Chapter 14 Flashcards
What accurately characterized the reality of the global matrix structure?
It can be difficult to get work done because of power struggles between divisions
This produces an inflexible organization that is unable to reach a decision quickly
Global matrix structure
This refers to the totality of a firm’s organization, including formal organizational structure, control systems and incentives, organizational culture, processes and people
Organizational architecture
By organizational structure, we mean what 3 things
The formal division of the organization into subunits
The location of decision-making responsibilities within that structure
The establishment of integrating mechanisms to coordinate the activities of subunits
These are the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits
Control systems
These are the decided used to reward appropriate managerial behavior
Incentives
The manner in which decisions are made and work is performed within the organization
Processes
This refers to the norms and value systems that are shared among the employees of an organization
Organizational culture
This refers to not only the employees of the organization, but also the strategy used to recruit, compensate, and retain those individuals and the type of people that they are in terms of their skills, values, and orientation
People
Organizational structure can be thought of in terms of what three dimensions
Vertical differentiation
Horizontal differentiation
Integrating mechanisms
This refers to the location of decision-making responsibilities within a structure
Vertical differentiation
This refers to the formal division of the organization into subunits
Horizontal differentiation
These are mechanisms for coordinating subunits
Integrating mechanisms
This structure tends to be favored by firms with a low degree of diversification and a domestic structure based on functions. The world is divided into geography areas
Worldwide area structure
This tends to be adopted by firms that are reasonably diversified and, accordingly, ironically had domestic structures based on product divisions. Each division is a self contained, largely autonomous entity with full responsibility for its own value creation activities.
Worldwide product division structure
What are the three components of a firm’s organizational structure?
The formal division of the organization into subunits
Location of decision-making responsibilities within the organization,
The establishment of integrating mechanisms to coordinate the activity in the subunits
These are societies of individuals who perform collective tasks with their own distinctive cultures and subcultures
Organizations
What are the three dimensions of organizational structure?
Vertical differentiation
Horizontal differentiation
Integrating mechanisms
Level of performance ambiguity associated with transnational firms
High
Level of performance ambiguity associated with global standardization firms
Medium
Level of performance ambiguity associated with localization firms
Low
The importance of local responsiveness in pursuing a localization strategy leads firms to adopt a ____ decision making model
Decentralized
This allows for horizontal differentiation in product division and geographic areas
The global matrix structure
Which control system is achieved by personal contact with subordinates
Personal
The ______ strategy used both centralized control go realize location and experience effects that reduce costs, and decentralized decision making to meet the needs of local responsiveness
Transnational
When performance ambiguity is high, the cost of control will be
High
Three ways firms can divide themselves into subunits using horizontal differentiation
By type of business, by geographic area, by function
Two benefits of the worldwide product division structure
Enhances the consolidation of value creation activities at key locations
Facilitates the transfer of core competencies within a division’s worldwide operations
What conditions must be fulfilled to achieve superior enterprise profitability? (2)
Different elements of the firm’s organizational architecture must be internally consistent
Organizational architecture, the firm’s strategy, and the competitive environment must be consistent
Four main types of control systems
Personal controls
Bureaucratic controls
Output controls
Cultural controls
This control is achieved by personal contact with subordinates
Personal control
This type of control tends to be most widely used in small firms, and also structured the relationships between managers at different levels in multinational enterprises
Personal controls
This control is achieved through a system of rules and procedures that directs the actions of subunits
Bureaucratic control
This control involves setting goals for subunits to achieve and expressing those goals in terms of relatively objective performance metrics such as profitability, productivity, growth, market share, and quality
Output control
This control exists when employees “buy into” the norms and value systems of the firm. Employees tend to control their own behavior, which reduces the need for direct supervision
Cultural control
The control system where goals are set for subunits to achieve and performance metrics are used to judge attainment of those goals is called
Output controls
The basic principle of an incentive scheme for an individual employee is to link the incentive to
An output target
The basic principle of this for an individual employee is to link the incentive to an output target
An incentive scheme
This gives subunits an amount it can spend in a given year
A budget
This gives headquarters control over how the money is spent by subunits
Capital spending rules
Which strategy would reflect the lowest level of performance ambiguity
Localization
The control system where employees tend to control their own behavior and need little direct supervision, because they have elected to follow the forms and values of the firm is
Cultural controls
Facilitating coordination, making it easier for top-level managers to bring about change, eliminating duplication of activities and making decisions consistent with organizational objectives are arguments for ______ of decision making
Centralization
The ___ strategy may use a mix of centralization and decentralization depending on the pressures for local responsiveness and the need to coordinate a dispersed value chain and transfer core competencies. There is a high need for coordination when using this strategy
The transnational strategy
What is the method of control where actions of subunits are directed by a system of rules and procedures?
Bureaucratic
The _____ strategy is the strategy in which businesses centralize functions such as R&D and marketing functions, but decentralize operating decisions to subsidiaries
The international strategy
A _____ strategy has firms operating with worldwide area structures, where operating decisions are decentralized to functionally self-contained country subsidiaries
Localization
Integrating mechanisms are used by a firm to help ____
Achieve coordination between subunits
These are used by a firm to help achieve coordination between subunits
Integrating mechanisms
The first principle of successful organizational change is to unfreeze the organization though
Shock therapy
The norms and value systems of a company make up the company’s ____ and are a source of organizational inertia
Culture
This exists when the causes of a subunit’s poor performance are not clear
Performance ambiguity
Two measures a company might use when refreezing an organization
Change hiring policies
Educate staff
