Presentation on theme: "Corporate strategy and the structure of the organizations"— Presentation transcript:
1Corporate strategy and the structure of the organizations Strategic managementLecture 11Corporate strategy and the structure of the organizations
2Process of strategic management Expectationsand purposesTheenvironmentResources,competencesand capabilityStrategicanalysisBases ofstrategicchoiceOrganisationstructureanddesignStrategyimplemen-tationStrategicchoiceResourceallocationandcontrolStrategicoptionsStrategyevaluationand selectionManagingstrategicchange12
3Development of Apple’s structure 1. Stage: entrepreneurial startupJobs and WozniakentrepreneursPart-time workers2, Stage: Small businessJobs and WozniakOwner and managersSales supervisorPurchasing agentProduction supervisorAccountantBoard3. Stage: Multimational busuinessCEOSalesMarketingProductionFinance
4Why Have a Structure? All businesses have to organise what they do A clear structure makes it easier to see which part of the business does whatThere are many ways to structure a business
5The Basic Tasks of Organization THE ORGANIZATIONAL CHALLENGE: Achieving high levels of productivity requires SPECIALIZATIONSpecialization by individuals necessitates COORDINATIONFor coordination to be effective requires COOPERATIONBut goals of employees == goals of ownersTHE AGENCY PROBLEMTHE ORGANIZATIONAL CHALLENGE:To design structure & systems that:Permit specializationFacilitate coordination by grouping individuals & link groups with systems of communication, decision making, & controlCreate incentives to align individual & firm goals
6Organization designOrganization design is the process of beveloping an organization sttructure. The organizaton structure consist of four elements:The assignment of taska and responsibilities that define the jobs of individuals and units,The clustering of individual positions into units and units into departments and larger units to form an organization’s hierarchy,The various mechanisms required to facilitate vertical coordunation, such as the number of individual reporting to any given managerial position and degree of delegation of authority,The various mechanisms needed to fostar horizontal coordination, such as task forcas and interdepartnemtal teams
7Job-designA job: is a collection of tasks performed in support of organizational objectives.The jobs are defined by the job description: specification of task activities associated with a particular jobThere are four major approaches to job design:Job simplification: The process of configuring jobs so that jobholders have only a small number of narrow activities to perform,Job rotation: Practice of periodically shifting workers through a set of jobs,Job enlargement: Allocatioion of a wilder variety of similar task to a job,Job enrichment: the process of ungrading and increase of the decisionmaking authority of the jobholder
8Some Key Terms Define of jobs Span of control Empowerment, and delegationChain of commandGroupings of activitiesFlat or tall structureHierarchy
9Span of ControlThis term is used to describe the number of employees that each manager/supervisor is responsible for.The span of control is said to be wide if a superior is in charge of many employees and narrow if the superior is in charge of a few employees.
10EmpowermentEmpowerment is the process of enabling or authorizing an individual to think, behave, take action, and control work and decision making in autonomous ways.It is the state of feeling self-empowered to take control of one's own destiny.
11Chain of commandA system whereby authority passes down from the top through a series of executive positions or military ranks in which each is accountable to the one directly superior.
12Groupings: a ways to structure a business By function: arranging the business according to what each section or department doesBy product or activity: organising according to the different products madeBy area: geographical or regional structure
13Groupings: a ways to structure a business By customer: where different customer groups have different needsBy process: where products have to go through stages as they are madeWhat are the advantages/disadvantages of different types of business structure?
14Tall Structure Organisation In its simpliest form a tall organisation has many levels of management and supervision.There is a “long chain of command” running from the top of the organisation eg Chief Executive down to the bottom of the organisation eg shop floor worker.
16Advantages Disadvantages Employees can be closely supervised.There is a clear management structure.The function of each layer will be clear and distinct.There will be clear lines of responsibility and control.There is a narrow span of control .The freedom and responsibility of employees (subordinates) is restricted.Decision making could be slowed downCommunication has to take place through many layers of management.High management costs
17Flat Structure Organisation In contrast to a tall organisation, a flat organisation will have relatively few layers or just one layer of management.This means that the “Chain of Command” from top to bottom is short and the “span of control is wide”.Due to the small number of management layers, flat organisations are often small organisations.
19Advantages of flat Organisations Disadvantages of flat Organisations More/Greater communication between management and workers.Better team sprit.Less bureaucracy and easier decision making.Fewer levels of management:includes benefits – lower management costs.Workers may have more than one manager/boss.May limit the growth of the organisation.Structure limited to small organisations.Function of each department/person could be blurred and merge into the job roles of others.
