Contemporary Management

Dr. Hesham Sadek

MID TERM
 CHAPTER 1

Do you know yourself? (Self-Awareness)

- what is known by the person about him/herself and is also known by others - open area,
- what is unknown by the person about him/herself but which others know - blind spot
- what the person knows about him/herself that others do not know - hidden self
- What is unknown by the person about him/herself and is also unknown by others – the
unknown.
-What is an Organization?
- Organizations provide goods or services to satisfy customer needs.
- Organizations are OPEN Systems.
Organizations are OPEN Systems.
The Environment (Supplies) Resource Input
- People
- Money
- Material
- Technology
- Information
The Organization (Creates)
- Work activities turn Resources into Output (Transformation Process)
The Environment (Consumes) Resource Output
- Finished Goods
- Services
Should be Customer and Client feedback from Resource Output to Resource Input again

Organizational Performance
Performance Efficiency:
An input that measures the costs associated with goal accomplishment

Performance Effectiveness:
An output that measures goal accomplishment

Productivity and Organizational Performance

- If goal achievement is high and resources utilization is poor so it is Effective but not Efficient
- If goal achievement is low and resources utilization is good so it is not Effective but Efficient
- If goal achievement is high and resources utilization is good so it is Effective and Efficient
- If goal achievement is low and resources utilization is poor so it is not Effective and not Efficient
Who are Managers and what do they do

Levels of Management: Top Managers, Middle Managers, Team Leaders or Supervisors:

Top Managers: responsible for performance of an organization as a whole or for one of its
larger parts

Middle Managers: in charge of relatively large departments or divisions

Team Leaders or Supervisors: in charge of a small work group of non-managerial

Management Levels:

- Top Managers
- Middle Managers
- First-Line Managers
- Non managerial Employees

Where is Management Needed?

Management is needed in:
- All sizes of Organizations (from small to large)
- All organizational areas (Manufacturing – Marketing – human resources-accounting – information
systems, etc.)
- All organization levels (from top to bottom)
- All Types of organizations (profit – not for profit)
Responsibilities of Team Leaders
- Plan meetings and work schedules.
- Clarify goals and tasks, and gather ideas for improvement.
- Appraise performance and counsel team members.
- Recommend pay raises and new assignments.
- Recruit, train, and develop team members.
- Encourage high performance and teamwork.
- Inform team members about organizational goals and expectations.
- Inform higher levels of work unit needs and accomplishments.
- Coordinate with others teams and support the rest of the organization

Mangers Function
The management process:
- Planning : Setting performance objectives and deciding how to achieve them
- Organizing : arranging tasks ,people and other resources to accomplish the work
- Leading : inspiring people to work hard to achieve high performance
- Controlling : Measuring performance and tacking action to ensure desired results

Managers Roles (Mintzberg’s)

Interpersonal roles: how a manager interact with people (liaison – leader –figurehead)
 Informational roles: how a manger exchanges and processes information (monitor- disseminator-
Spokesperson).
Decisional rules: how a manger uses information in decision making (entrepreneur –disturbance
Handler – resource allocator –negotiator)

Essential Managerial Skills (Katz’s)

Technical skill: the ability to apply special expertise to perform tasks.

Human skill: the ability to work well in cooperation with others.

Conceptual skill: the ability to think critically and analytically to solve complex problems.

Note: Your Technical skills will decrease while you advanced in management.
Your conceptual skills will increased while you advanced in management.
But your human skills should not decrease at any time.

Competencies for Managerial Success

- Communication: Share ideas

- Teamwork: As a team member or team leader
- Self-management: Evaluate oneself
- Leadership: To influence & support others
- Critical thinking: Analyze info for creative problem solving
- Professionalism: To sustain a positive impression
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CHAPTER 2

What is your Learning Style?

Accommodator: Likes hands-on activities to learn by doing

Diverger: Likes imagining, to learn by observing
Converger: Likes to experiment, learn by problem solving
Assimilator: Likes logical reasoning, to learn by information

Branches in Classical approach to Management

Scientific Management: (Careful selection & Training of workers)

