Core Concepts of Organizational design

QUESTIONS & ANSWERS
By Dr.M.Arumugam

Strategic Competency and Organizational Design 
Study questions. ± What is a co-evolution view of strategy, and what is its linkage to organizational design? ± What is organizational design, and how do the designs of small and large firms differ? ± Do the operations and information technology of the firm influence its organizational design?

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Strategic Competency and Organizational Design 
Study questions ² cont. ± What is the relationship between environmental conditions and organizational design? ± What is strategy, and how do organizational learning and information technology influence strategic competency?

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What is a co-evolution view of strategy, and what is its linkage to organizational design? 
Two aspects of strategy.
± Strategy involves:
‡ Formulation ² the positioning of the firm in its

environment to provide it with the capability to succeed.
‡ Implementation ² the stream of decisions that

enable the firm to fulfill its capability.
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‡ Adopt an organic type (or professional bureaucracy) to achieve innovation. ‡ Adopt a mechanistic type (or machine bureaucracy) to achieve efficiency. ± Traditional advice on organization design relative to strategy.What is a co-evolution view of strategy. 5 . and what is its linkage to organizational design?  Two aspects of strategy ² cont.

What is a co-evolution view of strategy. as well as allow for individuals to experiment. and what is its linkage to organizational design?  Two aspects of strategy ² cont. 6 . and develop competencies so that the firm¶s strategy can evolve. grow. ‡ The structural configuration should facilitate carrying out the strategy formulated by senior management. ± Contemporary advice on organization design relative to strategy.

‡ The firm can adjust to external changes even as it shapes some of the challenges facing it. ± Aspects of co-evolution. 7 . and what is its linkage to organizational design?  Strategy and co-evolution. ‡ Repositioning the firm in its environmental setting even as the setting changes. ‡ Shaping the capabilities of the organization¶s members and its administrative and technical systems. ± Co-evolution.What is a co-evolution view of strategy.

Operations and information technology. 8 . and how do the designs of small and large firms differ?  Organizational design. ± The choice of an appropriate organizational design depends on the firm¶s: ‡ ‡ ‡ ‡ Size. ± The process of choosing and implementing a structural configuration. Strategy for growth and survival. Environment.What is organizational design.2.

9 . ‡ Large firms have a much larger number of direct personal contacts that must be managed. ± Larger organizations cannot be bigger versions of their smaller counterparts. ‡ Large firms are bureaucracies. and how do the designs of small and large firms differ?  Organizational size. ‡ Large firms have many core operations technologies in a wide variety of specialized units.What is organizational design.

± A configuration involving one or two ways of specializing individuals and units. ± Appropriate for many smaller firms because of simplicity. 10 .What is organizational design. flexibility and responsiveness to a central manager. and how do the designs of small and large firms differ?  The simple design for smaller units and firms. ± Vertical specialization and control emphasize levels of supervision without elaborate formal mechanisms.

Do the operations and information technology of the firm influence its organizational design?  Organizational design must be adjusted to fit technological opportunities and requirements. analyze. procedures. ± Operations technology. 11 . ± Information technology. artifacts. and disseminate information for translating it into knowledge. store. knowledge. and techniques that creates a product or service output.3. ‡ The combination of machines. ‡ The combination of resources. and systems used to gather.

± Technologies classified according to the degree of specification and degree of interdependence of work units. ‡ Uncertainty as to how to produce desired outcomes.Do the operations and information technology of the firm influence its organizational design?  Thomson¶s view of technology. ± Intensive technology. 12 .

± Mediating technology. ‡ The way to produce desired outcomes is known and broken down into a number of sequential steps. ± Long-linked technology.Do the operations and information technology of the firm influence its organizational design?  Thomson¶s view of technology ² cont. ‡ Links parties that want to become interdependent. 13 .

‡ The organization tailor makes a variety of custom products to fit customer specifications. 14 . ‡ The organization produces one or a few products through an assembly line system. ± Small-batch production.Do the operations and information technology of the firm influence its organizational design?  Woodward¶s view of technology. ± Mass production.

Do the operations and information technology of the firm influence its organizational design?  Woodward¶s view of technology ² cont. ± The proper matching of structure and technology is critical to organizational success. 15 . ‡ The organization produces a few products using considerable automation. ± Continuous-process technology.

