chapter 9 Flashcards
1
Q
Developing structure requires consideration of three areas - what are they?
A
Organisational configuration
Centralisation/Decentralisation
Management sysmtes (inc make up of senior management team, processes to monitor financial results, to arrive at decisions and manage risks)
2
Q
What is defined
how the various functions of an organisation are formally arranged into departments or sections, and how responsibility and authority are allocated
A
Organisational Structure
3
Q
Structure following strategy is what kind of approach
A
top down
Structure of organisation must be adapted to fit the strategy adopted by management
4
Q
Organisational structure changes response to stage of Growth Chandler
Geographic expansion calls for
A
departmental offices set up to administer new field units
5
Q
Organisational structure changes response to stage of Growth Chandler
vertical integration
A
central office and multi-departmental structure
6
Q
Organisational structure changes response to stage of Growth Chandler
diversification required
A
general office to administer divisions operating in different industires
7
Q
Bottom up view of strategy and structure
A
strategy follows, emerges from, depends or structure or structure limits the choice of strategy
8
Q
Bottom up view
Organisational structure and interests and inforamtion
A
structure shapes the flow of information to those responsible for strategic management
9
Q
bottom up view
power
A
what actually gets don depends on power
10
Q
bottom up view
Highly centralised structures - what do they tend to do
A
stifle innovative strategic solutions
11
Q
bottom up view
Divisionalised structures - what do they restrict
A
collaboration and joined up strategies
12
Q
bottom up view
what go bureaucratic structures do
A
focus on maintaining status quo
13
Q
Different views on strategy and structure
A
top down - strategy sets structure
bottom up - structure sets strategy
contingency - no one best structure and best depends on situation
14
Q
Both bottom up and top down at work
restructure to
A
implement new strategies
15
Q
Both bottom up and top down at work
strategies partly unrealised due to
A
structure working against them
16
Q
Both bottom up and top down at work
structures develop organically as
A
teams and managers adapt to new challenges and initiatives
17
Q
Both bottom up and top down at work
restructuring creates
A
new initiatives and possibilities at the same time as suppressing others
18
Q
What is the modern contingency approach
A
no best universal structure, lots of variables influencing design and performance. Emphasis on need for flexibility
19
Q
Contingency - if then
A
if certain situational factors are present, then certain aspects of structure are most appropriate
20
Q
Contingency approach
types of situational factors
A
Type and size of organisation
purpose
culture
history
tech
environemtn
top management preference
skills ability needs motivation of employees
21
Q
Burns and Stalker - extreme types of structure and style - what are they
A
mechanistic and organi
22
Q
What is a mechanistic structure
A
rigid
bureaucratic management
stable environments
23
Q
What is an organic structure
A
more fluid appropriate to changing circumstances
24
Q
Mintzberg suggested all organisation can be analysed into five building blocks - what are they
A
strategic apex
middle line
operating core
technostructure
operating core
25
Mintzberg - what does structure depend on
which building block is more dominant
26
What is strategic apex
responsible to owners and wants to retain control over decision making
27
What is technostructure
analysts, reason for existence is design of procedures and standards and wants standardised, highly regulated enviornmetn
28
What is the operating core
members that work directly on the product or service. Working autonomously and achieve what other coordination is necessary by mutual adjustment
29
What is the middle line
middle managers
30
What do middle line want
to increase control over operating core
31
When do support staff gain influence
when their experience is vital
32
What does the strategic apex want
retain control over decision making
33
What do technostructure want
environment that is standardised and highly regulated
34
What is the key building block in a simple structure/entrepreneurial
strategic apex
35
What is the key building block in a machine bureaucracy / functional structure
techno structure
36
What is the key building block in a
professional bureaucracy
operating core
37
What is the key building block in a
divisionalised
middle line
38
What is the key building block in a
adhocracy/innovative/matrix
operating core
39
What is the environment for
a simple structure
simple dynamic
40
What is the environment for
machine bureaucracy / functional
simple static
41
What is the environment for
professional bureaucracy
complex static
42
What is the environment for
divisionalised
simple static diverse
43
What is the environment for
adhocracy/innovative matrix
complex dynamic
44
Internal factors for
simple structure/entrepreneurial
small
young
simple tasks
45
Internal factors for
machine bureaucracy/functional
large
old
regulated
46
Internal factors for
professional bureaucracy