- Standardize work and proper working conditions for every job.
- Carefully select workers with the right abilities for the job.
- Carefully train workers and provide proper incentives.
- Support workers by carefully planning their work and removing obstacles.
Administrative Principles: (Planning, Organization, Leading & Controlling)
- Planning: to complete a plan of action for the future.
- Organization: to provide resources to implement the plan.
- Leading: to lead, select, and evaluate workers to get the best work.
- Coordination: to ensure information is shared and problems solved.
- Control: to make sure things happen according to plan and to take action.
Bureaucratic Organization: (Logic, Order & Legitimate Authority)
 - Clear division of labor
- Clear hierarchy of authority
- Formal rules and procedures
- Impersonality
- Careers based on merit
Disadvantages of Bureaucratic Organization
- Excessive paperwork or “red tape”
- Slowness in handling problems
- Rigidity in the face of shifting needs
- Resistance to change

HR approaches to Management

Maslow’s Hierarchy of Needs:

Level Needs
1 Physiological Needs: warmth, shelter , food , a human being’s “animal” need Lower- Order’s
needs: satisfied
2 Safety Needs :a sense of security absence fear
Externally
3 Social Needs : interaction with other people (having a friends) Higher – Order’s
4 Esteem Needs: being well regarded by other people (appreciation) needs :Satisfied
5 Self-actualization : realizing individual potential ; winning ; achieving Internally

Theory “X” (Douglas McGregor)

- Dislike work
- Lack ambition
- Are irresponsible
- Resist change
- Prefer to be led
Theory “Y” (Douglas McGregor)
- Willing to work
- Capable of self-control
- Willing to accept responsibility
- Imaginative and creative
- Capable of self-direction

Theories “X” and “Y” versus Maslow’s

Level Needs
1 Physiological Needs: warmth, shelter , food , a human being’s “animal” need
Theory X assumes that
2 Safety Needs :a sense of security absence fear Lower-order needs
dominate Individuals
3 Social Needs : interaction with other people (having a friends)
4 Esteem Needs: being well regarded by other people (appreciation) Theory Y assumes that
Higher-order needs
5 Self-actualization : realizing individual potential ; winning ; achieving
dominate

- The question is how you can move “X” to “Y” and how to keep “Y” from moving to “X”?
- How would you describe your BEST Manager? Your WORST Manager?
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CHAPTER 3

External Environment & Organizational Culture

What is External Environment?

Successful companies in the new economy will need to focus on:

Knowledge:

- Customer behavior
- Markets
- Economies
- Technology

Learning:
Speed:

External Environment of an Organization

Important stakeholders are:

- Customers
- Suppliers
- Competitors
- Regulators
- Investors/owners

Multiple Stakeholders in an Org.

Mutual effect with firm

- Competitors
- Suppliers
- Customers
- Labor unions

One-way effect with firm

- Federal state and local governments

- Educational institutions
- Political parties
- Court and legal institutions
- Public – interest groups
- Financial institutions

Questions about Competitors

Do they appear to be successful at it? Why or why not?

What are they good at?
What competitive advantage(s) do they appear to have?
 What are they not so good at?
What competitive disadvantage(s) do they appear to have?
How large and profitable are these competitors?

. . . . . A competitive Edge!

A core competency that clearly sets an organization apart from competitors and gives it an advantage
Over them in the marketplace

How can you achieve a Competitive Edge?

- Products
- Pricing
- Customer service
- Cost efficiency
- Quality
- Knowledge
And this will drive the Organizational Culture

What Customers want

- High quality.
- Low price.
- On-time delivery.
- Great service.

Dimensions of Uncertainty

- Low complexity And Low rate of change in Environment , It is Low Uncertainty

- Low complexity And High rate of change in Environment ,It is High-Moderate Uncertainty
- High complexity And Low rate of change in Environment ,It is Low- Moderate Uncertainty
- High complexity And High rate of change in Environment ,It is High Uncertainty

Organizational Culture

Shared beliefs and values that develops within an organization and guides the behavior of its
Members.

Barriers to Women & Minority

Minority cultures: Women, people of color, other minorities

- Hold few top positions

- Distributed in lower middle levels
- Included in entry level hiring

Glass ceiling;

Limiting advancement of women and minorities

 Dominant culture: white males

- Hold most top positions

- Present at all levels
- Included in entry level hiring

Which Organizational Culture fits you?

A.A culture that values Talent and entrepreneurial activity.

B.A culture that stresses Loyalty and working for the good of the group.
C.A culture that offers little job security.
D.A culture that values long-term relationships.

CHAPTER 4

Ethical Behavior & Social Responsibility

6 Pillars of Character

- Trustworthy: Honesty, integrity, reliability in keeping promises, loyalty.

- Respect: Courtesy, decency, dignity.
- Responsibility: Accountability, pursuit of excellence.
- Fairness: Commitment to process, equity.
- Caring: Concern for others.
- Citizenship: Knowing & respecting the law, volunteering.

