Chapter 14: Environment, Strategy, Structure

Question 1

Open System

Answer 1

Organizations take inputs from external environment, transform them, and send them back as outputs
- organizations need to learn to cope with the demand of environment in both input and output

Question 2

What are the 6 components of external environment?

Answer 2

1. Customers: what do customers want?
2. Social/Political Factors: have to be sensitive to change of public opinion
3. Economy: upturns and downturns
4. Suppliers: need to get supplies from external environment like raw materials, equipment, and labour
5. Competitors: competing for customers and supplies
6. Technology: it is useful to adopt new technology for organization

Question 3

Environment, Strategy, and Organizational Effectiveness

Answer 3

1. Objective Organizational Environment:
   - objective uncertainty and resources

-> managerial experience and personnel

2. Perceived Organizational Environment:
   - perceived uncertainty and resources
3. Strategy formula:
   - vision, values, mission
4. Strategy Implementation:
   - legitimacy establishment, structure, tech
5. Organizational Effectiveness

Question 4

Vertical Division of Labor

Answer 4

• Concerned with the hierarchal levels of planning and decision making in an organization (who manages who)

Question 5

Horizontal Division of Labor

Answer 5

• Concerned with specialization and departmentalization of basic tasks within an organization

Question 6

What is departmentalization?

Answer 6

• A main component of horizontal division of labor
• assignment of jobs to departments

Question 7

What are the 6 methods of departmentalization?

Answer 7

1. Functional
2. Product
3. Matrix
4. Customer
5. Geographic
6. Hybrid

Question 8

What is Matrix Departmentation

Answer 8

• It is an attempt to combine both functional and product departmentation to capitalize on the strengths
• vice presidents for each responsibility/skill (HR, marketing, production, R&D)
• under each vice president there are managers for product A, B, C, D
• Matrix can also be based on geographic location instead of product
• remember the matrix diagram

Question 9

Advantages of Matrix Departmentation

Answer 9

• flexible
• good communication between functional managers (VPs)

Question 10

Disadvantages of Matrix Departmentation

Answer 10

• conflict between product/regional manager and functional manager
• managers need to be well trained
• role conflict and stress of employees bcuz they have to report to both functional and product manager

Question 11

Liaison Role

Answer 11

• A person assigned to help coordination between departments

Question 12

Task Force

Answer 12

• a group formed to help with coordination problems across departments
• once problems are solved, group is disbanded
• a representative from each department is included

Question 13

Two other types of groups to help with coordination?

Answer 13

• self managed groups
• cross-functional groups

Question 14

What is an integrator? What type of departments are they useful for?

Answer 14

• a person who is permanently assigned to help with coordination between departments
• they are useful for departments that:
  1. operate in ambiguous environment
  2. highly interdependent
  3. have diverse goals and orientations

Question 15

Who does an integrator report to?

Answer 15

• reports to an executive who are head of multiple departments

Question 16

What type of power does an integrator have to rely on?

Answer 16

Expert power
- must speak the language of both departments
- must identify strongly with overall org. goals

Question 17

Mechanistic Structure vs Organic Structure

Answer 17

Mechanistic: high centralization, formalization, tall and narrow span of control
Organic: decentralization wide span of control, less formalization

Question 18

When does Mechanistic structures work and when does organic structures work?

Answer 18

Mechanistic:
- environment is stable
- technology is routine
Organic:
- when innovation is important
- more uncertainty in environment
- technology is changing

Question 19

Ambidextrous Organization

Answer 19

One that exploits current competencies + explores emerging opportunities
- both organic and mechanistic
- hard to accomplish, tension between exploitation and exploration
- associated with innovation, good financial performance, longer survival

Question 20

What is the most successful structure for achieving ambidexterity?

Answer 20

• the innovative unit has its own culture, structure, and processes but be integrated into the core of the firm from existing senior management

Question 21

Network Organization

Answer 21

• functions are coordinated by MARKET MECHANISMS as well as managers/formal lines of authority
• emphasis placed on who can do what most effectively and economically
• two important things: diffusion of info and innovation

Question 22

Virtual Organization

Answer 22

• an alliance between independent companies that share skills, costs, and access to each other’s markets (producers, designers, suppliers, distributors)
• companies offer up their best skills (core competencies)
• continually evolving independent companies

Question 23

Types of Network Organizations?

Answer 23

1. Stable Network (describe diagrams)
2. Virtual Network (describe diagrams)

Question 24

Porter’s 5 Forces

Answer 24

1. Threats of New Entrant
2. Power of Suppliers
3. Rivalry
4. Power of Buyers
5. Threats of Substitute

Question 25

Strategy Diamond

Answer 25

Economic Logic: how will returns be attained (in the middle of diamond)

1. Arenas: where will we be active? (product categories, market segment)
2. Vehicles: how will we get there? (licensing, franchising)
3. Differentiators: how will we win? (image, customization)
4. Stages and Placing (speed and sequence of initiative)

Question 26

CAGE Culture Distance

Answer 26

• it is the differences and distance between countries that need to be considered by companies when thinking of international interactions

C - culture (language, religion, values)
A - administrative (what is their system like)
G - geographical (how far away are the countries, time zones, sea links)
E - economic (is one country rich and the other poor?)
E -

Question 27

Describe the decision matrix in slides: how to use strategies to figure out which country to do international exchange with

Answer 27

Used all strategies and methods (including CAGE and DIAMOND) on 5 different countries, which ever one had the most successful, gets to be the country to do international exchange with