Organizational Structure And Controls Flashcards
What does the organizational structure specifies
1- the firm’s formal reporting relationships, procedures, controls, and authority and decision-making processes
2- the work to be done and how to do it, given the firm’s strategy or strategies
What does the research evidence suggests about performance
The performance declines when the firm’s strategy is not matched with the most appropriate structure and controls
What are the 3 basic structure types of the organizational structure
1- simple structure
2- functional structure
3- multidivisional structure (M-form)
Explain the simple structure of the strategy and structure
-owner-manager:
-makes all major decisions directly
-monitors all activities
-staff
-serves as an extension of the manager’s supervisor authority
-growth creates complexity and managerial and structural challenges
-matched with entrepreneurial businesses focus strategies, and business-level strategies:
- commonly complete by offering a single product line in a single geographic market
What are the benefits of the functional structure?
-economies of scale and scope
-performance standards are better maintained
-specialized training and in depth skill development
-clear decision making and lines of communication
Explain the functional structure
-chief executive officer (ceo)
-limited corporate staff
-functional line managers in dominant organizational areas (ex: production, marketing, engineering, hr)
-support use of business-level strategies and some corporate-level strategies
-single or dominant business with low levels of diversification
Disadvantage of the functional structure
-hard to integrate
-lack of common vision
Why does firms use different forms of the functional org structure?
-To support implementing the:
-cost leadership
-differentiation
-integrated cost leadership/differentiation strat
What are the structural characteristics that differentiate each forms of the functional structure?
-specialization (concerned with the type and number of jobs required to complete work)
-centralization (degree to which decision-making authority is retained at higher managerial levels)
-formalization (the degree to which formal rules and procedures govern work)
What are the characteristics of the cost leadership form of the functional structure?
-simple reporting relationship
-a few layers in the decision-making and authority structure
-a centralized corporate staff
-a strong focus on process improvements through manufacturing rather than the development of new products by emphasizing product R&D
-a low-cost culture in which employees constantly try to find ways to reduce the costs incurred to complete their work
-centralized decision making
-highly specialized jobs
-the division of work into homogeneous subgroups
-highly formalized rules and procedures
What are the characteristics of the differentiation form of the functional structure?
-relatively complex and flexible reporting relationships
-frequent use of cross-functional product development teams
-a strong focus on marketing and product R&D rather than manufacturing and process R&D
-a development-oriented culture and flatter structure in which employees try to find ways and frequently exchange ideas about how to further differentiate current products and develop new, highly differentiated products
-decentralized decision-making responsibility and authority
-low specialization of jobs
-few formal rules and procedures
Explain the multidivisional structure
-top corporate officer delegates responsibilities to division managers:
-for day-to-day operations
-for business-unit strategy
-appropriate as firm grows through diversification
What are the three benefits of the multidivisional structure?
-corporate officers are able to more accurately monitor the performance of each business, which simplifies the problem of control
-facilities comparisons between divisions, which improves the resource allocation process
-stimulates managers of poorly performing divisions to look for ways of improving performance
What are the disadvantages of the multidivisional structure
-Difficult to coordinate across product lines
-replication of resources
-pressure to generalize, not specialize