16 . ± When managers and employees do not know the appropriate way to service a client or produce a particular product. an adhocracy might be an appropriate technological design.Do the operations and information technology of the firm influence its organizational design?  Where operations technology dominates: the adhocracy.

policies. ± Extreme horizontal specialization. ± Shared decision making among members. 17 . and procedures. ± Virtually no formal controls. ± Few levels of management. ± Substantial decentralization.Do the operations and information technology of the firm influence its organizational design?  An adhocracy is characterized by: ± Few rules.

± Problems are difficult to define and solve. 18 .Do the operations and information technology of the firm influence its organizational design?  An adhocracy is useful when: ± The tasks facing the firm vary considerably and provide many exceptions.

‡ Some process controls. 19 . ± IT provides a strategic capability. ± IT provides a partial substitute for: ‡ Some operations. ± IT provides a capability for transforming information to knowledge for learning. ‡ Some impersonal methods of coordination.Do the operations and information technology of the firm influence its organizational design?  Organizational impacts of information technology (IT).

‡ Did not alter fundamental character or design of the organization. ‡ Brought some marginal changes in organizational design.Do the operations and information technology of the firm influence its organizational design?  Information technology as a substitute. highly specified. ± A second wave of substitution replaced process controls and informal coordination mechanisms with IT. 20 . and repetitious jobs. ± Initial implementation of IT often displaced routine.

21 .Do the operations and information technology of the firm influence its organizational design?  Information technology as a capability for learning. ± Real impact of adding IT capability occurred when it became broadly available throughout the organization. ± IT provides individuals throughout the organization the information they need to plan. coordinate. decide. and control.

‡ Narrowly defined jobs with process controls are replaced by broadly-defined jobs with output controls.Do the operations and information technology of the firm influence its organizational design?  Information technology as a capability for learning ² cont. 22 . ± Impact of IT. ‡ Provides new information-based coordination devices. ‡ Individuals are empowered and their jobs are expanded. ‡ Can be linked to total quality management programs. ‡ Can help flatten and streamline the organization structure.

Do the operations and information technology of the firm influence its organizational design?  Information technology as a strategic capability. thus altering and enhancing strategic capability. thereby creating new strategic capability. ± IT is transforming aging bricks and mortar firms. ± IT has spawned e-businesses. 23 .

the adhocracy design became problematic. 24 .com firms adopted some variation of adhocracy. ± Many dot. ‡ Actual delivery of products and services rested more on responsiveness to clients and maintaining efficiency than on continual innovation.coms grew. ± As the dot.Do the operations and information technology of the firm influence its organizational design?  IT as a strategic capability for e-business. ‡ Limits on the size of an effective adhocracy.

± More firms are recognizing the strategic value of IT and are using IT as a basis for global operations. ± IT¶s most profound effect is in firms that rely on mediating technology. 25 .Do the operations and information technology of the firm influence its organizational design?  IT as a strategic capability for bricks and mortar firms.

economic. 26 . ± Specific environment. and competitors with which an organization must interact to grow and survive. suppliers. ‡ The set of cultural.4.What is the relationship between environmental conditions and organizational design?  Understanding the environment is important because an organization is an open system. distributors. and educational conditions found in the areas in which the organization operates. ‡ The owners. ± General environment. government agencies. legal-political.

‡ The degree of interdependence. ± More complex environments provide more problems and opportunities. ± The magnitude of problems and opportunities in the organization¶s environment.What is the relationship between environmental conditions and organizational design?  Environmental complexity. as reflected in: ‡ The degree of richness. ‡ The degree of uncertainty. 27 .

What is the relationship between environmental conditions and organizational design?  Degree of environmental richness. ± The environment is richer when: ‡ The economy is growing. ‡ Those on whom the organization relies are prospering. ± The opposite of richness is decline. 28 . ‡ Individuals are improving their education.

29 . ‡ Organization may co-opt powerful outsiders ‡ Organization may absorb or buffer demands of powerful external elements. ± Linkage between environmental independence and organization design may be subtle and indirect.What is the relationship between environmental conditions and organizational design?  Degree of environmental interdependence.

± Uncertainty and volatility can be particularly damaging to large bureaucracies. ± A more organic form is the appropriate organizational design response to uncertainty and volatility.What is the relationship between environmental conditions and organizational design?  Degree of environmental uncertainty. 30 .

What is the relationship between environmental conditions and organizational design?  Using alliances where environmental factors dominate. ± Interfirm alliances are announced cooperative agreements or joint ventures between two independent firms. 31 . interfirm alliances are used. ± In high-tech areas and businesses dominated by IT.

