Lektion 6 - Organizational structure and cross-functional integration Flashcards
(!) What is the difference between differentiation and integration
Differentiation
- Special competence in different areas
- Refers to functional structure / Silo
- Often favoured by management control systems
Integration
- People with different competencies cooperating towards some kind of common goal or purpose
(!) Describe a functional organizational structure and its advantages and disadvantages
General:
- Each manager is responsible for a specific function
- Manager with specialized knowledge to bear on decisions related to specific function
- Vertical
- Silos
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Differentiation vs. integration:
- High level of differentiation
- Low level of integration
____________
Advantages:
- Managers bring specialized knowledge
- Efficiency / Economies of scale
- Competence development: Learning from one another
____________
Disadvantages:
- No accurate way to determine effectiveness
- Functions constributes jointly to final output
- Prevent cross-funtional coordination
- Disputes settled at headquaters: Time-consuming and frustrating
(!) Describe a business unit organizational structure and its advantages and disadvantages
General:
- Responsible for all functions involved in product
- Semi-independent: Act like separate company
- Designed to solve functional structure problems
- Division
- More horisontal
- Plan and coordinate work of separate functions
- Resolving the disputes arising between functions
- Performance measured: Profitability of business unit
- Headquater reserve certain key prerogatives:
Headquater:
- Allocate funds to each business function
- Approves budgets
- Judges performance
- Measured by profitability
- Valid criterion
- Sets compensation
- Are able to remove them
- Established the ‘’charter’’
- Permitting product line to make and sell
- Permitting geographical territory
- Permitting customers to sell to
- Company wide policies
- Headquater staff offices may assist division
____________
Differentiation vs. integration:
- Lower degree of differentiation
- Integration within business unit decreases
- Still problems with integration
____________
Advantages:
- Provides training ground: Manager should demonstrate entrepreneurial spirit
- Better decisions than headquater: Closer to markets
- Quicker reaction to treaths and opportunities than headquater: Closer to markets
- Cross-functional competence development
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Disadvantages:
- May dublicate work
- Managers is generalist
- Sometimes more costly than value gained
- Integration problems still occur, but at a lower level
- Functional compentence development normally suffers
(!) Describe a matrix organizational structure and its advantages and disadvantages
General:
- Functional units have dual responsibilities to both a funtional- and business unit manager
- Combines advantages of both the functional- and business unit structure
- Often major advantage if succes
- Each operational unit manager has two managers: One manager increase integration within specific business unit and one increase integration between specific business units
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Disadvantages:
- Frustrating if managers compete
- More complex
- Require high level of maturity among managers
- Often does not work well at all
- Sometimes two partly different expectation meet
(!) What is lean management?
- Management model with the major purpose to strenghten integration by prioritizing flow efficiency over ressource efficiency
- Management philosophy more focused on the horisontal process dimension rather than vertical, hierarchic dimension
- Almost same perspective as business unit structure
What is the difference between ressource efficiency and flow efficiency?
Ressource efficiency:
- Capacity utilization in every part of process & all ressources should be as close to 100 percent as possible
- Scheduling the ressources
- High level of administration
- Keeping costs at a minimum
- Utilize all capacity
- Risk of lost data
- Stocks of pieces or queues waiting for next activity
- Long lead times
Problems:
- Costs: Stock require space, transport & administration
- Quality: Risk of continue producing pieces with issues
- Waste: Change in customer preferences
- Flexibility: Urgent need of products is not possible
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Flow efficiency:
- Lean management
- Everyone needs to do things right the first time
- Need of higher capacity
- Easier communication
- Need of fewer people to administration
- Stocks seen as waste and result in long lead times
Problems:
- Focus on process instead of value
- Focus on throughput control
- Too mechanic
(!) What is meant by a project?
General:
- ‘’A project is a set of activities intended to accomplish a specified end-result and which starts and ends at a particular time’’
- Structural solution that temporarily integrates the specific competencies needed to carry out the task for the project
- Ongoing activities is not projects
- Performed only once and differentiate from other projects
Beginning:
- When management has approved general nature of what is to be done and has authorized appropriate amount of resources that are to be spent
End:
- When objectives has been accomplished
- When it is cancelled
(!) What is the characteristics of a project in comparison to an ongoing project?
Single objective:
- Project: Performance judged by desired end product
- Ongoing activity: Performance judged on all the results
Organizational structure:
- Superimposed on ongoing operating organization.
- Management control system is superimposed by management control system of that organization
Focus on the project:
- Project: Satisfactory output, specified time period, optimum cost
- Ongoing activity: Activities of a specified time period
Less reliable standards:
- Projects: Less reliable performance standards
- Ongoing activities: Reliable performance standards
Different rhythm:
- Projects: Starts small, builds up to peak performance, tapers off as completion near
Ongoing projects: Same activity level in long time
What is the reason for having project teams?
To have an organizational unit that is temporary:
- Only exist until fulfillment of task
To have a number of compentencies that normally may not work together:
- Often mix from different functional department
Describe the project management triangle
- Prioritizing between cost, time and quality
- Not equally important
- Placement of a cross inside the triangle
Describe the two types of unknowns in project budgetting
Known unknowns:
- Nature of task is known: E.i. Building a house
- Cost is unknown: Often estimated within reasonable limits on basis of past experiences: E.i. Cost for building a house
Unknown unknowns:
- No way of estimating costs
- Must be recogniced in evaluation phase
- No definable upper limit
- If not described to be added to fixed price in contract, the estimator should include a contingency allowance for them
(!) Describe the waterfall method
- Planned in details and in sequences before starting
- Constant flow so no important activity is forgotten and activities are performed in optimal order
Describe the critical path method
General:
- Network analysis
- Consist of number of subgoals lined to each-other for the project to be accomplished
- Shows estimated time for each activity
- Show chronological sequence for completion
- Includes slack if activity waits for others
- Focus on improvements on critical path
Basic steps:
- Estimating time required for each activity
- Identifying the interdependencies among activities
- Which activity must be completed before next activity
- Calculating the critical path
Describe the difference between a project where costs and benefits can and cannot be quantified
Projects where cost and benefits can be quantified:
- Often beneficial for seller
- Financial uncertainty on customer
- Revenue with a high degree of certainy while cost has the uncertainty
- Often external customer
Projects where cost and benefits can not be quantified:
- Investment decisions
- Benefits can be predicted with some certainty
- More qualitative measurement has to be done
- Common capital budgetting technique: Pay back method, Internal rate of return or Discounted cashflow
- Examples: Change of information system, reorganization
Describe the difference between internal and external flexibility
External flexibility:
- Customers change mind
Internal flexibility:
- Project fails
