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Presentation Slides to Accompany Organizational Behavior 10 th Edition Don Hellriegel and John W. Slocum, Jr. Prepared by Michael K. McCuddy Valparaiso.

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Presentation on theme: "Presentation Slides to Accompany Organizational Behavior 10 th Edition Don Hellriegel and John W. Slocum, Jr. Prepared by Michael K. McCuddy Valparaiso."— Presentation transcript:

1 Presentation Slides to Accompany Organizational Behavior 10 th Edition Don Hellriegel and John W. Slocum, Jr. Prepared by Michael K. McCuddy Valparaiso University Chapter 14—Designing Organizations

2 Chapter 14: Designing Organizations236 Slide 14.1 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

3 Chapter 14: Designing Organizations237 Slide 14.2 Important Factors in an Organization’s Environment  Suppliers  Distributors  Competitors  Customers

4 Chapter 14: Designing Organizations238 Slide 14.3 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

5 Chapter 14: Designing Organizations239 Slide 14.3 (continued) Strategies for Building a Competitive Advantage  Focused strategy  Designed to help an organization target a specific niche in an industry, unlike both the low-cost and differentiation strategies, which are designed to target industrywide markets

6 Chapter 14: Designing Organizations240 Slide 14.4 Types of Task Interdependence in Organization Design CCC AAABBB PooledSequentialReciprocal ComplexSimple

7 Chapter 14: Designing Organizations241 Slide 14.5 Organization Design Options Functional Design Pooled Simple Complex Reciprocal Technological Factors Environmental Factors Place Design Product Design Multidivisional Design Multinational Design Network Design Virtual Design

8 Chapter 14: Designing Organizations242 Slide 14.6 Mechanistic and Organic Organizations  Mechanistic organization  Characterized by a reliance on formal rules and regulations, centralization of decision making, narrowly defined job responsibilities, and a rigid hierarchy of authority  Organic organization  Characterized by low to moderate use of formal rules and regulations, decentralized and shared decision making, broadly defined job responsibilities, and a flexible authority structure with fewer levels in the hierarchy

9 Chapter 14: Designing Organizations243 Slide 14.7 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, with strictly defined obligations, authority, and powers to compel obedience

10 Chapter 14: Designing Organizations244 Slide 14.7 (continued) 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

11 Chapter 14: Designing Organizations245 Slide 14.8 Organic and Mechanistic Design Features  Hierarchy of authority  Centralization  Division of labor  Rules  Procedures  Impersonality  Chain of command  Unity of command  Span of control

12 Chapter 14: Designing Organizations246 Slide 14.9 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, 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

13 Chapter 14: Designing Organizations247 Slide 14.9 (continued) 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

14 Chapter 14: Designing Organizations248 Slide 14.10 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, 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

15 Chapter 14: Designing Organizations249 Slide 14.11 United Technologies CEO Otis * Elevators * Escalators * Moving walks UT Auto- motive * Automotive electrical systems * Electric motors * Automotive interior & exterior trim Flight Systems * Helicopters * Propellers * Space life support systems Carrier * Heating & air conditioning * Building controls * Refriger- ation equipment Pratt & Whitney * Jet engines * Rocket engines * Industrial gas turbines Source: http://www.utc.com

16 Chapter 14: Designing Organizations250 Slide 14.12 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, 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

17 Chapter 14: Designing Organizations251 Slide 14.13 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, department, or division  Horizontal mechanisms help in dealing with complex environments

18 Chapter 14: Designing Organizations252 Slide 14.14 Basic Options in Multinational Design Functions Manufacturing Finance Others Marketing Country or Region Organization Global Product Organization Matrix Product line Place Country Responsiveness, Adaptation, Competitors, Manufacture, Customer Global Integration, Products, Competitors, Factories, Customers Human Resources

19 Chapter 14: Designing Organizations253 Slide 14.15 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

20 Chapter 14: Designing Organizations254 Slide 14.16 Key Elements of Network Design  Distinctive competence  Responsibility  Goal setting  Communication  Information technology  Organization design  Balanced view

21 Chapter 14: Designing Organizations255 Slide 14.17 Organizational Uses of Network Design  Effective in creating alliances of flexible partnerships  Can create successful external relationships through:  Importance  Investment  Interdependence  Integration  Information  Institutionalization

22 Chapter 14: Designing Organizations256 Slide 14.18 Key Developments in Information Technology  Open systems  Distributed computing  Real time  Global networking

23 Chapter 14: Designing Organizations257 Slide 14.19 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

24 Chapter 14: Designing Organizations258 Slide 14.19 (continued) 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


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