Professional Documents
Culture Documents
Effective
Organizational
Design
Chapter Ten
Scenario
Suppose that you with a great idea (无人机) start
your business with 3 employees. How will you design
a structure for them to work efficiently for a goal?
Suppose your business is successful, the number of
employees increases to 50. How will you adjust the
structure?
Suppose your business is expanding to multiple
countries, how will you adjust the structure?
Suppose you expand the business to new business,
how will you adjust the structure?
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Learning Objectives
After reading this chapter, you should have a good
understanding of:
LO10.1 The growth patterns of major corporations and
the relationship between a firm’s strategy and its
structure.
LO10.2 Each of the traditional types of organizational
structure: simple, functional, divisional, and matrix
LO10.3 The implications of a firm’s international
operations for organizational structure.
LO10.4 Boundaryless organization—modular
organization and its relative advantages and
disadvantages. 10-3
J & J Audio
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video
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Dominant Growth Patterns
of Large Corporations
Exhibit 10.1
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Traditional Forms of
Organizational Structure
Organizational structure
formalized patterns of interactions that link a
firm’s tasks, technologies, and people
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Traditional Forms of
Organizational Structure
Structure provides a means of balancing
two conflicting forces
Need for the division of tasks into meaningful
groupings
Need to integrate the groupings for efficiency
and effectiveness
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Simple Structure
Simple Structure
An organizational form in which the owner-
manager makes most of the decisions and
controls activities, and the staff serve as an
extension of the top executive.
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Simple Structure
Advantages Disadvantages
Highly informal Employees may
Centralized not understand
decision making their
Little specialization responsibilities
May take
advantage of lack
of regulation
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Functional Structure
Functional Structure
An organizational form in which the major
functions of the firm, such as production,
marketing, R&D, and accounting, are
grouped internally.
Ex. UM
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Functional Structure
Exhibit 10.2
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Example Parkdale Mills p.352
Read Strategic Spotlight 10.1 and discuss:
(1) What are the advantages of function
structure?
(2) What are the disadvantages of function
structure?
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Functional Structure: Advantages
Advantages Disadvantages
Enhanced coordination
Impeded communication and
and control
coordination due to
Centralized decision differences in values and
making orientations
Enhanced May lead to short-term
organizational-level thinking (functions vs.
perspective organization as a whole)
More efficient use of Difficult to establish uniform
managerial and technical performance standards
talent
Facilitated career paths
and development in
specialized areas
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Divisional Structure
Divisional organizational structure
An organizational form in which products,
projects, or product markets are grouped
internally.
Also called multidivisional structure or M-
Form
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Divisional Structure
Exhibit 10.3
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General Electric’s Organizational Structure, January 2009
Corporate Executive Office
Chairman & CEO
Corporate Staff
Business Development Legal
Commercial & Communications Global Research
Corporate Initiatives Group Human Resources
Finance International
Ex: p.355
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Holding Company Structure
Holding company structure
An organizational form in which the divisions
have a high degree of autonomy both from
other divisions and from corporate
headquarters.
Ex: Cheung Kong (Holdings) Limited
http://en.wikipedia.org/wiki/Cheung_Kong_H
oldings
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Matrix Structure
Matrix organizational structure
an organizational form in which there are
multiple lines of authority and some
individuals report to at least two managers.
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Royal Dutch/Shell Group, 1994: A Matrix Structure
ge_organization_chart.pdf
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International Operations: Implications for
Organizational Structure
Structures used to manage international
operations
International division
Geographic-area division
Worldwide functional
Worldwide product division
Worldwide matrix
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What Is An International
Divisional Structure?
One Company’s International Divisional Structure
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What Is A Geographic-area division?
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What Is A Worldwide Product
Division Structure?
A Worldwide Product Divisional Structure
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What Is The
Global Matrix Structure?
A Global Matrix Structure
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Business-Level Strategy: Reward and
Evaluation Systems
Exhibit 10.6
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Types of Boundaries
Vertical boundaries between levels in the
organization’s hierarchy
Horizontal boundaries between functional
areas
External boundaries between the firm and
its customers, suppliers, and regulators
Geographic boundaries between
locations, cultures and markets
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Boundaryless Organizational Designs
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The Modular Organization
Modular organization
An organization in which non-vital functions
are outsourced, which uses the knowledge
and expertise of outside suppliers while
retaining strategic control.
Ex:
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Pros and Cons of Virtual Structures
Exhibit 10.9
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The Virtual Organization
Virtual organization
a continually
evolving network of
independent
companies that are
linked together to
share skills, costs,
and access to one
another’s markets.
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Example: Virtual Organization
This textbook and supplemental material was
completed by a virtual team
The authors are in the Southwest and Northeast
U.S.
The editors work in the Midwest U.S.
The compositors are in India
The PowerPoint author works in the Southeast U.S.
Deadlines are coordinated by the MH editor in Burr
Ridge, IL to pull the book
together
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Pros and Cons of Virtual Structures
Exhibit 10.9
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Boundaryless Organizations:
Making Them Work
Factors facilitating effective coordination
and integration of key activities
Common culture and shared values
Horizontal organization structures
Horizontal systems and processes
Communications and information
technologies
Human resource practices
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