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PowerPoint Presentation by Charlie Cook The University of West Alabama © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,

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Presentation on theme: "PowerPoint Presentation by Charlie Cook The University of West Alabama © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated,"— Presentation transcript:

1 PowerPoint Presentation by Charlie Cook The University of West Alabama © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

2 Learning Objectives 1.Describe the basic nature of organization design. 2.Identify and explain two basic universal perspectives on organization design. 3.Identify and explain key situational influences on organization design. 4.Discuss how an organization’s strategy and its design are interrelated. 5.Describe the basic forms of organization design. 6.Describe emerging issues in organization design 12–2 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

3 The Nature of Organization Design Organization DesignOrganization Design  The structural elements and the relationships among the elements used to manage the organization.  A means to implement strategies and plans to achieve organizational goals. Organization Design ConceptsOrganization Design Concepts  Organizations are not designed and then left intact.  Organizations are in a continuous state of change.  Designs for larger organizations are extremely complex and have many nuances and variations. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–3

4 Perspectives on Organization Design Bureaucratic Model (Max Weber)Bureaucratic Model (Max Weber)  A logical, rational, and efficient organization design based on a legitimate and formal system of authority.  Characteristics: 1.A division of labor with each position filled by an expert. 2.A consistent set of rules ensuring uniformity in task performance. 3.A hierarchy of positions that creates a chain of command. 4.Impersonal management; with the appropriate social distance between superiors and subordinates. 5.Employment and advancement based on technical expertise, and employees protected from arbitrary dismissal. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–4

5 Bureaucratic Model Efficiency in function Prevention of favoritism Recognition of and requirement for expertise Advantages Organizational inflexibility and rigidity Neglect of social and human processes Belief in “one best way” to design organizations Disadvantages © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–5

6 Management Challenge Question What characteristics of a bureaucratic structure help an organization in meeting its diversity goals?What characteristics of a bureaucratic structure help an organization in meeting its diversity goals? What characteristics of a bureaucratic would hinder an organization in meeting its diversity goals?What characteristics of a bureaucratic would hinder an organization in meeting its diversity goals? © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–6

7 System 1 Exploitative Authoritative System 2 Benevolent Authoritative System 3 Consultative System 4 Participative Behavioral Model: Likert System Renesis LikertRenesis Likert  Organizations that pay attention to work groups and interpersonal processes are more effective than bureaucratic organizations. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–7 BureaucraticBehavioral Job-centered leader behavior Employee-centered leader behavior

8 Situational Influences on Organization Design EnvironmentTechnology Organizational Life Cycle Organization Design Size © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–8

9 Organization Design and Technology Core TechnologyCore Technology  Is the conversion processes used to transform inputs into outputs.  Is an organization’s most important technology. Joan WoodwardJoan Woodward  Initially sought a correlation between organization size and design; instead, she found a potential relationship between technology and design:  As the complexity of technology increases, so do the number of levels of management. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–9

10 Core Technology and Organization Design Unit or small-batch Large-batch/mass-production Continuous-process Woodward’s Basic Forms of Technology © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–10

11 Situational Influences on Organization Design (cont’d) The Environment (Burns and Stalker)The Environment (Burns and Stalker)  Forms of the organizational environment  Stable environments that remain constant over time.  Unstable environments subject to uncertainty and rapid change.  Organization Designs  Mechanistic organizations are similar to bureaucratic or System 1 models; found most frequently in stable environments.  Organic organizations are flexible and informal models; usually found in unstable and unpredictable environments. 12–11 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

12 Situational Influences on Organization Design (cont’d) Organization Dimensions (Lawrence and Lorsch)Organization Dimensions (Lawrence and Lorsch)  Differentiation  The extent to which the organization is broken down into subunits.  Integration  The degree to which the various subunits must work together in a coordinated fashion. 12–12 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

13 Situational Influences on Organization Design (cont’d) Organizational Size (Ashton Studies)Organizational Size (Ashton Studies)  Defined as the total number of full-time or full-time equivalent employees  Research findings:  Small firms tend to focus on their core technology.  Large firms have more job specialization, standard operating procedures, rules and regulations, and are more decentralized. Organizational Life CycleOrganizational Life Cycle  Organizations progressively evolve as they grow and mature—birth, youth, midlife, and maturity. 12–13 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

14 Strategy and Organization Design Corporate-Level StrategiesCorporate-Level Strategies  Single-product strategy  Related or unrelated diversification  Portfolio approach to managing strategic business units Organizational FunctionsOrganizational Functions  Major functions of the organization can influence an organization’s design. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–14

