Presentation Slides to Accompany Organizational Behavior 10 th Edition Don Hellriegel and John W. Slocum, Jr.

1. Presentation Slidesto AccompanyOrganizational Behavior10th EditionDon Hellriegel and John W. Slocum, Jr. Chapter 14—Designing Organizations Prepared by Michael K. McCuddy Valparaiso University

2. Slide 14.1Learning Objectives forDesigning Organizations • Explain how environmental, strategic, and technological factors affect the design of organizations • State the differences between mechanistic and organic organizations • Describe four traditional organization designs—functional, place, product, and multidivisional • Describe three contemporary organization designs—multinational, network, and virtual Chapter 14: Designing Organizations

3. Slide 14.2Important Factors in anOrganization’s Environment • Suppliers • Distributors • Competitors • Customers Chapter 14: Designing Organizations

4. Slide 14.3Strategies for Building aCompetitive Advantage • Low-cost strategy • Based on an organization’s ability to provide a product or service at a lower cost than its rivals • Differentiation strategy • Based on providing customers with something unique and makes the organization’s product or service distinctive from its competition Chapter 14: Designing Organizations

5. Slide 14.3 (continued) Strategies for Building aCompetitive Advantage • Focused strategy • Designed to help an organization target a specific niche in an industry, unlike both the low-cost and differentiation strategies, which are designed to target industrywide markets Chapter 14: Designing Organizations

6. Slide 14.4Types of Task Interdependencein Organization Design Pooled Sequential Reciprocal C C C A B A B A B Simple Complex Chapter 14: Designing Organizations

7. Slide 14.5Organization Design Options Virtual Design Complex Network Design Multinational Design Multidivisional Design Environmental Factors Product Design Place Design Simple Functional Design Pooled Technological Factors Reciprocal Chapter 14: Designing Organizations

8. Slide 14.6Mechanistic and Organic Organizations • Mechanistic organization • Characterized by a reliance on formal rules and regulations, centralization of decision making, narrowly defined job responsibilities, and a rigid hierarchy of authority • Organic organization • Characterized by low to moderate use of formal rules and regulations, decentralized and shared decision making, broadly defined job responsibilities, and a flexible authority structure with fewer levels in the hierarchy Chapter 14: Designing Organizations

9. Slide 14.7Characteristics of Bureaucracy • The organization operates according to a set of rules that are intended to tightly control employees’ behavior • All employees must carefully follow extensive impersonal rules and procedures in making decisions • Each employee’s job involves a specified area of expertise, with strictly defined obligations, authority, and powers to compel obedience Chapter 14: Designing Organizations

10. Slide 14.7 (continued)Characteristics of Bureaucracy • Each lower-level position is under the tight control and direction of a higher one • Candidates for jobs are selected on the basis of “technical” qualifications • The organization has a career ladder; promotion is by seniority or achievement and depends on the judgment of superiors Chapter 14: Designing Organizations

11. Slide 14.8Organic and MechanisticDesign Features • Hierarchy of authority • Centralization • Division of labor • Rules • Procedures • Impersonality • Chain of command • Unity of command • Span of control Chapter 14: Designing Organizations

12. Slide 14.9Organizational Uses ofFunctional Design • Permits clear identification and assignment of responsibilities • Employees easily understand the design • People doing similar tasks and facing similar problems work together, thus increasing the opportunities for interaction and mutual support • Employees tend to lose sight of the organization as a whole • Coordination across functional departments often becomes difficult Chapter 14: Designing Organizations

13. Slide 14.9 (continued)Organizational Uses ofFunctional Design • With the exception of marketing, most employees have no direct contact with customers and may lose sight of the need to meet or exceed customer expectations • May be effective when the organization: • Has a narrow product line • Competes in a uniform environment • Pursues a low-cost or focused business strategy • Does not have to respond to the pressures of serving different types of customers Chapter 14: Designing Organizations

14. Slide 14.10 Organizational Uses of Place Design • Each department or division is in direct contact with customers in its locale and can adapt more readily to their demands • Lower costs for materials, freight, and perhaps labor may result • Marketing strategies and tactics can be tailored to geographic regions • Control and coordination problems increase • Employees may begin to emphasize their own unit’s goals and needs rather than those of the entire organization Chapter 14: Designing Organizations

15. Slide 14.11United Technologies CEO Pratt & Whitney * Jet engines * Rocket engines * Industrial gas turbines Carrier * Heating & air conditioning * Building controls * Refriger- ation equipment Otis * Elevators * Escalators * Moving walks UT Auto- motive * Automotive electrical systems * Electric motors * Automotive interior & exterior trim Flight Systems * Helicopters * Propellers * Space life support systems Source: http://www.utc.com Chapter 14: Designing Organizations

16. Slide 14.12 Organizational Uses ofProduct Design • Reduces the information overload that managers face in a purely functional design • More effective handling of the business is possible • Addition of product lines, diverse customers, and technological advances increases the complexity and uncertainty of an organization’s business environment • Product design may incorporate features of functional and place designs into the organization of each product division Chapter 14: Designing Organizations

17. Slide 14.13 Organizational Uses ofMultidivisional Design • Eases problems of coordination by focusing functional expertise and knowledge on specific goods or services • A firm must have a large number of managerial personnel to oversee all the product lines • Higher costs result from the duplication of various functions • Often reduces the environmental complexity facing any one team, department, or division • Horizontal mechanisms help in dealing with complex environments Chapter 14: Designing Organizations

18. Slide 14.14Basic Options in Multinational Design Functions Functions Marketing Manufacturing Product line Finance Human Resources Others Place Country or Region Organization Matrix Global Product Organization Country Responsiveness, Adaptation, Competitors, Manufacture, Customer Global Integration, Products, Competitors, Factories, Customers Chapter 14: Designing Organizations

19. Slide 14.15Organizational Uses ofMultinational Design • Worldwide product-line divisions will be more dominant than geographically based divisions under certain conditions • A worldwide product-line division may not be as effective at opening up new territories as a geographically organized division • A division operating under a place design often: • Can establish relations with host governments • Invest in distribution channels • Develop brand recognition • Build competencies that no single product-line division could afford Chapter 14: Designing Organizations

20. Slide 14.16Key Elements of Network Design • Distinctive competence • Responsibility • Goal setting • Communication • Information technology • Organization design • Balanced view Chapter 14: Designing Organizations

21. Slide 14.17Organizational Uses ofNetwork Design • Effective in creating alliances of flexible partnerships • Can create successful external relationships through: • Importance • Investment • Interdependence • Integration • Information • Institutionalization Chapter 14: Designing Organizations

22. Slide 14.18Key Developments inInformation Technology • Open systems • Distributed computing • Real time • Global networking Chapter 14: Designing Organizations

23. Slide 14.19Organizational Uses of Virtual Design • Structure can be changed quickly to meet changing conditions and situations • Boundaries between an organization and its customers and suppliers are blurred • Employees continually master new manufacturing and information technologies, speeding the production process and the flow of information through the organization Chapter 14: Designing Organizations

24. Slide 14.19 (continued)Organizational Uses of Virtual Design • Employees respond quickly to changing customer demands with customized products and services available at any time and place • Employees are reciprocally interdependent • Managers delegate authority and responsibility to employees while providing a clear vision of the organization’s purpose and goals Chapter 14: Designing Organizations