Presentation Slides

Environmental Behavior Design.

to Accompany

Prepared by Nghia D. Tran

Learning Objectives for Designing Organizations
 Explain how environmental, strategic, and

technological factors affect the design of organizations
 State the differences between mechanistic and

organic organizations
 Describe four traditional organization designs—

functional, place, product, and multidivisional
 Describe three contemporary organization designs—

multinational, network, and virtual

Env. Design

Design .Important Factors in an Organization’s Environment  Suppliers  Distributors  Competitors  Customers Env.

Strategies for Building a Competitive Advantage Low-cost strategy Based on an organization’s ability to provide a product or service at a lower cost than its rivals Differentiation strategy Based on providing customers with something unique and makes the organization’s product or service distinctive from its competition Env. Design .

Strategies for Building a Competitive Advantage Focused strategy Designed to help an organization target a specific niche in an industry. Design . which are designed to target industrywide markets Env. unlike both the low-cost and differentiation strategies.

Design Complex .Types of Task Interdependence in Organization Design Pooled C Sequential C Reciprocal C A B A B A B Simple Env.

Design Reciprocal .Organization Design Options Virtual Design Complex Network Design Environmental Factors Multinational Design Multidivisional Design Product Design Place Design Functional Design Pooled Simple Technological Factors Env.

centralization of decision making. and a rigid hierarchy of authority Organic organization Characterized by low to moderate use of formal rules and regulations. broadly defined job responsibilities. narrowly defined job responsibilities. Design .Mechanistic and Organic Organizations Mechanistic organization Characterized by a reliance on formal rules and regulations. and a flexible authority structure with fewer levels in the hierarchy Env. decentralized and shared decision making.

Characteristics of Bureaucracy  The organization operates according to a set of rules that are intended to tightly control employees’ behavior  All employees must carefully follow extensive impersonal rules and procedures in making decisions  Each employee’s job involves a specified area of expertise. and powers to compel obedience Env. Design . with strictly defined obligations. authority.

Characteristics of Bureaucracy  Each lower-level position is under the tight control and direction of a higher one  Candidates for jobs are selected on the basis of “technical” qualifications  The organization has a career ladder. promotion is by seniority or achievement and depends on the judgment of superiors Env. Design .

Organic and Mechanistic Design Features  Hierarchy of authority  Centralization  Division of labor  Rules  Procedures  Impersonality  Chain of command  Unity of command  Span of control Env. Design .

Design . thus increasing the opportunities for interaction and mutual support Employees tend to lose sight of the organization as a whole Coordination across functional departments often becomes difficult Env.Organizational Uses of Functional Design  Permits clear identification and assignment of     responsibilities Employees easily understand the design People doing similar tasks and facing similar problems work together.

Design .Organizational Uses of Functional Design  With the exception of marketing. most employees have no direct contact with customers and may lose sight of the need to meet or exceed customer expectations  May be effective when the organization:     Has a narrow product line Competes in a uniform environment Pursues a low-cost or focused business strategy Does not have to respond to the pressures of serving different types of customers Env.

Organizational Uses of Place Design  Each department or division is in direct contact     with customers in its locale and can adapt more readily to their demands Lower costs for materials. freight. Design . and perhaps labor may result Marketing strategies and tactics can be tailored to geographic regions Control and coordination problems increase Employees may begin to emphasize their own unit’s goals and needs rather than those of the entire organization Env.

Design .United Technologies CEO Pratt & Whitney * Jet engines * Rocket engines * Industrial gas turbines Carrier * Heating & air conditioning * Building controls * Refrigeration equipment Otis * Elevators * Escalators * Moving walks UT Automotive * Automotive electrical systems * Electric motors * Automotive interior & exterior trim Flight Systems * Helicopters * Propellers * Space life support systems Env.

and technological advances increases the complexity and uncertainty of an organization’s business environment  Product design may incorporate features of functional and place designs into the organization of each product division Env.Organizational Uses of Product Design  Reduces the information overload that managers face in a purely functional design  More effective handling of the business is possible  Addition of product lines. diverse customers. Design .

department. Design . or division Horizontal mechanisms help in dealing with complex environments Env.Organizational Uses of Multidivisional Design  Eases problems of coordination by focusing     functional expertise and knowledge on specific goods or services A firm must have a large number of managerial personnel to oversee all the product lines Higher costs result from the duplication of various functions Often reduces the environmental complexity facing any one team.

Basic Options in Multinational Design Product line Place Country or Region Organization Country Responsiveness. Customers Env. Factories. Competitors. Products. Competitors. Design . Customer Matrix Global Product Organization Global Integration. Manufacture. Adaptation.

Design .Organizational Uses of Multinational Design  Worldwide product-line divisions will be more dominant than geographically based divisions under certain conditions  A worldwide product-line division may not be as effective at opening up new territories as a geographically organized division  A division operating under a place design often:     Can establish relations with host governments Invest in distribution channels Develop brand recognition Build competencies that no single product-line division could afford Env.

Design .Key Elements of Network Design  Distinctive competence  Responsibility  Goal setting  Communication  Information technology  Organization design  Balanced view Env.

Organizational Uses of Network Design  Effective in creating alliances of flexible partnerships  Can create successful external relationships through:  Importance  Investment  Interdependence  Integration  Information  Institutionalization Env. Design .

Design .Key Developments in Information Technology  Open systems  Distributed computing  Real time  Global networking Env.

Organizational Uses of Virtual Design  Structure can be changed quickly to meet changing conditions and situations  Boundaries between an organization and its customers and suppliers are blurred  Employees continually master new manufacturing and information technologies. speeding the production process and the flow of information through the organization Env. Design .

Design .Organizational Uses of Virtual Design  Employees respond quickly to changing customer demands with customized products and services available at any time and place  Employees are reciprocally interdependent  Managers delegate authority and responsibility to employees while providing a clear vision of the organization’s purpose and goals Env.