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Bateman

Snell

Management
Competing in the New Era

5th Edition
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Part Three
Chapter 9 - The Responsive Organization Chapter Outline Today¶s Imperatives Organizing for Optimal Size Organizing for Environmental Response Organizing for Technological Response Organizing for Strategic Response Final Thoughts about Responsive Organizations

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Learning Objectives 
After 
the

studying Chapter 9, you will know:

market imperatives a firm must meet to survive  the potential advantages of creating an organic form of organization  how a firm can ³be´ both small and big  how to manage information-processing demands  how firms manage information-processing demands  how firms organize to meet customer requirements  how firms organize around different types of technology  the new types of dynamic organizational concepts and forms that are being used for strategic responsiveness
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Today¶s Imperatives 
Responsiveness 
quickness,

agility, and the ability to adapt to changing

demands 
Burns

and Stalker

structures - a form of organization that seeks to maximize internal efficiency  organic structure - an organization form that emphasizes flexibility 
mechanistic 
people

work more as teammates than as subordinates break away from the traditional bureaucratic form
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Elements Of Organic Structure
Broad, changing job responsibilities Communication is advisory

Employees relate more informally and personally Commitment to organizational goals

Organic Structure

Decentralized and informal decision making Expertise is highly valued

Greater reliance on judgement than rules

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organization Chart Shows Who¶s On Top
Leers (CEO) O¶Hara (SVP) Blair Stewart Ruiz Calder (SVP) Long (SVP) Stern (SVP

Harris Muller Huttle Benson Jules Atkins Fleming Baker Kibler Church Daven Martin Thomas Lee Zanado Wilson Swinney Carlson Hoberman Fiola Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Advice Network Reveals Knowledge Flow
Church Blair Baker Thomas Swinney Leers (Ceo) Long (SVP) Lee Daven Harris Martin Calder (SVP) Ruiz Carlson Wilson Fleming Huttle Kibler Hoberman Benson Atkins
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Jules

Zanado

Muller

O¶Hara (SVP)

Fiola

Stewart

Stern (SVP)

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Organizing For Optimal Size 
Large organizations 
tend

to have more specialized jobs  are more difficult to control 
adopt

bureaucratic controls such as rules, procedures, and paperwork 

The

case for big
economies - lower costs per unit of production
operating costs, easier access to capital, greater purchasing power 

scale 

lowered

of scope - materials and processes used with one product can be used for other, related products  diseconomies of scale - cost of being too big 
economies
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Optimal Size (cont.) 
The

case for small
companies can: 

smaller 

move fast provide quality goods and services to targeted market niches inspire greater involvement from their people 
today,

premium exists for flexibility and responsiveness 

Being

big and small 

small

is beautiful for unleashing energy and speed  large size offers market power  challenge is to be both big and small to capitalize on the advantages of each
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Optimal Size (cont.) 
Downsizing 
the

planned elimination of positions or jobs  common approaches include eliminating functions, hierarchical levels, or units  rightsizing - a successful effort to achieve an appropriate size at which the company performs most effectively  survivor¶s syndrome - loss of productivity and morale in employees who remain after a downsizing 
struggle

with heavier workloads wonder who will be the next to go try to figure out how to survive become narrow-minded and self-absorbed
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Easing The Pain Of Downsizing
Carefully choose positions to be eliminated

Train people how to cope

Emphasize a positive future

Positive practices

Protect talented people

Communicate constantly

Attend to those who have lost their jobs
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Environmental Response 
Organizing to 
huge

manage information

amounts of information flow to and from the environment  Option one: Reducing the need for information 
slack 

resources - extra resources which can be used ³in a pinch´

e.g., inventory 

creating

self-contained tasks - change from a functional organization to a product or project organization
each unit has the resources needed to perform its task  communications flow within each team rather than among a complex array of interdependent groups 

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Environmental Response (cont.) 
Organizing to 
Option 
invest

manage information (cont.)

two: Increasing information processing capability

in information systems - employing or expanding computer systems create horizontal relationships - foster coordination across different units 

horizontal processes include:  direct contact  liaison roles  task forces  teams  product, program, or project managers  matrix organization
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Managing High InformationProcessing Demands
Reduce the need for information High information processing demands Process more information Create slack resources Create self-contained tasks Invest in information systems Create horizontal relationships

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Environmental Response (cont.) 
Organizing for 
no

customer responsiveness

other aspect of the environment has had a more profound impact on organizing recently than the focus on customers  strategic triangle - managers must balance this triangle

Customers

Corporation

Competitors
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Environmental Response (cont.) 
Organizing for 
Customer

customer responsiveness (cont.)

Relationship Management (CRM) -multifaceted

process 
creates

two-way exchanges with customers in order to learn their needs and buying patterns 

traditional

thinking - customers wanted high quality or low

costs  kaizen - attain and retain competitive advantage by continuing to improve  customer - refers to the next process, or wherever work goes next 
highlights

interdependence among related functions
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Environmental Response (cont.) 
Organizing for 
Total

customer responsiveness (cont.)

