Chapter 9: Implementing Strategy Through Organizational Design

Organizational Design The process through which managers select the combination of organizational building and have got systems that they believe will enable the company to create and sustain a competitive advantage. align and motivate employees To create valueand Obtain a competitive advantage Koontz and ODonnell The Process School of steering Planning Organizing Staffing Directing viewling Building blocks of organizational structure Differentiation Vertical how much delegacy to delegate Horizontal how to divide peopleInto functions and divisions Integration coordinate people and functions To accomplish organizational goals and tasks high structure (7 10 levels) Flat structure (2 4 levels) Tall Structure Problems Coordination Information distortion need Too many middle managers McKinsey Consulting Company Increased height of company organization structures professorships Office President of each division Centralization or Decentralization (tending toward) Decentraliz ation 1. Delegate decision making imprimatur to middle and lower level managers 2.Adapt to local conditions. Promotes flexibility 3. Fewer managers needed Centralization 1. Facilitates coordination and formulation 2. Decisions fit broad organizational objectives Management Policy Guide word of mouths for decision making are made at highest levels And passed down to lower levels Horizontal Differentiation How to group tasks and activities to meet strategies Functional Structure Grouping by expertise. Most U. S. firms have a functional structure Advantages Good place to learn Easy to control Effective and efficient DisadvantagesGeographical diversion causes duplication of people and costs Communication problems Measurement problems localization problems Strategic problems Product Structure Group by product line. Product Team structure matrix Management Concurrent Design Methodology Cross-functional teams Geographic Structure Multidivisional Structure Self-contained product lin e or business unit (Operating responsibility) Corp headquarters staff. Financial Control. (Strategic Responsibility) Advantages of Multidivisional Structure Enhanced corporate monetary controlStrategic control Growth Internal efficiency Disadvantages of a Multidivisional Structure Establish Division-Corporate authority levels GM and Alfred Sloan Litton Industries Distortion of information Competition for resources Transfer pricing (GE example) Focus on short-term full(prenominal) operating costs All functions are in each division Integration and Organizational Control Forms in Integrating Mechanisms 1. Direct contact 2. Interdepartmental liaison roles 3. Temporary task forces ad hoc committees 4. imperishable teams standing committees 5. Integrating rolesDifferentiation and Integration The Nature of Organizational Control 1. Monitor 2. Evaluate 3. compare actual to goals 4. Take corrective action Strategic Controls Financial controls Stock Sales Growth ROI bring in Output Con trols Set Goals Measure output performance against goals Behavior Control Rules and Procedures Common controls 1. Operating budgets 2. standardisation 3. Rules and procedures 4. Organizational Culture a. Values beliefs and goals b. Norms Expectations for behavior Culture and Strategic Leadership Walt Disney example