Organizational Structure: Specialization & Coordination

Forms of structures
• Functional Structure
• Divisional Structure
− Based on Products
Product Division Structure
Multi Divisional Structure
Product Team Structure
− Based on Geography
− Based on Market Structure
• Matrix Structure
• Network Structure

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 Organizational Structure: Specialization& Coordination
Product Structure
Product division structure:
• Structure in which a centralized set of support
functions service the needs of a number of different
product lines

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 Organizational Structure: Specialization& Coordination
Product Structure (Multidivisional)

CEO

SVP SVP SVP SVP

Mktg. R&D HR Fin.

Div A Div B Div C Div D

Support Functions
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 Organizational Structure: Specialization& Coordination
Product Structure (Product Team Structure)

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 Organizational Structure: Specialization& Coordination

Geographic Structure

Discuss: Increase in vertical and horizontal differentiation

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 Organizational Structure: Specialization& Coordination
Market Structure
A market structure aligns functional skills and activities
with the needs of different customer groups
• Each customer group has a different marketing focus, and
the job of each group is to develop products to suit the needs
of its specific customers
• Each customer group based divisions makes use of
centralized support function

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 Organizational Structure: Specialization& Coordination
Matrix Structure

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 Organizational Structure: Specialization& Coordination
Network Structure
Product Call
Design Center
Firm Firm
(France) (India)
Core
Firm
(U.S.A.)
Advertising
Manufacturing
Firm
(Malaysia)
(U.K.)
Accounting
Firm
(U.S.A.)

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 Four Levels of Strategy
Functional-level strategy: a plan to strengthen an
organization’s functional and organizational resources, as
well as its coordination abilities, in order to create core
competences
Business-level strategy: a plan to combine functional core
competences to position the organization so that it has a
competitive advantage in its domain
Corporate-level strategy: a plan to use and develop core
competences so that the organization not only can protect
and enlarge its existing domain but can also expand into
new domains
Global expansion strategy: a plan that involves choosing
the best strategy to expand into overseas markets to obtain
scarce resources and develop core competences
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 Functional-Level Strategy
• The strategic goal of each function is to create a
core competence that gives the organization a
competitive advantage
• To gain a competitive advantage, an organization
must be able to do at least one of the following:
− Perform functional activities at a cost lower
than that of its rivals, or
− Perform functional activities in a way that
clearly differentiates its goods and services
from those of its rivals
• Strategies to lower costs or differentiate products

10
Table 8.1: Low-Cost and Differentiation Advantages
Resulting From Functional-Level Strategy

11
Figure 8.3: Structural Characteristics

What should be the structure of support

functions like HR & Finance? Same or Different?
12
Business-Level Strategy
• The business-level strategy involves:
− Selecting and managing the domain the organization will
compete in
− Positioning the organization so that it can use its resources and
abilities to manage its specific and general environments to
protect and enlarge that domain
• Strategies to lower costs or differentiate products
− Low-cost business-level strategy:
− Differentiation business-level strategy:
− Focus business-level strategy

13
Figure 8.5: Organizational Structure &
Business-Level Strategies

What about Multidivisional Structure?

14
Figure 8.6: Corporate-Level Strategies
for Entering New Domains

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 Corporate-Level Strategy and Structure
• For organizations operating in more than one domain, a
multidivisional structure is appropriate
• Conglomerate structure and unrelated diversification
− Conglomerate structure: a structure in which each business is
placed in a self-contained division and there is no contact between
divisions
− Exception for thumb rule related to design challenge III

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Implementing Strategy Across Countries
Four principal strategies
− Multidomestic strategy: oriented toward local
responsiveness by decentralizing control to subsidiaries
and divisions in each country
− International strategy: decentralization of all value-
creation functions except for R&D and marketing
− Global strategy: oriented toward cost reduction, with all
the principal value-creation functions centralized at the
lowest-cost global location
− Transnational strategy: some functions are centralized,
while others are decentralized at the global location best
suited to achieving these objectives to achieve both local
responsiveness and cost savings

17
Table 8.2: Strategy-Structure
Relationships in the International Arena

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 Organizational Culture
Set of shared values and norms that control
organizational members interaction with each
other and with people outside the
organization.