Are we missing out any of these?

What is Ethics and what is Ethical Behavior?

Ethics: Set standards of “good” or “bad” . . . “right” or “wrong” in one’s conduct.

Ethical behavior: What is accepted as good and right in a moral code.

What is Ethical Behavior?

- Legal behavior is not necessarily ethical behavior.

- Personal values help determine individual ethical behavior

Values broad beliefs

Terminal Values: Goals that a person would like to achieve or see in a lifetime.
Instrumental Values: Means of achieving a person’s Terminal Values.

Values and Ethical Behavior

Never underestimate the power of cultural differences. A behavior that may be perfectly acceptable in
one culture may be rude in another.
Four views of Ethical Behavior?

- Practical View of Ethics: Greatest good to the greatest number of people

- Justice View: Fair treatment for all people with dignity & respect
- Individualism View: Commitment is to one’s interests
- Moral-Rights View: Respects & protects rights of people

Which one of these views represent you?

How can Managers Improve their Ethical Behavior

- Hire individuals with high ethical standards.

- Establish codes of ethics and decision rules.
- Lead by example.
- Set realistic job goals and include ethics in performance appraisals.
- Provide ethics training.
- Conduct independent social audits.
- Provide support for individuals facing ethical dilemmas.

Ethics in the Workplace . . . . . !

Ethical Dilemmas: a situation that offers potential benefits but is unethical

“No clear consensus on what is “Right” and “Wrong”

Ethical dilemmas include:

1. Discrimination: denying promotion because gender, religion, race, age.
2. Sexual harassment: requesting favors for favorable job treatment.
3. Conflicts of interest: taking Bribes or Gifts for making a decision.
4. Customer confidence: giving another party privileged information.
5. Organizational resources: using company’s e-mail for personal opinions.

Develop a Checklist for dealing with Ethical Dilemmas

Step 1: Recognize the Ethical Dilemma

Step 2: Get the facts
Step 3: Identify your options
Step 4: Test each option: Is it legal? Is it right? Is it beneficial?
Step 5: Decide which option to follow.
Step 6: “How will I feel if my family finds out about my decision?”
“How will I feel if my decision is on the newspaper or the internet?”
Step 7: Take action

Ethical behavior can be rationalized by convincing yourself that:

- Behavior is not really illegal.

- Behavior is really in everyone’s best interests.
- Nobody will ever find out.
- The organization will “protect” you.
Whistleblowers . . . .

Whistleblowers expose misdeeds of others to:

- Preserve ethical standards
- Protect against wasteful, harmful, or illegal acts

Do you think this is Ethical?

Ethical Role Models

- Top managers serve as ethical role models.

- All managers can influence the ethical behavior.
- Excessive pressure can foster unethical behavior.
- Managers should be realistic in setting performance goals for others.

Is it a Bribe or a Gift?

- $ 3 million business = $ 20,000 payment!! This will not guarantee you to get the order!
- Your Boss says “OK” but you must be sure!
- All other companies paid the $ 20,000
- Difficult to determine a gift or a bribe.

Corporate Social Responsibility CSR Elements

Child Labor The company shall not engage in or support the use of child labor (a
child=less than 15 years old)
Forced Labor The company shall not engage in or support the use of forced labor, nor shall
personnel be required to lodge deposits or identity papers upon commencing
employment with the company
Health & Safety The employee should not at any time be exposed to any kind of danger during
work
Freedom of Speech The company shall respect the right of all personnel to form and
Join trade unions of their choice and to bargain collectively.
Discrimination No discrimination in hiring, remuneration, access to training, promotion,
termination or retirement based on race, religion, disability, gender, union
membership, political affiliation, or age.
The company shall not engage in or support the use of corporal punishment,
Disciplinary Actions
mental or physical coercion, and verbal abuse.
The company shall comply with applicable laws and industry standards on
Working Hours
working hours
The company shall ensure that wages paid for a standard working week shall
Remuneration meet the industry minimum standards and shall be sufficient to meet basic
needs of personnel
Management Systems Top management shall define the company’s policy for social accountability

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 CHAPTER 5

International Management

Some terminologies

Global Management: managing operations in more than one country.

A Global Manager: is culturally aware on international affairs

A Global Business: conducts commercial transactions across national boundaries.

Global Sourcing: materials or services are purchased around the world for local use.

How do you choose a Joint Venture Partner?

JV operates in a foreign country through co-ownership by foreign and local partners.

- Familiar with your firm’s major business.

