Chaptere 14

Question 1

Open systems

Answer 1

Systems that take inputs from the external environment, transform some of them, and send them back into the environment as outputs.

Valuable because it sensitizes us to the need for organizations to cope with the demands of the environment on both the input side and the output side.

Question 2

List the components of an external enviroment.

Answer 2

 General economy.
• When a downturn occurs, competition for remaining customers increases, and organizations might postpone needed capital improvements.
 Customers.
 Suppliers.
 Competitors.
 Social / political factors.
 Technology.
• Refers to ways of doing things, not simply to some form of machinery.
• Adopting technology enhances organization effectiveness.
• Interest groups- Parties / organizations other than direct competitors that have some vested interest in how an organization is managed.

Question 3

Simple environment

Answer 3

Involves relatively few factors which are fairly similar to each other.

Question 4

Complex environment

Answer 4

Contains a large number of dissimilar factors that affect the organization.

Question 5

Static environment

Answer 5

Components of this environment remain fairly stable overtime.

Question 6

Dynamic environment

Answer 6

Components are in a constant state of change which is unpredictable and irregular not cyclical.

Effects:
 As uncertainty increases, cause-and-effect relationships become less clear.
 Makes priorities harder to agree on and stimulates political jockeying within the organization.
 As environmental uncertainty increases, more information must be processed by the organization to make adequate decisions.

Question 7

Organizational structure

Answer 7

Manner in which an organization divides its labour in specific tasks and achieves coordination among these tasks.

Question 8

Labour must be divided because individuals have physical and intellectual limitations.

What are 2 basic dimensions to division of labour?

Answer 8

Vertical division of labour:
 Concerned primarily with apportioning authority for planning and decision making.
 The domain of decision making, and authority is reduced as the number of levels in the hierarchy increases.
• Managers have less authority over fewer matters.

Horizontal division of labour:
 Groups the basic tasks that must be performed into jobs and then into departments, so the organization can achieve its goals.
 Required workflow is the main basis for this division.
 Closely tied to job design.
 As organizations engage in increased horizontal division of labour they become more differentiated.

Question 9

Functional departmentation

Answer 9

Employees with closely related skills and responsibilities are assigned to the same department.

Question 10

What are the advantages to Functional departmentation?

Answer 10

Advantages:
• Efficiency.
• Enhanced communication within departments.
• Enhanced career ladders and training opportunities within the function.
• Performance of functional specialists easier to measure and evaluate.

Question 11

What are the disadvantages to Functional departmentation?

Answer 11

Disadvantages:
• High degree of differentiation leading to poor coordination and slow response to organizational problems.
• Differentiation could also lead to conflict between departments leading to ignorance of needs of customers.

Question 12

Product departmentation

Answer 12

Departments are formed on the basis of a certain product, product line, or service.

Question 13

What are the advantages to Product departmentation/Geographic departmentation/ Customer departmentation?

Answer 13

Advantage:
• Better coordination among functional specialists who work on a particular product line.
• Flexibility.
• Product-focused-departments can be evaluated as profit centres.
• Serves customers better since they can see more easily who produced the product.

Question 14

What are the disadvantages to Product departmentation/Geographic departmentation/Customer departmentation?

Answer 14

Disadvantages:
• Professional development may suffer without a critical mass of professional working in the same place at the same time.
• Economies of scale might be threatened and inefficiency may occur if relatively autonomous product-oriented departments are not coordinated.

Question 15

Matrix departmentation

Answer 15

Employees remain members of a functional department while also reporting to a product or project manager.

Question 16

What are the advantages to Matrix departmentation?

Answer 16

Advantages:
• Provides a degree of balance between the abstract demands of the product or project and the people who actually do the work, resulting in a better outcome.
• Very flexible.
• Managers need to be well-trained.

Question 17

What are the disadvantages to Matrix departmentation?

Answer 17

Disadvantages:
• No guarantee that product or project managers will see eye to eye with many functional managers.
• Employees assigned to a product or project team in essence report to 2 managers which can result in role conflict and stress.

Question 18

Geographic departmentation

Answer 18

Relatively self-contained units deliver an organization’s product or services in a specific geographic territory.
 Shortens communication channels, allows the organization to cater to regional tastes, and gives some appearance of local control to clients and customers.