professional simple system
47
Internal factors for
Divisionalised
Very large
old
divisible tasks
48
Internal factors for
adhocracy/innovative (matrix)
young
complex tasks
49
Key coordinating mechanism of
simple structure
direct supervision
50
Key coordinating mechanism of
Machine bureaucracy/functional
standardisation of work
51
Key coordinating mechanism of
Professional bureaucracy
standardisation of skills
52
Key coordinating mechanism of
divisionalised
standardisation of outputs
53
Key coordinating mechanism of
Adhocracy/innovative (matrix)
mutual adjustment
54
Four structures suggested by mintzberg
entrepreneurial
functional
divisionalised
matrix
55
An entrepreneurial / simple structure is typically a
single owner manager in a small business
56
Benefits of entrepreneurial / simple structure
flexible,
quick to adapt to change
57
Issue with entrepreneurial structure
dependent on entrepreneur
limited in ability to come with expansion
not expert in everything
58
Functional structure explained
departments defined by functions (work that they do)
59
Benefits of functional structure
more efficient
benefit from economies of scale
60
Issues with functional structure
conflict
bureaucracy hamper cross functional innovation and creativity
rigid - unsuitable for change environments
61
Divisional structure expalined
business divided into autonomous units based on geography, product or market.
62
Divisionalised structure
benefits
adapted for growth and diversification, better suited to large diversified business
63
Benefits of geographic divisionalisation
Better, quicker local decision making
May be less costly to establish area factories
May be essential of o/s to cope with different environemtns
64
Disadvantages of geographic divisionalisation
duplication of management effort
Struggles to cope with large clients who span divisions
65
What is product divisionalisation
elements are grouped by product or product line. some functional divisionalisation remains.
66
Advantages of a product/brand divisionalised structure
individual managers held accountable for profitability of products
specialisation developed
different functional activities required for each product can be coordinated and integrated
focussed on how business makes product
67
Disadvantage of product divisionalisation
Increases overhead costs and managerial complexity of organisation
68
What is a matrix organisation
formalisation of management control between different functions, whilst maintaining functional divisionalisation
69
Advantages of a matrix structure
More flexible (people, tasks and structure)
Improved communication
Multiple orientation - functional specialists do not get wrapped up in their own concerns
structure for allocating responsibility to managers for end results
Inter-disciplinary cooperation, mix of skills and expertise
geographic areas with distinct need served, EOS maintained
70
Disadvantage of matrix structure
Dual authority can lead to conflict between managers
Role stress with two bosses
more costly
difficult for management to accept
slower decision making - requires consensus and agreement
71
Define span of control
number of subordinates reporting to one person - influences shape of organisation
72
Factors influencing span of control
Location of subordinates
More widely spread - fewer that can be managed effectively
73
Factors influencing span of control
complexity / nature of work
as more complex, span decreases
74
Factors influencing span of control
management personality and ability
better managers can manage more people
75
Factors influencing span of control
Subordinate ability
better they are, more they can be delegated and managed by the manager
76
Factors influencing span of control
Level of organisational support
personnel departments remove routine tasks from manager, they can manage more people
77
Factors influencing span of control
level of 'danger' if delegation takes place
more danger, less people that can be managed
78
Issues setting span of control wrong
too wide/flat
loss of contact
loss of control
subgroups form with unofficial leaders
79
Issues setting span of control wrong
too narrow/tall
Too many management levels and too much cost
delays in decision making
over supervision and demoralised staff
80
How can IT impact structure
new patterns of work
form and structure of groups
supervisory roles
change in lines of authority
job design/descriptions
centralised/decentralised decision making
81
What has IT led to in terms of structure
flatter structures, wider spans, fewer levels of management
82
What do flexible structures allow firms to do
adapt to changing circumstances
83
what is a boundary less organisation
structured to make it easier to collaborate with external parties, remove internal barriers existing between different functions
84
Focus of boundary less organisations
creation of relationships with external groups
85
What is central to creation of boundary-less organisations
increased outsourcing
establishing virtual communication networks facilitated by internet technologies
86
What are examples of boundary less organisations
network
virtual
hollow
modular
87
Where is network approach visible
outsourcing as strategic method.