It controls the way

- the members make decisions
- they interpret the environment
- they process the information
- they behave

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 Organizational Culture

•Physical Structures
Artifacts of •Language
Organizational
•Rituals and Ceremonies
Culture
•Stories and Legends

Organizational
•Values/Norms
Culture
•Assumptions

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 Organizational Culture
Organizational Values
Organizational Values

Terminal Values Instrumental Values

Desired end states Desired modes of

or outcomes behavior

Specific norms, rules

and SOP’s
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 Competing value framework
FLEXIBILITY
Human Relations Model Open Systems Model
Clan Culture Adaptability Culture
Human Resource
Development
(M) Flexibility, Readiness

(M) Cohesion (E) Growth,

Morale Resource acquisition

INTERNAL EXTERNAL

(M) Communication (E) Productivity,

Information Mgmt. Efficiency

(E) Stability (M) Planning, Evaluation

Control Goal setting

Internal Process Model Rational Goal Model

Bureaucratic Culture STABILITY Mission Culture
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December 18, 2020 Organizational Structure, Design and Change 24
 Allocate 100 points across four options
First for current culture and then for preferred culture (Distribute 100 points each time)

1. Dominant Characteristics Now Prefe-

rred
A. The assigned group is a very personal place. It is like an
extended family. People seem to share a lot of themselves.
B. The assigned group is a very dynamic entrepreneurial place.
People are willing to stick their necks out and take risks.
C. The assigned group is very results oriented. A major concern
is with getting the job done. People are very competitive and
achievement oriented.
D. The assigned group is a very controlled and structured
place. Formal procedures generally govern what people do.
Total

December 18, 2020 Strengthening Leadership Development for Public Health Officials 25
 Allocate 100 points across four options
First for current culture and then for preferred culture (Distribute 100 points each time)

2. Organizational Leadership Now Prefe-

rred
A. The leadership in the assigned group is generally
considered to exemplify mentoring, facilitating, or nurturing.
B. The leadership in the assigned group is generally
considered to exemplify entrepreneurship, innovating, or
risk taking.
C. The leadership in the assigned group is generally
considered to exemplify a no-nonsense, aggressive, results-
oriented focus
D. The leadership in the assigned group is generally
considered to exemplify coordinating, organizing, or
smooth-running efficiency
Total
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 Allocate 100 points across four options
First for current culture and then for preferred culture (Distribute 100 points each time)

3. Management of Employees Now Prefe-

rred
A. The management style in the assigned group is
characterized by teamwork, consensus, and participation.
B. The management style in the assigned group is
characterized by individual risk-taking, innovation, freedom,
and uniqueness.
C. The management style in the assigned group is
characterized by hard-driving competitiveness, high demands,
and achievement.
D. The management style in the assigned group is
characterized by security of employment, conformity,
predictability, and stability in relationships.
Total
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 Allocate 100 points across four options
First for current culture and then for preferred culture (Distribute 100 points each time)

4. Organization Glue Now Prefe-

rred
A. The glue that holds the assigned group together is loyalty
and mutual trust. Commitment to this organization runs high.
B. The glue that holds the assigned group together is
commitment to innovation and development. There is an
emphasis on being on the cutting edge.
C. The glue that holds the assigned group together is the
emphasis on achievement and goal accomplishment.
Aggressiveness and winning are common themes.
D. The glue that holds the assigned group together is formal
rules and policies. Maintaining a smooth-running organization
is important.
Total
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 Allocate 100 points across four options
First for current culture and then for preferred culture (Distribute 100 points each time)

5. Strategic Emphases Now Prefe-

rred
A. The assigned group emphasizes human development. High
trust, openness, and participation persist.
B. The assigned group emphasizes acquiring new resources
and creating new challenges. Trying new things and
prospecting for opportunities are valued.
C. The assigned group emphasizes competitive actions and
achievement. Hitting stretch targets and winning in the
marketplace are dominant.
D. The assigned group emphasizes permanence and stability.
Efficiency, control and smooth operations are important.
Total

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 Allocate 100 points across four options
First for current culture and then for preferred culture (Distribute 100 points each time)

6. Criteria of Success Now Prefe-

rred
A. The assigned group defines success on the basis of the
development of human resources, teamwork, employee
commitment, and concern for people.
B. The assigned group defines success on the basis of having
the most unique or newest products. It is a product leader and
innovator.
C. The assigned group defines success on the basis of winning
in the marketplace and outpacing the competition.
Competitive market leadership is key.
D. The assigned group defines success on the basis of
efficiency. Dependable delivery, smooth scheduling and low-
cost production are critical.
December 18, 2020 Total
Strengthening Leadership Development for Public Health Officials 30
 Organizational Culture
Transmitting Organizational Culture
Socialization: Process of learning and internalizing the
values and norms of the organization (members)

Collective Individual
Formal Informal
Sequential Random
Fixed Variable
Serial Disjunctive
Divestiture Investiture
Group Activity: Suggest the right combination for newly recruited
employees in Accenture for Consulting, IT & BPO Business
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 Organizational Culture
Source of Organizational Culture
Property rights
system

Organizational Organizational Organizational

ethics Culture structure

Characteristics
of the
people within

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