Quality Management (TQM) - comprehensive approach to improving quality and customer satisfaction 
characterized

by a strong orientation toward internal and external customers involves people across departments in improving all aspects of the business requires integrative mechanisms that facilitate group problem solving, information sharing, and cooperation across business functions 
Baldrige

award - given to U.S. companies that achieve quality excellence
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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The Baldrige Criteria
Leadership Customer focus and satisfaction Information and analysis

Quality and operational results

Quality excellence

Strategic quality planning

Management of process quality

Human resource development and management
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Environmental Response (cont.) 
Organizing for 
ISO

customer responsiveness (cont.)

9000 - a series of quality standards developed by a committee working under the International Organization for Standardization 
intended

to improve total quality in all businesses companies that comply with standards entitled to certification 
Reengineering

- revolutionizes key organizational systems

and processes 
completely

overhauls the operation based on a vision for how the organization should run

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response 
Technology 
systematic

application of scientific knowledge to a new product, process, or service  the methods, processes, systems, and skills used to transform resources (inputs) into products (outputs) 
Types

of technology configurations 

Small

batch technologies - produce goods and services in low volume
shops structure tends to be organic 
job

few rules and formal procedures  decentralized decision making 

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response (cont.) 
Types

of technology configurations (cont.) 

Large

batch technologies - produce goods and services in high volume 
structure 

tends to be more mechanistic

many more rules and formal procedures  centralized decision making  higher spans of controls  more formal communication 
Continuous

process technologies - highly automated continuous production flow 
structure 

can be more organic

less monitoring and supervision required  more informal communication

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response (cont.) 
Organizing for 
Mass

flexible manufacturing

customization - the production of varied, individually customized products at the low cost of standardized, massproduced products 
a

dynamic network of relatively independent operating units module - a specific process or task performed by a unit
different modules joined to make a good or service  combination of modules dictated by unique customer requests  

Computer-integrated

manufacturing (CIM) - use of computer-aided design and computer-aided manufacturing to sequence and optimize a number of production processes
team members work on the network from remote sites  provides maximum process flexibility 

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response (cont.) 
Organizing for 
Flexible 
have

flexible manufacturing (cont.)

factories - differ from traditional factories

much shorter production runs, with different products organized around products in work cells or teams use local or decentralized scheduling 
Lean

manufacturing - operation that strives to achieve the highest possible productivity and total quality, cost effectively, by eliminating unnecessary steps in the production process and continually strives for improvement

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Conditions For Effectiveness Of Lean Manufacturing
Broad training of people Informal and horizontal communication

Concurrent product development

Effective operation of lean manufacturing

General-purpose equipment

Long-term supplier relationships

Work is organized in teams (cells)
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response (cont.) 
Organizing for 
time

speed: Time-based competition (TBC)

is emerging as a key competitive advantage that can separate market leaders from also-rans  TBC - strategies aimed at reducing the total time it takes to deliver a product or service  Logistics - the movement of resources into the organization (inbound) and products from the organization (outbound) 
an

extension of the organization¶s technology configuration a great mass of parts, materials, and products moving via trucks, trains, planes, and ships

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response (cont.) 
Organizing for 
Just-In-Time

speed: Time-based competition (cont.)

(JIT) - system that calls for subassemblies and components to be manufactured in very small lots and delivered to the next stage of the production process just as they are needed 
a

company-wide philosophy oriented toward eliminating waste throughout all operations and improving materials throughout
excess inventory is eliminated  costs are reduced 

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Production Concepts Included In JIT
Elimination of waste

Perfect quality

Problem discovery and prevention

JIT

Reduced cycle times

Value-added manufacturing

Employee involvement
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Technological Response (cont.) 
Organizing for 
Simultaneous

speed: Time-based competition (cont.)

engineering - a design approach in which all relevant functions cooperate jointly and continually in maximum effort aimed at producing high-quality products that meet customers¶ requests 
departure

from old development process in which tasks were assigned to various functions in sequence incorporates the issues and perspectives of all functions - and customers and suppliers - from the beginning of the process

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Strategic Response 
Organizing around 
companies

core competencies

compete on the basis of their core strengths and

expertise 
core

competence - the capability - knowledge, expertise, skill that underlies a company¶s ability to be a leader 

company

viewed as a portfolio of competencies  company should strive for core competence leadership by: 
identifying

existing core competencies acquiring or building core competencies that will be important in the future investing in competencies in order to remain world-class extending competencies
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Strategic Response (cont.) 
The 
a

network organization

collection of independent, mostly single-function firms  not one organization, but a web of interrelationships among many firms  dynamic network (modular or virtual corporation) temporary arrangement among partners that can be assembled and reassembled to adapt to the environment 
contracts

stipulate expected results offers flexibility, innovation, quick responses, and reduced costs and risks managers become brokers 

play several important boundary roles
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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A Dynamic Network

Designers

Producers

Brokers

Suppliers

Distributors
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Strategic Response (cont.) 
Strategic alliances 
a

formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals  individual organizations: 
share

administrative authority form social links accept joint ownership 
managers

must foster and develop the human relationships in the partnership

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

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Organizing For Strategic Response (cont.) 
The

learning organization 

an

organization skilled at creating, acquiring, and transferring knowledge  modifies its behavior to reflect new knowledge and insights 
High-involvement organization 
top

management ensures that there is consensus about the direction of the business 
seeks

input from lower-levels of the company techniques used to foster participation in decision making continual feedback to participants flat, decentralized structure built around customer, product, or service
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.