88
What are virtual teams
connected groups of people who may not be in same office/organisation but
share information and tasks
make joint decisions
fulfil collaborative function of a team
89
How can oraganisations structure differently
Staffing
certain areas are undertaken by freelance/contract - shamrock
90
Organisation structure activities differently
leasing
leasing of machinery, IT and accommodation more common
91
Organisations able to structure activities differently
production
May be outsourced even offshore where labour is chpeaer
92
Organisations able to structure activities differently
Interdependence
emphasised by sharing functions and service, database and communication share and access common data
93
Network structures co-operation and non-core competence matters can lead to benefits including
cost reduction
increased market penetration
experience curve effects
94
Virtual organisations considerations
home working
customers and suppliers - virtual teams
95
What are hollow organisations
use outsourcing effectively so the organisation is hollowed out. Anything non-essential is outsourced out
96
What is a modular organisation
separate production processes into individual modules,
activities undertaken are then outsourced to a number of different specialist parties
which become responsible for producing one aspect used in overall process
97
Benefit of modular organisation
reduce cost
gain access to specialist skills that would take time to develop in house
98
What is Handy's Shamrock
core of essential executives and workers,
supported by outside contractors and part time help
99
Shamrock is also known as
flexible firm
100
elements in shamrock
professional core
flexible labour force
contractual fringe
customers
101
Shamrock
what is the professional core
permanently employed staff providing core competencies and distinctive knowledge base of the organisation
102
What is the flexible labour force
temporary and part time workers who can be deployed for peaks in demand
103
Handy's Shamrock, what is the contractual fringe
external providers who can undertake non-core activities,
provide specialist services
more economically than the organisation could arrange internally
(outsourcing)
104
Shamrock - customers
organisation may be able to 'sub contract' some tasks, IT allowed sales service and supply
105
When is an organisation centralised
decision making authority concentrated on strategic apex
106
Decentralisation defined
ability to make decisions is passed down to lower levels of hierarchy
107
Factors affecting decentralisation
management style
size
extent of activity diversification
effectiveness of communication
ability of management
speed of tech advancement
geography
extent of local knowledge required
108
Factors affecting decentralisation
Management style
authoritarian = centralised
109
Factors affecting decentralisation
size
size increase, decentralisation tends to
110
Factors affecting decentralisation
extent of activity diversification
more diversified, more decentralised
111
Factors affecting decentralisation
effectiveness of communication
decentralisation doesn't work if information is not communicated downards
112
Factors affecting decentralisation
ability of management
more able, more decentralised
113
Factors affecting decentralisation
speed of tech advancement
lower managers more familiar with changing tech
therefore decentralise
114
Factors affecting decentralisation
Geography
if spread, decentralise
115
Factors affecting decentralisation
extent of local knowledge needed
if required, decentralise
116
Advantages of decentralisation
senior management free to concentrate on strategy
motivation for lower managers
local expertise improves decisions
quicker and more effective responses to local conditions
career paths for managers/employees
117
disadvantages of decentralisation
more difficult to coordinate as lots making decisions
incongruent decisions
loss of control
complicated structure
transfer pricing
evaluating performance difficult
duplication of some roles
118
Risk of products all being in the same stage of development
may all decline together
119
Mix of portfolio - what does a business need
mix of yesterday, today and future products
range of products with different lifecycles
products in development
lots in maturity to support others
120
When assessing product portfolio consider
stage of lifecycle
remaining life
urgency of developing new
whether lifecycle can be extended
121
BCG can be applied to
individual products
whole strategic business units
122
Axis on BCG
Market attractiveness (rate of growth)
Market strength (relative market share)
123
High share of a high growth market is a
star
124
stars require in the short term
capital expenditure in excess of cash generated to maintain position,
but promise him return in future
125
high growth rates will attract