15 Organizational Strategies Defender Prospector Analyzer Business-Level Strategies Differentiation Cost Leadership Focus Generic Competitive Strategies © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–15

16 Basic Forms of Organization Designs Functional or U-form (Unitary) DesignFunctional or U-form (Unitary) Design  Organizational members and units are grouped into functional departments such as marketing and production.  Coordination is required across all departments.  Design approach resembles functional departmentalization in its advantages and disadvantages. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–16

17 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12– Functional or U-form Design for a Small Manufacturing Company

18 Basic Organization Designs (cont’d) Conglomerate or H-form (Holding) DesignConglomerate or H-form (Holding) Design  Organization is a set of unrelated businesses with a general manager for each business.  Holding-company design is similar to product departmentalization.  Coordination is based on the allocation of resources across companies in the portfolio.  Design has produced only average to weak financial performance; has been abandoned for other approaches. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–18

19 SemiconductorsTelecommunications Appliances Media CEO © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12– Conglomerate (H-form) Design at Samsung

20 Basic Organization Designs (cont’d) Divisional or M-form (Multidivisional) DesignDivisional or M-form (Multidivisional) Design  Multiple businesses in related areas operating within a larger organizational framework.  Results from a strategy of related diversification.  Activities are decentralized down to the divisional level; others are centralized at the corporate level.  Design advantage is in opportunities for coordination and sharing of resources.  Successful M-form organizations can out perform U-form and H-form organizations. 12–20 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

21 12– Multidivisional (M-form) Design at Hilton Hotels

22 Basic Organization Designs (cont’d) Matrix DesignMatrix Design  Two overlapping bases of departmentalization:  A set of product groups or temporary departments are superimposed across the functional departments.  Employees in the matrix belong to their departments and the project team:  A multiple command structure in which an employee reports to both departmental and project managers.  A matrix design is useful when:  There is strong environmental pressure.  There are large amounts of information to be processed.  There is pressure for shared resources. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–22

23 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12– A Matrix Organization

24 Matrix Design Advantages Enhances organizational flexibility.Enhances organizational flexibility. Creates high motivation and increased organizational commitment for team members.Creates high motivation and increased organizational commitment for team members. Gives team members opportunity to learn new skills.Gives team members opportunity to learn new skills. Provides an efficient way for the organization to use its human resources.Provides an efficient way for the organization to use its human resources. Uses team members as bridges to their departments for the team.Uses team members as bridges to their departments for the team. Useful as a vehicle for decentralization.Useful as a vehicle for decentralization. 12–24 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

25 Matrix Design Disadvantages Employees are uncertain about reporting relationships.Employees are uncertain about reporting relationships. Managers may view design as an anarchy in which they have unlimited freedom.Managers may view design as an anarchy in which they have unlimited freedom. The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus.The dynamics of group behavior may lead to slower decision making, one-person domination, compromise decisions, or a loss of focus. More time may be required for coordinating task- related activities.More time may be required for coordinating task- related activities. 12–25 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

26 Basic Organization Designs (cont’d) Hybrid DesignsHybrid Designs  Based on two or more common forms of organization design—may have a mixture of related divisions and a single unrelated division.  Most organizations use a modified form of organization design that permits them to have sufficient flexibility to make adjustments for strategic purposes. © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–26

27 The Future of Organization Design The Team Organization The Virtual Organization The Learning Organization Emerging Organization Design Issues The International/Global Organization © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12–27

28 International Organization Design Issues 12–28 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Establish an international operating group? Make international operations an autonomous subunit? Create an international division? Competing Effectively in Global Markets

29 A.Separate International Division CEO ProductionMarketingFinance International division B.Location Departmentalization North American operations European operations Asian operations CEO © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12– a Common Organization Designs for International Organizations

30 C. Product Departmentalization Product Manager A CEO Product Manager B Product Manager C Asia North America Europe D. Multidivisional Structure CEO Subsidiary A (Germany) Subsidiary C (France) Subsidiary E (China) Subsidiary D (Japan) Subsidiary B (U.S.) © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12– b Common Organization Designs for International Organizations

31 KEY TERMS organization designorganization design bureaucracybureaucracy behavioral modelbehavioral model System 1 designSystem 1 design System 4 designSystem 4 design situational view of organization designsituational view of organization design technologytechnology mechanistic organizationmechanistic organization organic organizationorganic organization differentiationdifferentiation integrationintegration organization sizeorganization size organizational life cycleorganizational life cycle functional designfunctional design conglomerate designconglomerate design divisional designdivisional design matrix designmatrix design hybrid designhybrid design team organizationteam organization virtual organizationvirtual organization learning organizationlearning organization 12–31 © 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


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