- Employs a strong local workforce.
- Values its customers.
- Has potential for future expansion.
- Has strong local market for its own products.
- Has good profit potential.
- Has sound financial standing.

Global Businesses

Global Corporation:
MNC (Multinational Corporation) with extensive business operations in more than one foreign
Country

Transnational Corporation
MNC (Multinational Corporation) operates worldwide on a borderless basis

Big Mac Index (2008): economists use this to track purchasing power among the world’s currencies.

What does this tell you as Managers?

MNC / Host Country . . . Relationships!

What can go RIGHT, and what can go WRONG?

What should go RIGHT?

Mutual benefits:
- Shared opportunities
- Growth
- Income
- Learning
- Development
 What can go WRONG (Host vs MNC)

Host complaints about MNCs:

- Excessive Profits
- Economic domination
- Interference with Gov.
- Limited Tech Transfer
- Disrespect for local customs

MNC complaints about Host:

- Profit limitations
- Overpriced resources
- Exploitative rules
- Foreign exchange restrictions
- Failure to uphold contracts

Communication vs Cultures

Egypt Germany
Tends to prefer direct verbal interaction. Tends to prefer indirect verbal interaction.
Tends to understand meaning at one level only. Tends to understand meanings at many socio-cultural
levels.
Is generally less proficient in reading non-verbal cues. Is generally more proficient in reading non-verbal cues.
Values individualism. Is generally more proficient in reading non-verbal cues.
Relies more on logic. Relies more on feeling.
Employs linear logic. Employs spiral logic.
Says no directly. Talks around point, avoids saying no.
Communicates in highly structure messages, provides Communicates in simple, ambiguous messages.
details.

Chapter 6

The Decision-making process

Types of Information:

Intelligence information: gathered from stakeholders and external environment.

Internal Information: flows up, down, around and across organization.
Public Information: disseminated to stakeholders and external environment

Implications of IT within Organizations:

- Facilitation of communication and information sharing.

- Flattening of organizational structures.
- Faster decision making.
What is USEFUL Information?
Data Base || knowledge base
Data: Raw facts and observations.
Characteristics of useful information:
- Timely.
- High quality.
- Complete.
- Relevant.
- Understandable

IT is breaking barriers & changing Orgs.

- People , teams , and departments are better connected by IT

- Organization are flatter as IT replaces management levels
- Suppliers : supply chain management is improved by IT connection
- Strategic partner : more things are done by outsourcing and partnership using IT

How Managers use Info to make decisions

Problem-solving styles:

1. Problem avoiders: Inactive in information gathering and solving problems.

2. Problem solvers: Reactive in gathering information and solving problems.
3. Problem seekers: Proactive in anticipating problems and opportunities and taking appropriate
action to gain an advantage.

Your turn as Groups

You have a PROBLEM: one of your team members is causing the Breakup of the Team.
What are the steps would you take to solve this problem?

Systematic versus Intuitive thinking

- Systematic thinking: approaches problems in a rational, step-by-step, and analytical fashion.

- Intuitive thinking: approaches problems in a flexible and spontaneous fashion.
- Multidimensional thinking: applies both intuitive and systematic thinking.
- Effective multidimensional thinking: requires skill at strategic opportunism.

Types of Managerial Decisions . . .

Programmed Decisions:

- Apply solutions that are available from past experiences to solve structured problems.
- Structured problems are straightforward and clear.
- Best applied to routine problems that can be anticipated.

Non-programmed Decisions

- Develop novel solutions to meet the demands of an unstructured problems.

- Unstructured problems are ones that are full of ambiguities and information deficiencies.
- Commonly faced by higher-level management
 Crisis Decisions

- A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and
appropriately.

Steps in Decision making & Problem Solving

Step 1: Find & define the Problem

Step 2: Generate & evaluate alternative solutions
Step 3: Make decision & conduct ethics double-check
Step 4: Implement the decision
Step 5: Evaluate results

Repeat process as necessary

Chapter 7

Fundamentals of Planning

The roles of Planning & Controlling

PLANNING to set the Direction:

- Decide where you want to go
- Decide how best to get there

ORGANIZING: to create Structures

LEADING: to inspire Efforts
CONTROLLING to ensure Results
- Measure performance
- Take corrective action

Top Managers & Middle Managers & Fist-line Managers:

Planning: Top Managers > Middle Managers > Fist-line Managers.

Organizing: Top Managers > Middle Managers > Fist-line Managers.
Leading: Top Managers < Middle Managers < Fist-line Managers.
Controlling: Top Managers > Middle Managers > Fist-line Managers.