32 . ± Known as keiretsu in Japan. ± The network organization is beginning to evolve in the United States. ± Known as informal combines or cartels in Europe.What is the relationship between environmental conditions and organizational design?  Interfirm alliances.

information distribution. and how do organizational learning and information technology influence strategic competency?  Strategic competency can be acquired through organizational learning. and information retention in adapting successfully to changing circumstances. information interpretation. ± Organizational learning is the process of knowledge acquisition. 33 .What is strategy.5.

‡ Is important to new firms. ‡ Provides workable.What is strategy. if not ideal. and how do organizational learning and information technology influence strategic competency?  Knowledge acquisition. ‡ Reduces the number of decisions that need to be analyzed separately. ± Mimicry. Core Concepts of Organizational Behavior: Chapter 12 34 . solutions to many problems. ‡ Establishes legitimacy or acceptance and narrows the choices requiring detailed explanation.

‡ All organizations and managers learn through experience. ‡ Learning through structured programs. and how do organizational learning and information technology influence strategic competency?  Knowledge acquisition ² cont.What is strategy. ‡ Learning by doing. ± Vicarious learning. ‡ Capturing the lessons of others¶ experiences. ± Experience. Core Concepts of Organizational Behavior: Chapter 12 35 .

behavior. and how do organizational learning and information technology influence strategic competency?  Knowledge acquisition ² cont. self-control. ‡ Social learning is achieved through the reciprocal interactions among people. ‡ Symbolic processes. Core Concepts of Organizational Behavior: Chapter 12 36 .What is strategy. and self-efficacy are important in social learning. ‡ The individual learns behaviors by observing and imitating others. and the environment. ± Individual social learning.

± Contracting out (or outsourcing). or firms to bring in useful knowledge. and how do organizational learning and information technology influence strategic competency?  Knowledge acquisition ² cont. Core Concepts of Organizational Behavior: Chapter 12 37 . ‡ Asking outsiders to perform a particular function. ± Grafting. units. ‡ The process of acquiring individuals. ± Scanning. ‡ Involves looking outside the firm and bringing back useful solutions.What is strategy.

± Key challenges of information distribution in large organizations. and how do organizational learning and information technology influence strategic competency?  Information distribution. ‡ Quickly locating who has needed information. ± Once information is obtained. Core Concepts of Organizational Behavior: Chapter 12 38 . ‡ Quickly locating who needs specific types of information.What is strategy. managers must establish mechanisms for distributing relevant information.

Core Concepts of Organizational Behavior: Chapter 12 39 . and how do organizational learning and information technology influence strategic competency?  Information interpretation. rather than seeing what is. ± Interpretation problems. ‡ Self-serving interpretations ² managers and employees seeing what they want to see. ‡ Managerial scripts ² a series of well-known routines for problem identification and alternative generation and analysis that are commonly used by a firm¶s managers.What is strategy. ± Interpreted information reflects a collective understanding within the firm.

What is strategy.  The denial of tradeoffs.  There is a single organizational truth. ‡ Organizational myths ² commonly held cause- effect relationships or assertions that cannot be empirically supported. and how do organizational learning and information technology influence strategic competency?  Information interpretation ² cont. Core Concepts of Organizational Behavior: Chapter 12 40 .  The presumption of competence.

Physical structures (or ecology). Formal organizational structures. Transformation procedures. Core Concepts of Organizational Behavior: Chapter 12 41 . and how do organizational learning and information technology influence strategic competency?  Information retention.What is strategy. Organizational culture. External archives. Internal information technologies. ± Important retention mechanisms. ‡ ‡ ‡ ‡ ‡ ‡ ‡ Individuals.

± A deficit cycle is a pattern of deteriorating performance that is followed by even further deterioration.What is strategy. and how do organizational learning and information technology influence strategic competency?  Deficit cycles of strategic organizational learning. and the firm fails to develop adequate mechanisms for learning. Core Concepts of Organizational Behavior: Chapter 12 42 . ± The same problems keep reoccurring.

and how do organizational learning and information technology influence strategic competency?  Deficit cycles of strategic organizational learning ² cont.What is strategy. ‡ Organizational inertia. ‡ Hubris. ‡ Detachment. Core Concepts of Organizational Behavior: Chapter 12 43 . ± Factors associated with deficit cycles.

Core Concepts of Organizational Behavior: Chapter 12 44 . and how do organizational learning and information technology influence strategic competency?  Benefit cycles of strategic organizational learning.What is strategy. ± The same problems do not keep reoccurring as the firm develops adequate mechanisms for learning. ± Firms that successfully co-evolve can ride the benefit cycle. ± A benefit cycle is a pattern of successful adjustment followed by further improvements.

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