20Hierarchical Organisation In a hierarchical organisation employees are ranked at various levels within the organisation, each level is one above the other.At each stage in the chain, one person has a number of workers directly under them, within their span of control.The chain of command (ie the way authority is organized) is a typical pyramid shape
21Evolution of the Modern Corporation The businessenvironmentStrategicchangesOrganizationalconsequencesEarly19thcenturyLocal markets Firms specialized & Small firms.Transport slow focused on local Simple manage-Limited mechanization markets ment structuresLate19thcenturyIntroduction of Geographical and Functional struct-railroads, telegraph vertical expansion ures. Line/staffindustrialization separation. Accou-nting systemsEarly20thcenturyExcess capacity in Product & Development ofdistribution. Growth multinational multidivisionalof financial institut- diversification corporationions & world trade
25The building blocks of organisations StrategicapexIdeologySupportstaffTechnostructureMiddlelineOperating core
26Organizational iceberg model These components are:Publicly observableGenerally rational,Cognitiveli derivedOvert organizationStructure,Job-description, span of control, rules, rolesThese conponents are:Hidden,Generally affective,Emotionally derivedCovert organizationEmergent power and influence pattern,Emotional feeling,Group normsIndividual role perception,Needs, and desires
27A Transnational Structure Exploits knowledge across bordersGets the best of multi-domestic and global strategyHigh local responsivenessHigh global coordinationNational units operate independently, but are a source of ideas and capabilities for the whole organisationNational/regional units achieve greater scale economies by specialisingCorporate centre manages global network
29Advantages Disadvantages Authority and responsibility and clearly definedClearly defined promotion path. There are specialists managersEmployees are very loyal to their department within the organisation.The organisation can be bureaucratic and respond slowly to changing customer needs and the marketCommunication across various sections can be poor especially horizontal communication.Departments can make decisions -rivalry
30Matrix ( or project-based) organisations A Matrix structure organisation contains teams of people created from various sections of the business.These teams will be created for the purposes of a specific project and will be led by a project manager.Often the team will only exist for the duration of the project and matrix structures are usually deployed to develop new products and services.
32The advantages of a matrix include Individuals can be chosen according to the needs of the project. The use of a project team which is dynamic and able to view problems in a different way as specialists.Project managers are directly responsible for completing the project within a specific deadline and budget.The disadvantages includeA conflict of loyalty between line managers and project managers over the allocation of resources.If teams have a lot of independence can be difficult to monitor.Costs can be increased if more managers (ie project managers) are created through the use of project teams.
33The most important people are the employees who are at the forefront of serving the customers. The rest of the hierarchy is there to enable the employees to do their job. So rather than the workers being responsible to their bosses, the bosses are there to service the needs of the workers as they go about their company’s business.
34Pros and Cons of Different Structures This depends on the business type, size and structure usedLet’s look at a functional structure:Board of DirectorsChief ExecutiveProductionMarketingAccountsPersonnelIT
35Functional Structure Advantages Disadvantages Specialisation – each department focuses on its own workAccountability – someone is responsible for the sectionClarity – know your and others’ rolesDisadvantagesClosed communication could lead to lack of focusDepartments can become resistant to changeCoordination may take too longGap between top and bottom
36An Example of Organisation by Product/Activity Hewlett PackardImaging andPrinting GroupPersonalSystems GroupEnterpriseSystems GroupHP ServicesHP FinancialServices
37Organisation by Product/Activity AdvantagesClear focus on market segment helps meet customers’ needsPositive competition between divisionsBetter control as each division can act as separate profit centreDisadvantagesDuplication of functions (e.g. different sales force for each division)Negative effects of competitionLack of central control over each separate division
38Hewlett-Packard’s Headquarters Worldwide Organisation by AreaHewlett-Packard’s Headquarters WorldwideHewlett PackardAmericasHouston, TexasEurope, Middle East, AfricaGeneva, SwitzerlandAsia PacificHong Kong
39Organisation by Area Advantages Disadvantages Serve local needs better Positive competitionMore effective communication between firm and local customersDisadvantagesConflict between local and central managementDuplication of resources and functions
40Other Organisational Structures By Customer:Similar effects to structuring by productBy Process:Similar to structuring by function
41Organising for Success – Outline (1) Key challenges in organising for successControl, knowledge management, coping with change, response to globalisationStructural types of organisationsStrengths and weaknessesOrganisational processesPlanning systems, performance targetsManagement of internal and external relationshipsHelp or hinder success
42Organising for Success – Outline (2) Three reinforcing strands for organising configurationsStructure, processes and relationshipsImplications of configurations for organisational performance and change