Chapter 10 Flashcards
Strategy implementation 2 key points
Consider the plan for implementation before adopting a strategic alternative.
The greater the strategic change, the more complex the implementation.
Organizational Structure
Organizational structure refers to the formal means by which work is coordinated in an organization. The structure exists to provide control and coordination for the organization.
In a new business, each employee often performs multiple tasks and the owner/manager is involved in all aspects of the business, a form of organization often called a simple structure.
Vertical Growth
Vertical growth refers to an increase in the length of the organization’s hierarchy (i.e., levels of management).
Span of control
The number of employees reporting to each manager represents that manager’s Span of control.
Tall vs flat organizations
A Tall organization is comprised of many hierarchical levels and narrow spans of control, whereas a flat organization has few levels in its hierarchy and a wide span of control from top to bottom.
Centralization and Decentralization
In a firm marked by centralization, most strategic and operating decisions are made by managers at the top of the organization structure.
When a structure is characterized by decentralization, most strategic and operating decisions are made by managers at lower levels of the organization.
Simple structure
Each employee often performs multiple tasks and the owner/manager is involved in all aspects of the business, a form of organization often called a simple structure.
In organizations with a simple structure, early survival depends on an increase in demand for the company’s products or services.
Firms more likely to be decentralized
Very large organizations tend to be more decentralized than very small ones, simply because it is difficult for the chief executive officer (CEO) of a very large company to stay abreast of all of the organization’s operations.
Firms with large numbers of unrelated businesses tend to be relatively decentralized whereby corporate-level management determines the overall corporation’s mission, goals, and strategy, and lower-level managers make the actual operating decisions.
Organizations in dynamic environments must be relatively decentralized so that decisions can be made quickly whereas organizations in relatively stable environments can be managed more systematically and centrally because change is relatively slow and fairly predictable.
Horizontal growth
Horizontal Growth refers to an increase in the breadth of an organization’s structure.
Downsizing occurs when one or more hierarchical levels—typically middle managers—is eliminated.
Structure options (4)
Functional Structure- organize by functions.
Product Divisional Structure- organize by products.
Geographic Divisional Structure- organize by geography.
Matrix Structure- combine functional and product divisional structures.
Product and geographic divisional structures are also called multidivisional or M-form structures.
Functional structure
Each subunit of the organization engages in firm-wide activities related to a particular function, such as marketing, human resources, finance, or production.
Common to new organizations
Emphasizes specialization
Fosters development of economies of scale
Product divisional structure
Divides the organization’s activities into self-contained entities, each responsible for producing, distributing, and selling its own products.
Focus on products, the “real source” or success for the firm
Pinpointing the responsibility for profits or losses is also easier because each product division becomes a profit center—a well-defined organizational unit headed by a manager accountable for its revenues and expenditures.
Geographic divisional structure
Activities and personnel are grouped by specific geographic locations.
Useful when two or more divisions can be dissected easily along geographical lines
Attractive when there are substantial differences in various geographical regions
Matrix structure
A combination of the functional and product divisional structures
Members have “two (or more) bosses,” one for the functional area and one or more for the project area(s)
Attractive when the organization faces a high degree of technological change, but can be confusing and complex
Four advantages of matrix structure
First, by combining the functional and product divisional structures, a firm can enjoy many of the advantages of both forms.
Second, a matrix organization is flexible because employees may be transferred with ease between projects with different time frames.
Third, a matrix permits lower-level functional employees to become heavily involved in projects and gain valuable experience.
Fourth, top management in a matrix is freed from day-to-day involvement in the operations of the enterprise in order to focus on strategic leadership.