Question 19

Customer departmentation

Answer 19

Relatively self-contained units deliver an organization’s product or service to specific customers.
 Goal is to provide better service to each customer group through specialization.

Question 20

Hybrid departmentation

Answer 20

Structure based on some mixture of functional product, geographic, or customer departmentation.
 Attempts to capitalize on the strengths of various structures while avoiding the weakness of others.

Question 21

What are methods of coordinating divided behaviour?

Answer 21

 Direct supervision.
 Standardization of work processes.
• Useful for routine jobs.
 Standardization of outputs.
 Standardization of skills.
 Mutual adjustment.
• Puts most control in the hands of those actually doing the work along with skill standardization.
 Liaison role- Role occupied by person who’s assigned to help achieve coordination between their department and another department.
• Not effective when coordination problems involving several departments simultaneously arise.
 Task forces and teams:
• Self-managed and cross-functional teams are also effective means of achieving coordination.
 Integrators- Organizational members permanently assigned to facilitate coordination between departments.
• Especially useful for dealing with conflict between departments that:
o Are highly interdependent.
o Have very diverse goals.
o Operate in a very ambiguous environment.

Question 22

Integration

Answer 22

Process of attaining coordination across differentiated departments

Question 23

List Traditional structural characteristics.

Answer 23

o Span of control- Number of subordinates supervised by a manager.
o Flat organization- Organization with relatively few levels in its hierarchy of authority.
 Push decision-making powers downward in the organization.
 Enhance vertical communication and coordination.
o Tall organization- Organization with relatively many levels in its hierarchy of authority.
o Formalization- Extent to which work roles are highly defined by an organization.
 Very complex tasks dictate high formalization.
o Centralization- Extent to which decision-making power is localized in a certain part of an organization.
 Dictated by:
• Information processing capacity of executives.
o Complexity- Extent to which an organization divides labour vertically, horizontally, or geographically.
o Size and structure:
 Larger organizations are more formal than smaller ones.

Question 24

Mechanistic structures

Answer 24

Characterized by tallness, specialization, centralization, and formalization.
 Useful when organization’s external environment is more stable, and its technology is more routine.

Question 25

Organic structures

Answer 25

Characterized by flatness, low specialization, low formalization, and decentralization.
 Useful when environment is uncertain, and technology is less routine, and innovation is important.

Question 26

Contemporary organic structures: Ambidextrous organization

Answer 26

Organization that can simultaneously exploit current competencies and explore emerging opportunities.

Question 27

Contemporary organic structures: Network organization

Answer 27

Liaisons between specialist organizations that rely strongly on market mechanisms for coordination.

Advantage:
 Flexibility and adaptability.
 Allow organizations to specialize in what they do best.

Problems:
 Stable networks can deteriorate when companies dealing with the core firm devote so much of their effort to this firm that they’re isolated from normal market demands. This can make them “lazy” resulting in a loss of technological edge.

Question 28

Contemporary organic structures: Modular organization

Answer 28

Network organization that performs a dew core functions and outsources other activities to specialists.

Disadvantages:
• Don’t work well when not focused on right specialty and have good suppliers.

Advantages:
• Streamlined with great flexibility so it’s well suited to rapidly changing environments.

Question 29

Contemporary organic structures: Virtual organization

Answer 29

Network of continually evolving independent organizations that share skills, costs, and access to one another’s market.

Problems:
 Virtual organization lose their organic advantage when they become legalistic, secretive, and too binding of the other partners.

Question 30

What are forms of strategic response?

Answer 30

o Vertical integration- Strategy of formally taking control of sources of organizational supply and distribution

o Mergers and acquisitions:
 Merger- Joining of 2 organizations.
 Acquisition- Purchase of one organization by another.
 When they occur in the same industry, they are being affected partly to reduce the uncertainty prompted by competition.
 When they occur across different industries the goal is to reduce resource dependence on a certain segment of the environment.

o Strategic alliances- Actively cooperative relationships between legally separate organizations.
 Join venture- Two or more organizations form an alliance in the creation of a new organization entry.

o Establishing legitimacy- Taking actions that conform to prevailing norms and expectations.
 Do good deeds in the community.
 Associate with higher-status-individuals or organizations.