t possible to
see the internal structure of an organization the way we might see its manufacturing tools, offices, website, or products. Although we might see employees going
about their duties, performing different tasks, and working in different locations,
the only way to actually see the structure underlying all this activity is through the
organization chart. The organization chart is the visual representation of a whole
set of underlying activities and processes in an organization. Exhibit 3.1 shows a
simple organization chart for a traditional organization. An organization chart can
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 3: Fundamentals of Organization Structure
89
EXHIBIT 3.1
CEO
Chief
Accountant
Budget
Analyst
Vice President
Manufacturing
Plant
Superintendent
Maintenance
Superintendent
Director
Human Resources
Training
Specialist
be quite useful in understanding how a company works. It shows the various parts
of an organization, how they are interrelated, and how each position and department fits into the whole.
The concept of an organization chart, showing what positions exist, how they are
grouped, and who reports to whom, has been around for centuries.9 For example,
diagrams outlining church hierarchy can be found in medieval churches in Spain.
However, the use of the organization chart for business stems largely from the Industrial Revolution. As we discussed in Chapter 1, as work grew more complex and was
performed by greater numbers of workers, there was a pressing need to develop
ways of managing and controlling organizations. The growth of the railroads
provides an example. After the collision
of two passenger trains in Massachusetts in 1841, the public demanded better control of the operation. As a result,
the board of directors of the Western
Railroad took steps to outline “definite
responsibilities for each phase of the
company’s business, drawing solid lines
of authority and command for the railroad’s administration, maintenance, and
operation.”10
Exhibit 3.2 shows an interesting
example of an early organization chart
created by Daniel McCallum for the
Erie Railroad in 1855. Faced with financial strain and slumping productivity,
McCallum created charts to explain the
railroad’s operations to investors and to
show the division of responsibilities for
superintendents along hundreds of miles
Benefits
Administrator
EXHIBIT 3.2
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
© Cengage Learning®
Vice President
Finance
90
Part 2: Organization Purpose and Structural Design
of rail lines. McCallum divided the railroad into geographic divisions of manageable
size, with each division headed by a superintendent.11
The type of organization structure that gradually grew out of these efforts in the
late nineteenth and early twentieth centuries was one in which the CEO was placed
at the top, and there was a clear hierarchy of authority extending to everyone else
arranged in layers down below, as illustrated in Exhibit 3.1. The thinking and decision making are done by those at the top, and the physical work is performed by
employees who are organized into distinct, functional departments. This structure
was quite effective and became entrenched in business, nonprofit, and military organizations for most of the twentieth century. However, this type of vertical structure is not always effective, particularly in rapidly changing environments. Over the
years organizations have developed other structural designs, many of them aimed
at increasing horizontal coordination and communication and encouraging adaptation to external changes. This chapter’s BookMark suggests that new approaches to
organizing and managing people are crucial for companies to attain durable competitive advantages in the twenty-first century.
ASSESS
YOUR
1
A popular form of organizing is to have employees work on what they want in
whatever department they choose so that motivation and enthusiasm stay high.
ANSWER: Disagree.
ANSWER
Information-Sharing Perspective on Structure
The organization should be designed to provide both vertical and horizontal
information flow as necessary to accomplish the organization’s overall goals. If the
structure doesn’t fit the information requirements of the organization, people either
will have too little information or will spend time processing information that is
not vital to their tasks, thus reducing effectiveness.12 However, there is an inherent
tension between vertical and horizontal mechanisms in an organization. Whereas
vertical linkages are designed primarily for control, horizontal linkages are designed
for coordination and collaboration, which usually means reducing control.
Centralized Versus Decentralized
One question is the level at which decisions are made in the organization, because
that determines where information is needed. Centralization and decentralization
pertain to the hierarchical level at which decisions are made. Centralization means that
decision authority is located near the top of the organization. With decentralization,
decision authority is pushed downward to lower organization levels.
Organizations can choose whether to orient toward a traditional organization
designed for efficiency, which emphasizes vertical communication and control
(a mechanistic design, as described in Chapter 1), or toward a contemporary
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Chapter 3: Fundamentals of Organization Structure
BOOKMARK
3.0
91
HAVE YOU READ THIS BOOK?
The Future of Management
W. L. Gore.
in The Future of Management
forever
Visa.
SOME STRUCTURAL INNOVATORS
The Future of Management
HOW TO BE A MANAGEMENT INNOVATOR
The Future of Management
ers the rise of modern management and organization de
Whole Foods Market. Teams are the basic organiza
The Future of Management
flexible learning organization, which emphasizes horizontal communication and
coordination (an organic design). Exhibit 3.3 compares organizations designed
for efficiency with those designed for learning and adaptation. An emphasis on
efficiency and control is associated with specialized tasks, a hierarchy of authority,
rules and regulations, formal reporting systems, few teams or task forces, and
centralized decision making. Emphasis on learning and adaptation is associated
with shared tasks; a relaxed hierarchy; few rules; face-to-face communication; many
teams and task forces; and informal, decentralized decision making.
Organizations may have to experiment to find the correct degree of centralization
or decentralization to meet their needs. For example, a study by William Ouchi
found that three large school districts that shifted to a more flexible, decentralized
Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
92
Part 2: Organization Purpose and Structural Design
Vertical Organization
Designed for E fficiency
(Mechanistic)
Dominant
Structural
A …
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