Benefits of Planning

- Improves focus and flexibility.

- Improves action orientation.
- Improves coordination.
- Improves time management.
- Improves control.
Time Management Tips . . . .

- DO say “no” to requests that distract from what you should be doing.
- DON’T get bogged down in details that can be addressed later.
- DO screen telephone calls, emails, and meeting requests.
- DON’T let drop-in visitors instant messaging use up your time
- DO prioritize your important and urgent work
- DON’T become calendar bound by letting others control your schedule
- DO follow priorities; do most important and urgent work first.

Urgent versus Important . . .

URGENT: must be done NOW.

IMPORTANT: must be done by YOU.

- Low important Low Urgent : Don’t do it

- Low important High Urgent : Ask someone else to do it now
- High important Low Urgent : Do it yourself later
- High important High Urgent : Do it now , Do it yourself

Short range and Long range plans

- Short-range plans : 1 year or less

- Intermediate-range plans : 1 to 2 years
- Long-range plans : 3 or more years

Strategic & Operational plans

Strategic plans: set broad, comprehensive, and longer-term action directions for the entire organization.
Operational plans: define what needs to be done in specific areas to implement strategic plans:
- Production plans
- Financial plans
- Facilities plans
- Marketing plans
- Human resource plans

Personal Development Plan (PDP)

Life Plan: from 0 to 80

Career Plan: between 25 to 60
Career plan within the company: between 32 to 52
Annual Development:
 Chapter 8

Strategic Management Process

Strategic Management Process:

- Identify the organization’s current mission , goals , and strategies

SWOT Analysis
1- External analysis ( opportunities & threats )
2- Internal analysis (strengths & weaknesses)
- Formulate strategies
- Implement strategies
- Evaluate Results

Strategy Formulation & Implementation

Strategy formulation (create strategy)

- Identify and analyze current mission & objectives & strategies

- Analyze internal and external environments:
1- Organizational resources and capabilities (strength and weakness).
2- Industry and external environment (opportunities and threats)
- Revise mission and objectives select new strategies (corporate , business , functional )

Strategy Implementation (putting strategies into action)

- Implement strategies: (corporate governance , management system and practices , strategic

leadership)
- Evaluate results :(strategic control ,Renew strategic management process)

Three Levels of Strategies

Corporate Strategy: What business are we in?

Business Strategy: How do we complete in each of our major business?
Functional Strategy: How do we best support each of our business strategies?

Strategic questions for strategy formulation

- What is our business mission?

- Who are our customers?
- What do our customers consider value?
- What have been our results?
- What is our plan?

Typical Objectives of Strategic Management

- Profitability
- Market share
- Human talent
- Financial health
- Cost efficiency
- Product quality
 - Innovation
- Social responsibility

The SWOT Analysis

Internal Assessment of the organization

What are our strength?

- Manufacture efficiency?
- Skilled workforce?
- Good market share?
- Strong financing?
- Superior reputation?
What are our weakness?
- Outdated facilities?
- Inadequate R & D?
- Obsolete technologies?
- Weak management
- Past planning failures?

External Assessment of the Environment

What are our opportunities?

- Possible new market?
- Strong economy?
- Weak market rivals?
- Emerging technologies?
- Growth of existing market?
What are our threats?
- New competitors
- Shortage of resources?
- Changing market tastes?
- New regulations?
- Substitute products?

Questions for SWOT Analysis

Potential Strengths
1. Well-developed strategy?
2. Strong product lines?
3. Broad market coverage?
4. Manufacturing competence?
5. Good marketing skills?
6. Good materials management systems?
7. R&D skills and leadership?
8. Human Resources competencies?
9. Brand-name reputation?
10. Cost of differentiation advantages?
11. Appropriate organizational structure?
12. Appropriate control systems?
13. Ability to manage strategic change?
14. Others?
Potential Opportunities
1. Expand core business?
2. Exploit new market segments?
3. Widen product range?
4. Extend cost or differentiation advantage?
5. Diversify into new growth businesses?
6. Expand into foreign markets?
7. Apply R&D skills in new areas?
8. Enter new related businesses?
9. Vertically integrate forward (eliminating the Middle Man)?
10. Vertically integrate backward (makes the retailors part of them?
11. Overcome barriers to entry?
12. Reduce Competition among competitors?
13. Apply brand-name capital in new areas?
14. Seek fast market growth?
15. Others?

