Class 7 (Organization)

Question 1

4 key factors that matter most to strategy execution

Answer 1

– Information
– Decision Rights
– Motivators
– Structure

Question 2

vertical vs horizontal differentiation?

Answer 2

– Vertical differentiation
• the balance between the centralization and decentralization of authority
– Horizontal differentiation
• involves specifying which people do which jobs in which units

Question 3

what are the 3 types of knowledge that allows organization structure to implement strategy?

Answer 3

Functional knowledge: Access to coworkers with
expertise in basic business functions such as production,
marketing, finance, accounting, HR management, IT
• Product knowledge: Understanding technological trends,
customer needs, competitive forces affecting the goods
the firm produces & sells
• Geographical (area) knowledge: Understanding cultural,
commercial, social, economic conditions in each host
country
• Each form allows firms to integrate one type of knowledge, but
also makes it difficult to integrate the other types of knowledge

Question 4

within vertical differentiation, define centralization vs decentralization

Answer 4

– Centralization
• degree to which high-level managers make strategic decisions and
delegate them to lower levels for implementation

– Decentralization
• degree to which lower-level managers make and implement
strategic decisions

Question 5

what are the classical structures used to achieve horizontal differentiation?

Answer 5

– functional,
– area or divisional,
– matrix or
– mixed

Question 6

define horizontal differentiation

Answer 6

– Specifies the set of tasks to accomplish
– Divides the tasks among SBUs, divisions, departments,
committees, teams, jobs, and individuals
– Stipulates superior and subordinate relationships

Question 7

purpose of the functional structure?

Answer 7

groups people based on common expertise and resources

– is popular among companies with narrow product lines

Question 8

describe the divisional structure

Answer 8

divides employees based on the product, customer
segment, or geographical location
– duplicates functions and resources across divisions
• International division
• Global product structure
• Worldwide area structure

Question 9

describe the matrix structure

Answer 9

– Institutes overlaps among functional and divisional forms
– Gives functional, product, and geographic groups a
common focus
– Violates the unity of command principle
• has dual reporting relationships rather than a single line of
command

Question 10

describe mixed structure

Answer 10

– Combines elements of the functional, area, and product
structures
– Allows the firm to better adapt to market conditions
worldwide

Question 11

what are neoclassical structures?

Answer 11

– emphasize coordination and cultivation not command and
control
– Network structure
• arranges differentiated elements in patterned flows of activity that
allocate people and resources to problems and projects in a
decentralized manner
– keiretsu, sogo shosha, chaebol
– Virtual organization
• dynamic arrangement among partners that efficiently adapts to
market change

Question 12

define virtual organization

Answer 12

A virtual organization is a temporary arrangement
among independent companies, suppliers,
customers and rivals that “works across space
time and organizational boundaries with links
strengthened by webs of communication
technology”

Question 13

what are coordinated systems?

Answer 13

Coordination by:
1. Standardization - relies on objectives and schedules to set rules and
regulations
2. Plan - requires interdependent units to meet common deadlines and
objectives
3. Mutual adjustment - depends on managers interacting extensively
with their counterparts

Question 14

what are the 3 types of control?

Answer 14

1. bureaucratic control which emphasizes organizational authority and
   relies on rules and regulations
2. market control which uses external market mechanisms to establish
   objective standards
3. clan control which uses shared values and ideals to moderate
   employee behavior

Question 15

what are control systems?

Answer 15

Control systems define how managers compare performance
to plans, identify differences, and where found, assess the
basis for the gap and impose corrections

Question 16

control tools include:

Answer 16

– Reports
– Visits to subsidiaries
– Evaluative metrics
– Information systems

Question 17

what is overcontrol?

Answer 17

The firm tries to exert more control
over individuals than they think is
appropriate
Example: Disney banning beards for
Disneyland Paris employees

Question 18

what is inappropriately focused control?

Answer 18

Firm may inadvertently be trying to
control the wrong things
Example: compromising quality by
focusing on cost reduction

Question 19

what is increased accountability?

Answer 19

Example: shifting from an annual
reporting (where employees may
not need to do a great job day by
day) to daily reporting

Question 20

what are the three types of resistance to control?

Answer 20

• overcontrol
• inappropriately focused control
• accountability

Question 21

what is organization culture?

Answer 21

• Organization culture: The coherent set of assumptions about
an MNE and its goals and practices shared by its members
– management values and principles
– work climate and atmosphere
– ‘how we do things around here’ patterns
– traditions
– ethical standards