competition
126
BCG - Cash cows require capital expenditure
very little expenditure
generate high cash returns
income can be used to finance stars
127
Low growth rate makes attacks by new firms
unlikley
128
Question marks
capital expenditure
Decision - considerable expenditure to build into star, usually poor cash generators and show negative cash flow
129
Dogs should be
allowed to die or should be killed off
130
Dogs and cashflow
modest outflow or inflow
cash trap - will tie up resources
131
When can dogs be a valid part of product portfolio
complete range
fill niche market
132
What are infant products
in early stage of development
133
What are war horse products
products that were cash cows
still making good sales and earning good profits
134
What are cash dogs
dogs that are generating cows
135
What are dodos
low share low growth losing cash
136
Product lifecycle stages
introduction
growth
shakeout
maturity
decline
137
BCG and Product lifecycle
Introduction
Infants
negative cash flow
138
BCG and Product lifecycle
Growth
Stars and question marks
139
BCG and Product lifecycle
Maturity
Cash cow and dogs
140
BCG and Product lifecycle
decline
war horses
dodos
141
BCG Matrix benefits
framework for planners to consider and forecast growth
evaluate competitive dimension
142
BCG issues
Does not consider other factors
ROCE/EPS used for investors, stars and question marks look bad
No insight how to compare opportunities when considering which to allocate resources to
Rates of profit can be very high for small businesses
Doesn't consider risk
Focussed on known markets and products, rational planning and positioning approach
assumes industry and markets can be defined, ignores substitutes
difficult forecasting growth
143
Issues in portfolio planning
Models simple
BCG ignores risk
ignore opportunities for creative segmentation or identifying New niche
Rely on identifiable products rather than services
ignore profit generating capability
does not increase share price when diversified portfolio (investors can od)
Cash cow flow into question mark - ignores paying out dividend
may cause business to move beyond core competences
144
Considerations for successful divisionalisation three
autonomy
controllability
corporate optimality
145
Divisons can be
revenue centres
cost centres
profit centres
investment centres
146
Investment centres responsible for
balance sheet and profit
147
Profit centres responsible for
revenue and cost
148
Cost centres responsible for
keeping cost in limit
149
Revenue centres only responsible for
revenes
150
Implication of transfer pricing
determine profit
affect performance evaluation
determine tax
determine currency of profits
may determine price and final sales
can lead to dysfunctional decisions
151
Three cost based methods of setting
Full cost
Variable cost
opportunity cost
152
Cost based optimal transfer price
higher of VC and opportunity cost
153
Other methods of transfer pricing
negotiated
two part
dual
154
Negotiated transfer price
price established by discussions between divisional managers in bargaining process
155
Two part transfer prices
transfer price set at VC to ensure corporate optimality
supplying division records extra amount to arrive at profit figure
156
Dual pricing transfer pricing
receiver at standard VC
Transferer at higher value to give profit incentive
157
Dual transfer pricing outcome
Goal congruence
poor cost control
158
Considerations for TP
Impact on group profitability
impact on product positioning
costs of the system
motivational impacts of the system
159
Bartlett and Ghoshal four structures depends on
local independence/responsiveness
global coordination
160
Bartlett and Ghosal four structurse
international division
local sub
global product division
transnational appraoch
161
High global coordination, low local independence
global product dvision
162
Low global coordination
low local independence
international division
163
High global coordination, high local independence
transnational corporation
164
Low global coordination
high local independence
local sub
165
What is an international division
stand alone division added to domestic structure,
drawing on products and tech of home business
166
What is a local subsidiary
Based and operated independently.
Local management has a high degree of autonomy
167
When is local sub appropriate
business following multi domestic strategy
168
What is a global product division
Typical for company following global strategy
with separate ww division for different products
169
What is the transnational approach
high local responsiveness and high global coordination
strategic and organisational flexibility
like a matrix
170
What does the TNC do
Coordinate various stages of production chain between countries
take advantage of diffecnes in geographical distribution
has geographical flexility
171