Potential Weaknesses
1. Poorly developed strategy?
2. Obsolete, narrow product lines?
3. Rising manufacturing costs?
4. Decline in R&D innovations?
5. Poor marketing plan?
6. Poor materials management systems?
7. Loss of customer goodwill?
8. Inadequate human resources?
9. Loss of brand name?
10. Growth without direction?
11. Loss of corporate direction?
12. Infighting among divisions?
13. Loss of corporate control?
14. Inappropriate organizational structure & control systems?
15. High conflict and politics?
16. Others?

Potential Threats
1. Attacks on core business?
2. Increase in domestic competition?
3. Increase in foreign competition?
4. Change in consumer tastes?
5. Fall in barriers to entry?
6. Rise in new or substitute products?
7. Increase in industry rivalry?
8. New forms of industry competition?
9. Potential for takeover?
10. Changes in demographic factors?
11. Downturn in economy?
12. Rising labor costs?
13. Slower market growth?
14. Others?
7 characteristics of Organizational Culture

1. Innovation and risk taking.

- Degree to which employees are encouraged to be innovative and to take risks
2. Attention to details.
- Degree to which employees are expected to exhibit precision, analysis, and attention to details
3. Outcome orientation: management focus on results.
- Degree to which managers focus on results or outcomes rather than on how these outcomes are
achieved
4. People Orientation: Effect of outcome on people.
- Degree to which management decisions take into account the effects on people in the
organization
5. Team Orientation: Teams rather than individuals.
- Degree to which work is organized around team rather than individuals
6. Aggressiveness.
- Degree to which employees are aggressive and competitive rather than cooperative
7. Stability.
- Degree to which organizational decisions and actions emphasize maintaining the status quo

Chapter 9

Fundamentals of organizing

What is Organization Structures?

PLANNING to set the Direction:

- Decide where you want to go
- Decide how best to get there

ORGANIZING: to create Structures

LEADING: to inspire Efforts
CONTROLLING to ensure Results
- Measure performance
- Take corrective action

Top Managers& Middle Managers & Fist-line Managers:

Planning: Top Managers > Middle Managers > Fist-line Managers.

Organizing: Top Managers > Middle Managers > Fist-line Managers.
Leading: Top Managers < Middle Managers < Fist-line Managers.
Controlling: Top Managers > Middle Managers > Fist-line Managers.

Types of Structures
- Formal
- Informal
- Functional
- Divisional
- Matrix
Formal Structure Informal Structure

Functional structures

President

Business Firm
Vice president Vice president Vice president Vice president
Marketing Finance Production HR

Branch Manager

Branch Bank
Manager Manager Manager Manager
Loans Investments Operations Trusts

Administrator

Community Hospital
Director Director Director Director
Medical Staff Nursing clinics Patiants service
Divisional Structures

Based on product, geography, customer, process…

Type Focus Example

General Manager
Goods or service
Product
produced
Grocery Products Drugs and toiletries

President
Geographical Location of activity
Asian Division European Division

Agency Administrator
Customer or client
Customer
serviced
Problem Youth senior citizens

Catalog sales Manager

Activities part of same
Process
process
Product Purchasing Order Fulfillment

Matrix structure

Combines functional and divisional structures to gain advantages and minimize disadvantages of each.

Advantages of Matrix structures

- Better cooperation across functions.
- Improved decision making.
- Increased flexibility
- Better customer service.
- Improved strategic management
Disadvantages of Matrix structures
- Two-boss system -power struggles.
- Two-boss system -can create task confusion and conflict in work priorities.
- Team meetings are time consuming.
- Team may develop “clicks / groups”
Why do Structures differ?
Mechanistic model: A structure characterized by extensive departmentalization, high formalization, a
limited information network, and centralization.
Organic model: A structure that is flat, use cross-hierarchical and cross-functional teams, has low
formalization, possesses a comprehensive information network, and relies on participative decision making.
Types of Strategy
- Innovation Strategy: A strategy that emphasizes the introduction of major new products and
services.
- Cost-minimization Strategy: A strategy that emphasizes tight cost controls, avoidance of
unnecessary innovation or marketing expenses, and price cutting.
- Imitation Strategy: A strategy that seeks to move into new products or new markets only after their
viability has already been proven.
Structures versus Strategies
Innovation: Organic: A loose structure; low specialization, decentralized.
Cost Minimization: Mechanistic: Tight control; extensive work specialization; high formalization;
High centralization.
Imitation: Mechanistic & Organic: Mix of loose with tight properties; tight controls over
Current activities and looser controls for new undertakings

END OF MID TERM