Organizational Forms I Flashcards

1
Q

Modularization

A
  • reducing the number of elements of a system by grouping
  • Main task - differentiation in many smaller tasks - grouping back together into a product
  • -> reduction of the number of relationship between modules which leads to more flexibility and adoptability and a reduction of external effects, information overload and internal costs (coordination and communication)
  • -> intense interactions within modules facilitate learning opportunities
  • -> economies of scale can be exploited if products contain similar modules
  • -> the production of modules can be outsourced
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2
Q

Modularization on different levels

A
  • Macro-level (whole company; segmentation in business units and classification of objects etc.)
  • Meso-level (department/process level: manufacturing segments, island concept)
  • Micro-level (job design; principle of outcome)

Interfaces are integrating mechanism between modules (define relationships between modules)

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3
Q

Interdependencies

A
  • the degree to which activity in one organizational unit affects the activities and goals of other units
  • -> interfaces are not independent from each other
  • -> can be: pooled, sequential or reciprocal
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4
Q

Type of interdependencies

A
  • Type of interdependencies determine the choice of coordination mechanism
  • monolithic organization: with a high level of interdependencies between and within departments, depending on the level of differentiation and integration
  • modularized organization: reduces number of interfaces, with a high level of interdependencies within modules but low level between modules, coordination via interfaces
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5
Q

Traditional organizational forms

A
  • organizations can be formal (defining objects, activities, etc with boundaries) or informal (social system, with relationships between organization members)
  • -> focus on formal structure
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6
Q

functional organization

A
  • integration of similar (several) functions into departments, which are responsible for all of the corresponding function (have own budget, management, objectives, plans etc.)
  • the broader the function the longer the way of communication
  • each function has its own internal hierarchy
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7
Q

functional organization (Vor- und Nachteile)

A

+ high level of interaction within the function - individual knowledge, common functions, specific knowledge –> higher productivity, flexibility of complex tasks, more motivation and performance, peer-support

  • suboptimal for big companies: manager highly involved –> coordination procedure between functions; long-term planning may be forgotten; communication and coordination problems between functions
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8
Q

Divisional organization

A
  • Integration of all functions and tasks to produce one product within the same division
  • product management = product specific functions report to the division management
  • each division has its own divisional structure; and each can act as profit center or be operated as a separate business
  • -> some functions serve multiple divisions; small divisions additionally improve to dynamic market condition
  • Divisionalization creates smaller units, simplifying communication within divisions and organizational controlling
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9
Q

Types of divisional organization

A
  • Product-division structure
  • Multidivisional structure
  • Product-team structure
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10
Q

Product-division structure

A
  • combination of centralized functions (serving all product devisions) and decentralized product division (execute all additional tasks concerning the individual product)
  • homogenous product portfolio; only if product divisions need the same centralized function
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11
Q

Multidivisional structure

A
  • product portfolio is heterogenous: each product division needs specific supporting functions
  • combines specialization within centralized functions and are supported by decentralized product-specific term
  • production is so different
  • product division act independently: controlled and coordinated by headquarter managers
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12
Q

Product-team structure

A
  • combination on elements of product division and multidivisional structure
  • focus on new product development (product developing teams –> overlaying; equipped with decisive power)
  • enables bottom up influence, smoothly coordination between centralized functions, fast development processes
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13
Q

Product-team structure (Vor- und Nachteile)

A

+ single divisions better respond to uncertainty
+ divisions are closer to the market, fast reaction to environmental changes
+ accountability clearly defined

  • divisions may compete against each other (may develop similar products/similar types of customer)
  • may lead to duplication of internal services
  • economies of scale can be lost
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14
Q

Regional organizations

A
  • Structures are organized according to the needs of different geographical areas; supported by centralized functions
  • geographical areas can act as profit center or functional structure
  • fits if: transportation is difficult, products are bulky, customer recruit from specific area (e.g. Hospitals)
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15
Q

Customer-oriented organization

A
  • organizations are structured according to the needs of specific customer groups
  • focus on separate specific customer satisfaction
  • fits if products comparable markets different and different customer segments
  • customer segments have heterogeneous preference and demand
  • needs to understand individual needs of customer; knowledge is crucial
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16
Q

Divisional vs. customer oriented organization

A
  • Goal: best product for customer vs. best solution for customer
  • Main offering: new product vs. personalized package
  • Most important customer: most advanced customer vs. profitable, loyal customer
  • Priority setting basic: Portfolio of products vs. customer
  • Org. concept: production profit center, product teams vs. customer segments; individual customer
  • Most important processes: Product development vs. CRM
  • Measures: market share, new products vs. valuable customer, satisfaction
17
Q

Profit center organization

A
  • organizational divisions within the same organization
  • management of legally independent subsidiaries
  • advantages high level of flexibility; central headquarter can assess the performance of subsidiaries (rewards, budget allocation, etc.)
18
Q

Holding organization

A
  • legally independent organizations belonging to the same enterprise
  • sustained network of legally independent organization operating under common leadership (companies are part of a common umbrella company, which limits decisive power)
  • A parent company has no market access of umbrella company: a holding has one
19
Q

Types of holdings

A
  1. Share holding: Parent corporation administrates financial shares; subsidiaries act independent, parent do not interfere in strategy
  2. Financial holding: Parent corporation coordinates funding, accounting and controlling of all subsidiaries
  3. Strategic holding: Parent corporation execute specific functions for subsidiaries
  4. Management holding: Parent corporation administrates more (e.g. manage strategic decisions)
20
Q

Umbrella company (Vor- und Nachteile)

A

+ high level of flexibility; restructuring is in comparison simple; ability to influence affiliate subsidiary

  • demanding legal requirements (high costs), duplication of decentralized functions
21
Q

Affiliate subsidiaries (Vor- und Nachteile)

A

+ Access to financial resources of umbrella company
+ high level of motivation and flexibility
+ Subsidiaries close to the market

  • limited autonomy (depends on type of holding)
  • integration by internal prices (hard to determine)