Ch 10. key terms Flashcards
Functional Structure
R&D, MARKETING, PRODUCTION, ACCOUNTING ARE MANAGED BY A SPECIALIST
1. USUALLY, HAVE A SINGLE CLOSELY RELATED PRODUCT
2. ALL SPECIALIST ARE REPORTING TO CEO
3. CAN MAKE DEPARTMENTS ISOLATED AND SO THERE IS LESS COMMUNICATION ACROSS THE COMPANY
The structure enables the firm to group operations into functions, departments, or geographic areas
Simple Structure
OWNER/MANAGER MAKES MOST OF THE DECISIONS & STAFF IS THE EXTENSION OF MANAGEMENT
1. FEW RULES
2. INFORMAL EVALUATION AND REWARD SYSTEM
3. HIGHLY CENTRALIZED
increases sales revenue and output over time
may engage in vertical integration
Divisional Structure
is the outcome of a diversification strategy which intends to reorganize around the geographic area or product line
Factors that international structure is based on
- the extent of expansion
- type of strategy
- degree of product diversity
Functional structure disadvantages
- short term thinking of each department of what is best for the department rather than the organization as a whole
- difficult to have a standard evaluation because some of the departments can be specifically linked to sales but others such as accounting or engineering are not linked to sales
- CEO has to handle many problems
STRATEGIC BUSINESS UNITS
- SIMILAR PRODUCT OR MARKETS ARE GROUPED TO
- ACHIEVE SYNERGY
- EACH UNIT OPERATES AS PROFIT CENTER
- DECENTRALIZATION OF AUTHORITY
- QUICK RESPONSES TO CHANGES IN THE MARKET
DIVISIONAL STRUCTURE ADVANTAGES
Separation of strategic & operating control
Quicker response to changes in the market environment
Fewer problems sharing resources across functions
Development of general management talent is enhanced
DIVISIONAL STRUCTURE DISADVANTAGES
Very expensive duplication of functions possible
Dysfunctional competition among divisions
Differences in image & quality possible across divisions
Too much focus on short-term performance
HOLDING COMPANY STRUCTURE ADVANTAGES
Cost savings due to fewer personnel and lower overhead
Divisional autonomy increases the motivation level of divisional executives
Quicker response to changes in the market environment
HOLDING COMPANY DISADVANTAGE
- Potential for synergies is very limited
- The corporate office has little control
- Difficult to replace key divisional executives if they leave
- Turnaround may be difficult due to limited corporate staff support
MATRIX ORGANIZATIONAL STRUCTURE
FUNCTIONAL DEPARTMENTS ARE COMBINED WITH PRODUCT GROUPS ON A PROJECT BASIS
INDIVIDUALS HAVE 2 MANAGERS
PROJECT MANAGERS AND FUNCTIONAL MANAGERS SHARE RESPONSIBILITY
GEOGRAPHIC MANAGERS IN A MATRIX STRUCTURE ARE RESPONSIBLE
FOR PROFITABILITY OF BUSINESS IN THEIR REGION
PRODUCT MANAGERS IN A MATRIX STRUCTURE ARE
RESPONSIBLE FOR DEVELOPMENT, PRODUCT, AND DISTRIBUTION OF THE LINE
ADVANTAGES OF MATRIX DESIGN
- Increases market responsiveness, collaboration & synergies
- Allows more efficient utilization of resources
- Improves flexibility, coordination & communication
- Increases professional development
DISADVANTAGE OF MATRIX STRUCTURE
- Dual reporting relationships lead to uncertainty
- regarding accountability
- Can lead to power struggles & conflict
- Relationships are complicated, need teamwork
- Decision making takes longer
MULTI-DOMESTIC STRATEGIES
USE GEOGRAPHIC DIVISION STRUCTURE
OR INTERNATIONAL DIVISION OR WORLDWIDE MATRIX
GLOBAL STRATEGIES USE
Worldwide functional structure
Worldwide product division structure
Worldwide holding company structure
BOUNDARYLESS ORGANIZATIONAL STRUCTURE
PERMEABLE BOUNDARIES ( VERTICAL, HORZINATAL). Boundaryless designs should not replace the traditional forms of organizational structure, but they should complement them.
INTERNATIONAL STRUCTURES WITH A HIGH LEVEL OF AUTONOMY WITHIN GEOGRAPHIC CONSTRAINTS
INTERNATIONAL AND GEOGRAPHIC AREA DIVISION
EFFICIENCY STRUCTURES THAT VIEW WORLD AS HOMOGENOUS
WORLDWIDE FUNCTION OR WORLDWIDE DIVISIONAL STRUCTURE
REASONS TO OPT FOR GLOBAL EXPANSION
- REQUIRED HUMAN RESOURCES ARE GLOBALLY DISPURSSED
- IF FOREIGN FINANCING IS EASIER TO OBTAIN
- PENETRATION OF PRODUCT HAS NOT YET BEEN DONE BY ANYONE
- EASIER RECOVERY OF DEVELOPMENT COST
DISADVANTAGES OF A BARRIER FREE STRUCTURE
- POLITICAL BOUNDARIES UNSOUT AND OUT ARE DIFFICULT TO OVERCOME
- LACKS STRONG LEADERSHIP
- TIME CONSUMING & DIFFICULT TO MANAGE
- LACKS A HIGH LEVEL OF TRUST
ADVANTAGES TO A BARRIER FREE STRUCTURE
- LEVERAGES COMPETENCY
- QUICKER RESPONSE TO MARKET CHANGES
- , CAN LEAD TO COORDINATED WIN WIN SITUATIONS
THE 3 APPROACHES TO BOUNDRYLESS ORGANIZATION
BARRIER FREE TYPES FOCUSES ON MAKING ALL BOUNDARIES (EXTERNAL & INTERNAL) MORE PERMEABLE
MODULE AND VIRTUAL FOCUS ON A SEAMLESS EXTERNAL RELATIONSHIP (SUPPLIERS AND CUSTOMERS)
