Emerging Org Structures

1
Emerging Org Structures

• Team-based organizations
• Virtual organizations
• Megacorporations
• keiretsu (Japanese Mitsubishi Group)
• chaebol (Korean Samsung, Hyundai)

2

• Context
• Structure Functional
• Environment Low uncertainty, stable
• Technology Routine, low interdependence
• Size Small to medium
• Goals Internal efficiency, process quality
• Internal System
• Operative goals Functional goal emphasis
• Formal authority Upper managers in functional
  depts.
• Strengths
• Allows economies of scale within functional
  depts. to increase efficiency
• Enables in-depth skill development
• Able to accomplish functional goals
• Promotes high quality technical problem solving
• Centralizes decision making (tight control)

3

• Weaknesses
• Slow response time to environmental changes
• Hierarchy overload (decisions piled on top)
• Poor horizontal communication
• Less innovation
• Restricted view of organizational goals
  functional goals take priority

4

Context Structure Divisional Environment
Moderate to high uncertainty, changing Technology
Non-routine, high dept. interdependency Size
Large with several products Goals External
effectiveness (quality), adaptation, client
satisfaction Internal System Operative goals
Division (product, customer, geographic
line) emphasis Formal authority Division
managers Strengths Suited to fast change in
unstable environment Allows greater product or
customer visibility Clear product responsibility
and contact points Involves high coordination
across functions Allows unit to adapt to
differences in product, customer, region,
etc Decentralizes decision making
5

• Weaknesses
• Eliminates economies of scale in functional
  departments
• Leads to poor coordination across division lines
  may require extensive rules
• Eliminates in-depth competence and technical
  specialization
• Makes integration and standardization across
  division lines difficult
• May foster politics in resource allocation

6

• Context
• Structure Hybrid
• Environment Moderate to high uncertainty,
  changing
• Technology Routine/non-routine, some
  interdependence between functions
• Size Large
• Goals Coordination and adaptation, plus
  efficiency within some functions
• Internal Systems
• Operative goals Division emphasis with some
  functional emphasis
• Formal authority Division managers coordination
  responsibility resting with functional managers
• Strengths
• Allows organization to achieve adaptability and
  coordination in divisions and efficiency in
  centralized functional departments
• Results in better alignment between corporate and
  business goals

7

• Weaknesses
• Has potential for excessive administrative
  overhead - staff to oversee divisions
• Functions duplicate activities performed within
  divisions
• Could lead to conflict between divisional and
  functional departments

8

• Context
• Structure Matrix
• Environment High uncertainty
• Technology Non-routine, many interdependencies
• Size Medium size with multiple product lines
• Goals Dual product innovation and technical
  specialization
• Internal Systems
• Operative goals Equal divisional and functional
  emphasis
• Formal authority Joint between functional and
  division managers
• Strengths
• Achieves coordination needed to meet
  environmental demands for efficiency and
  innovation - avoids need to duplicate functional
  departments for each division
• Flexible sharing of human resources across
  product lines
• Suited to complex decisions and frequent changes
  in unstable environment
• Provides opportunity for functional division
  skill development

9

• Weaknesses
• Leads to dual authority, which can be frustrating
  and confusing
• Means employees need good interpersonal skills
  and extensive training
• Time consuming involves frequent meetings and
  conflict resolution sessions
• Employees must understand it and adopt collegial
  rather than functional relations

10
Symptoms of Structural Deficiency

• Decision making is delayed or lacking in quality
• signals poor coordination
• Organization does not respond innovatively to a
  changing environment
• signals poor flexibility and coordination
• Too much conflict between departments
• signals conflicts of interest or ambiguities in
  authority lines

11
Take Home Points

• Understand how environmental conditions and
  strategic approaches shape structure
• Understand the goals that the major design types
  promote
• functional, divisional, hybrid
• matrix
• Understand the strengths and weaknesses or the
  major design types