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ORGANIZATIONAL DESIGN

ORGANIZATIONAL DESIGN. How organizations structure subunits and coordination and control mechanisms to achieve their strategic goals. BASIC QUESTIONS OF ORGANIZATION DESIGN . (1) How to divide work among the organization's subunits?

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ORGANIZATIONAL DESIGN

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  1. ORGANIZATIONAL DESIGN How organizations structure subunits and coordination and control mechanisms to achieve their strategic goals.

  2. BASIC QUESTIONS OF ORGANIZATION DESIGN (1) How to divide work among the organization's subunits? (2) How to coordinate and control the efforts of the units created?

  3. EX 8.1 FUNCTIONAL STRUCTURE

  4. THE FUNCTIONAL STRUCTURE WORKS BESTWhen organization has: • Few products • Few locations • Few types of customers • A stable environment • Routine technology

  5. PRODUCT AND GEOGRAPHIC STRUCTURES • Usually less efficient than the functional organization • Allow a company to serve customer needs that vary by region or product

  6. EX 8.2 PRODUCT STRUCTURE

  7. EX 8.3 GEOGRAPHIC STRUCTURE

  8. WHEN? • Product or an area sufficiently unique to require focused functional efforts on one type of product or service

  9. PRACTICALITIES • Organizations mix structures to best implement strategies • Mixed form organizations called hybrid structures

  10. ORGANIZATIONAL STRUCTURES FOR INTERNATIONAL STRATEGIES

  11. EXPORT DEPARTMENT • Created when: • Exports become significant • A company wishes greater control over export operations • Deals with international sales of all products

  12. EX 8.4 AN EXPORT DEPARTMENT

  13. INTERNATIONAL DIVISION • Usual step after export department • Deals with all products • Manages overseas sales force and manufacturing sites

  14. EX 8.5 INTERNATIONAL DIVISION

  15. PRESSURES TO ABANDON THE INTERNATIONAL DIVISION • Diverse products too complex • Not close enough to local markets • Cannot take advantage of global economies of scale or global sources of knowledge

  16. TWO SOLUTIONS • Worldwide Geographic Structure • Worldwide Product Structure

  17. A WORLDWIDE GEOGRAPHIC STRUCTURE • Implements a multilocal or regional strategy • Country-level divisions • Separate divisions for large market countries

  18. A WORLDWIDE PRODUCT STRUCTURE • Implements strategies that emphasize global products • Each product division assumes responsibility to produce and sell its products or services though out the world

  19. EX 8.6 APPLE’S GEOGRAPHIC STRUCTURE

  20. EX 8.7 WORLDWIDE PRODUCT STRUCTURE

  21. EX 8.8 P&G’S INTL. DIVISION

  22. HYBRIDS AND WORLDWIDE MATRIX STRUCTURE • Support strategies that include local adaptation and concern for globalization. • Mix geographic units with product or function units

  23. THE MATRIX STRUCTURE • Balances the benefits produced by area and product structures • Creates lines of authority for products and areas • Requires near equal demands from the environment

  24. Requires extensive resources for communication and coordination • Requires middle and upper level managers with good human relations skills

  25. THE TRANSNATIONAL NETWORK STRUCTURE • Implements the transnational strategy • Combines functional, product, and geographic subunits in networks

  26. Has no symmetry or balance in its structural form • Resources, people, and ideas flow in all directions • Nodes or centers in the network coordinate product, functional, and geographic information

  27. NETWORK STRUCTURES HAVE • Dispersed subunits • Specialized operations • Interdependent relationships

  28. EX 8.10 EXAMPLE GEOGRAPHIC LINKS

  29. EX 8.11 EXAMPLE PRODUCT LINKS

  30. EX 8-12 STRATEGY AND STRUCTURE

  31. CONTROL AND COORDINATION SYSTEMS • Top managers must design organizational systems to control and coordinate the activities of their subunits.

  32. BASIC FUNCTIONS OF CONTROL • Measure or monitor the performances of subunits • Provide feedback to subunit managers regarding the effectiveness of their units

  33. COORDINATION SYSTEMS • Provide information flows among subsidiaries • Link the organization horizontally

  34. CONTROL SYSTEMS • Output • Bureaucratic • Decision making • Cultural

  35. Exhibit 8.11 shows the relationship between the control mechanisms and basic multinational organizational structures.

  36. COORDINATION SYSTEMS • Paperwork (memos, reports) • Direct contact • Liaison roles • Task forces • Full-time integrator • Teams

  37. CONCLUSIONS • Strategy+Organizational Design = Effectiveness • Basic Structures • Structures for multinational operations • Coordination and control

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