Designing Adaptive
Organizations
Week 9
Chapter Outline
• Organizing
– Vertical and Horizontal
• Advantages/ Disadvantages
•
•
•
•
Evolution of Organization Structure
Structure and Strategy
Structure and Technology
Types of Technology
– Manufacturing, service, digital
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Organizing
What?
Organizational resources to achieve strategic goals
– Division of labor
– Lines of authority
– Coordination
Link to Planning
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Organizing the Vertical Structure
Organizing Structure Defines:
 The set of formal tasks assigned to individuals
and departments
 Formal reporting relationships
 The design of the systems to ensure effective
coordination
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Organizing the Vertical Structure
Work Specialization
Chain of Command
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Organization Chart
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Authority, Responsibility,
and Delegation
• What is Authority?
Formal and legitimate right of a manager to
make decisions, issue orders, and allocate resources
to achieve organizational outcomes.
 Authority is vested in positions, not people
 Authority is accepted by subordinates
 Authority flows down the vertical hierarchy
 Accountability
 Delegation
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Line and Staff Authority
Line departments perform primary tasks
Ex: Shoes, clothing
– Sales
– Production
Line Authority: Direct & control subordinates
Staff departments support line departments
– Finance
– Human Resources
– Research
• Staff authority: advise, recommend specialist
expertise
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Span of Management
• Span of management?
– Determinants
• Subordinates similar work, single location, skills of
subordinates, etc.
• Determines if the organization is a:
Tall Structure
Flat Structure
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Reorganization and Span of
Management
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Centralization and Decentralization
• Centralization
• Decentralization
• Factors:
– Greater change and uncertainty are usually
associated with decentralization
– Centralization or decentralization should fit the
firm’s strategy
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Departmentalization:
Functional & Divisional
• Functional Approach?
• Divisional Approach
– Grouping based on organizational output
• Product, Program, Business (self-contained unit)
• Geographic- or Customer-Based Divisions
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Functional Versus Divisional
Structures
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Geographic-Based Global
Organization Structure
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Departmentalization:
Matrix & Team Approach
• Matrix combines functional and divisional
approaches
– Improve coordination and information
– Dual lines of authority
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Matrix Structure
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Global Matrix Structure
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Team Approach
• Widespread trend in departmentalization
• Allows managers to delegate authority to lower
levels, Flexible, responsive
• Types
– Cross-functional
– Permanent teams
• Horizontal coordination & communication
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Virtual Network Approach
• Extends idea of horizontal coordination
and collaboration
– Partnerships
– Alliances
• Could be a loose interconnected group
– i.e. outsourcing
Virtual network structure means that the firm
subcontracts most of its major functions to
separate companies.
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Network Approach to
Departmentalization
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Structural Advantages and
Disadvantages
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Organizing for Horizontal
Coordination
• Lack of coordination and cooperation can
cause information problems
• Horizontal
– Meet fast-shifting environment
– Break down barriers between departments
– Need integration and coordination
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Task Forces, Teams, and Project
Management
Task Force –
a temporary team or committee
formed to solve a specific shortterm problem involving several
departments
Cross-functional Team –
furthers horizontal coordination by
including members across the
organization
Project Manager –
a person responsible
for coordinating the
activities of several
departments on a fulltime basis for the
completion of a
specific project
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Evolution of Organization Structures
Traditional Vertical
Structure
Cross-Functional Teams and
Project Managers
Reengineering to
Horizontal Teams
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Structure Follows Strategy
• Business performance is influenced by the
company’s structure
• Strategic goals should drive structure
• Structure should be used to facilitate strategic
goals
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Factors Affecting Organization Structure
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Relationship of Structural Approach
to Strategy and the Environment
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Structure Fits the Technology
• Technology - knowledge, tools, techniques
and activities
– Technology varies but it can impact structure
• Difference among three manufacturing
technologies is technical complexity:
– Small-batch and unit production
– Large-batch and mass production
– Continuous process production
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Manufacturing Technology and
Organization Structure
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Service Technology
• Service organizations:
– Examples.
• Service technology defined as:
– Intangible output
– Direct contact with customers
• Need more interaction/horizontal communication
Digital technology is the use of the Internet and other
digital processes to support business online.
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