Organizational

Design

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Strategic and Innovation Management Dr. Alexander, SE, MM 1

 Subject
• Organizational Structures
• Functional Organizational Structures
• Divisional Organizational Structures
• Matrix Organizational Structures
• International Operations: Implications for Organizational
Structure
• Boundaryless Organizational Designs
• Creating Ambidextrous Organizational Designs

Strategic and Innovation Management Dr. Alexander, SE, MM 2

 Organizational Structures
• Organizational structure specifies the firm’s formal reporting relationships,
procedures, controls, and authority and decision making processes.
• Strategy and structure have a reciprocal relationship, and if aligned
properly will improve company’s performance.
• The functional organizational structure is an organizational form in which
the major functions of the firm, such as production, marketing, R&D, and
accounting, are grouped internally.
• The divisional organizational structure is an organizational form in which
products, projects, or product markets are grouped internally.
• The matrix organizational structure is an organizational form in which
there are multiple lines of authority and some individuals report to at
least two managers.
Strategic and Innovation Management Dr. Alexander, SE, MM 3
Functional Organizational Structures

Chief Executive Officer

or President

Manager Manager Manager Manager Manager Manager

Production Engineering Marketing R&D Personnel Accounting

Lower-level managers, specialist, and operating personnel

Strategic and Innovation Management Dr. Alexander, SE, MM 4

Functional Organizational Structures

Strategic and Innovation Management Dr. Alexander, SE, MM 5

 Divisional Organizational Structures
Chief Executive Officer
or President

Corporate Staff

Division A Division B Division C

General Manager General Manager General Manager

Manager Manager Manager Manager Manager Manager

Production Engineering Marketing R&D Personnel Accounting

Lower-level managers, specialist, and operating personnel

Organized Organized
similarly to similarly to
Division A Division A

Strategic and Innovation Management Dr. Alexander, SE, MM 6

 Divisional Organizational Structures

Strategic and Innovation Management Dr. Alexander, SE, MM 7

 Matrix Organizational Structures
Chief Executive Officer
or President

Corporate Staff

Manager Manager Manager Manager Manager Manager Public

Administration Projects Manufacturing Engineering Marketing Relations
and Human
Resources
Project A

Project B

Project C

Project D

Strategic and Innovation Management Dr. Alexander, SE, MM 8

 Matrix Organizational Structures

Strategic and Innovation Management Dr. Alexander, SE, MM 9

International Operations: Implications for Organizational Structure

• Three major contingencies that influence the chosen structure are:

1. The type of strategy that is driving a firm’s foreign operations.
2. Product diversity.
3. The extent to which a firm is dependent on foreign sales.
• The primary types of structures used to manage a firm’s
international operations are:
• International division
• Geographic-area division
• Worldwide functional
• Worldwide product division
• Worldwide matrix
Strategic and Innovation Management Dr. Alexander, SE, MM 10
Boundaryless Organizational Designs
Organizations in which the boundaries, including vertical, horizontal, external,
and geographic boundaries, are permeable. There are three types of
boundaryless organizational designs as follow:
• The Barrier-Free Organization: an organizational design in which firms
bridge real differences in culture, function, and goals to find common
ground that facilitates information sharing and other forms of cooperative
behavior.
• The Modular Organization: an organization in which nonvital functions are
outsourced, using the knowledge and expertise of outside suppliers while
retaining strategic control.
• The Virtual Organization: a continually evolving network of independent
companies that are linked together to share skills, costs, and access to one
another’s markets.
Strategic and Innovation Management Dr. Alexander, SE, MM 11
 Boundaryless Organizational Designs

Pros and Cons of Barrier-Free Structures

Strategic and Innovation Management Dr. Alexander, SE, MM 12

 Boundaryless Organizational Designs
Pros and Cons of Modular Structures

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 Boundaryless Organizational Designs

Pros and Cons of Virtual Structures

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Creating Ambidextrous Organizational Designs
• Ambidextrous organizational designs: organizational designs that
attempt to simultaneously pursue modest, incremental innovations as
well as more dramatic, breakthrough innovations.
• Firms that achieve both adaptability and alignment are considered
ambidextrous organizations—aligned and efficient in how they manage
today’s business but flexible enough to changes in the environment so
that they will prosper tomorrow.
• Adaptability: managers’ exploration of new opportunities and
adjustment to volatile markets in order to avoid complacency.
• Alignment: managers’ clear sense of how value is being created in the
short term and how activities are integrated and properly coordinated.

Strategic and Innovation Management Dr. Alexander, SE, MM 15

 Group Assignment
Case study discussion:
1. Please watch the videos about the failure of Euro (Paris) and
Hongkong Disneyland.
2. Please discuss, conclude and explain the reasons of the failure of
Euro (Paris) and Hongkong Disneyland at the beginning of its
operation.
3. What are the lessons learned from the Disneyland’s cases?
Reflection Questions for Discussion:
1. What is your current organization structure? Why is your organization
applying this organization structure?
2. Do you think the current organization structure fit with the company’s
strategy? Please explain why whether the answer yes or no.
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 References
Dess, G.G., McNamara, G., Eisner A.B., Lee, S.H. (2021). Strategic Management:
Creating Competitive Advantages, 10th ed., New York: McGrawHill,
513p.
Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2020). Strategic Management:
Competitiveness & Globalization, Concepts and Cases, 13th ed., Boston:
Cengage Learning, 770p.

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Thank You
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Strategic and Innovation Management Dr. Alexander, SE, MM 18