Bài giảng Management: A Pacific Rim Focus - Chapter 10 Strategic organisation design

CHAPTER 10STRATEGIC ORGANISATION DESIGN© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Lecture outlineOverview: Organisation structure designAssessing structural alternativesWeighing contingency factorsMatching strategy & structurePromoting innovation© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Organisation structure designStrategy & structure: which comes first?Strategy & structure are closely linked with each other.Mismatches in strategy/structure lead to difficulties.Factors influencing organisation design Contingency factors: technology, size, environment.Need to promote innovation: roles, differentiation, transfer processes. © 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Organisation structure designStrategyContingency factorsTechnologySizeEnvironmentOrganisation structureFunctionalDivisionalHybridMatrixStructural methods for promoting innovationRolesReservationsDifferentiationTransfer processesOrganisational goals(efficiency & effectiveness)© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesFunctional structureDivisional structureHybrid structureMatrix structureEmergent structure© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesFunctional structure Structure in which positions are grouped according to their main functional (or specialised) area.CEOManager,DistributionManager,AdministrationManager, Manufacturing© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Functional structureAdvantagesIn-depth expertise development.Clear career path within function.Efficient use of resources.Economies of scale (possible).Ease of co-ordination.Technical advantage on competition. DisadvantagesSlow response re: multifunction problems.Decision backlog at top of hierarchy.Bottlenecks re: sequential tasks.Inexact measures of performance.Narrow training of future managers.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesDivisional structure: Structure in which positions are grouped according to similarity of products, services or markets.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesCEO, Alpha IndustriesChief General ManagerCopier productsChief General ManagerScanner productsChief General ManagerPhotographic productsChief General ManagerIndustrial Imaging productsChief General Manager Computer Storage productsChief General ManagerMarine Electronic products© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Divisional structureAdvantagesFast response to environmental changeSimplified co-ordination across functionsSimultaneous emphasis on organisational goalsStrong customer orientationAccurate measurement of performanceBroad training in management skillsDisadvantagesResource duplication in each divisionReduction of in-depth expertiseCompetition amongst divisionsLimited sharing of expertise between divisionsInnovation restricted to each divisionNeglect of overall goals© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternatives Hybrid structure: Structure adopting both functional and divisional structures at the same management levels.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Hybrid structureAdvantagesAlignment of corporate & divisional goals.Functional expertise &/or efficiency.Adaptability & flexibility in divisions.DisadvantagesConflicts between corporate departments & divisions.Excessive administration overhead.Slow response to exceptional situations.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesMatrix structure: Structure superimposing a horizontal set of divisional reporting relationships onto a hierarchical functional structure.Appropriate when:Need for a strong focus on both functional & divisional dimensions.Need to quickly process information & co-ordinate activities.There is pressure for shared resources.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesGM, TransportGM,SalesGM,HRMGM,FinanceManager,Business AManager,Business BManager,Business CManager,Business DManager,Business ETransport, Business ATransport, Business BTransport, Business CTransport, Business DTransport, Business ESales, Business ASales, Business BSales, Business CSales, Business DSales, Business EHRM, Business AHRM, Business CHRM, Business DHRM, Business EFinance, Business AFinance, Business BFinance, Business CFinance, Business DFinance, Business EHRM, Business B© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Matrix structureAdvantagesDecentralised decision-making.Strong product co-ordination.Improved environmental monitoring.Flexible use of human resources.Efficient use of support systems.Fast response to change.DisadvantagesHigh administrative costs.Confusion over authority & responsibility (potential).Excessive focus on internal relations.Overemphasis on group decision making.Slow response to change (possible).© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Assessing structural alternativesEmerging structures:Process structure Type of departmentalisation where positions are grouped by a complete flow of work.Networked structure Form of organising where many functions are contracted out to other independent firms & coordinated by use of information technology networks to operate as if they were within a single corporation.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Weighing contingency factorsThe best structure for an organisation depends on contingency factors such as:TechnologySizeEnvironment.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Weighing contingency factorsTechnology:Technological complexity (Woodward)Unit & small batch productionLarge batch & mass productionContinuous process productionTechnological interdependence (Thompson)Pooled interdependenceSequential interdependenceReciprocal interdependence© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Weighing contingency factorsFour trendsWith growth:more departments,shift from functional to divisional formWith growth: more staff positionsto assist senior managementWith growth: tendency to decentralise (enabled by formalisation) With growth:additional rules & regulations (formalisation)© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Weighing contingency factorsStable environments, mechanisticNarrow tasks, prescribed tasks, hierarchical control, decision-making levels, communication vertical, instructions by superiors, loyalty to organisation & obedience to superiorsUnstable/uncertain environments, organicGeneral tasks, tasks subject to continuous negotiation, network control, decision making rests with those with knowledge, communication across & between levels, ‘supervision’ is information & advice, commitment to organisational goals, possession of expertiseLawrence & Lorsch: Balance of differentiation & integration© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Matching strategy & structureManagers must match strategy & structure toachieve effectiveness e.g:Niche differentiation: –narrow target marketCost leadership: –organisational efficiency, lower pricesMarket differentiation:– advertising, prestige pricing & market segmentationInnovative differentiation: –complex product or service innovations© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Promoting innovation Structure’s ability to support strategy can be enhanced by using structural means to encourage innovation. Innovation is critical to various differentiation strategies.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Promoting innovationFour major means of using organisationstructure to facilitate innovation are:Vital roles Idea champion, sponsor, orchestrator.Reservations Organisation units devoted to the generation of innovative ideas.Differential paradox Separating innovation process decreases chance of implementation.Transfer process The difficulty of translating ideas into products/services.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Lecture summaryOverview: Organisation structure designStrategy & structure closely linked.Factors influencing design: contingency factors, need for innovation.Assessing structural alternativesFunctional, divisional, hybrid, matrix, emerging structures.Weighing contingency factors Technology, size, environment.© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.Lecture summaryMatching strategy and structureStructure must match chosen strategy for effectiveness.Promoting innovationStructure may enhance innovation.Key factors: vital roles, reservations, differential paradox, transfer process. © 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.