Presentation Slides to Accompany Organizational Behavior 10th Edition Don Hellriegel and John W. Slocum, Jr.

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Presentation Slidesto AccompanyOrganizational
Behavior 10th EditionDon Hellriegel and John W.
Slocum, Jr.
Chapter 14Designing Organizations

• Prepared by
• Michael K. McCuddy
• Valparaiso University

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Learning Objectives forDesigning Organizations

• Explain how environmental, strategic, and
  technological factors affect the design of
  organizations
• State the differences between mechanistic and
  organic organizations
• Describe four traditional organization
  designsfunctional, place, product, and
  multidivisional
• Describe three contemporary organization
  designsmultinational, network, and virtual

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Important Factors in anOrganizations
Environment

• Suppliers
• Distributors
• Competitors
• Customers

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Strategies for Building aCompetitive Advantage

• Low-cost strategy
• Based on an organizations ability to provide a
  product or service at a lower cost than its
  rivals
• Differentiation strategy
• Based on providing customers with something
  unique and makes the organizations product or
  service distinctive from its competition

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Strategies for Building aCompetitive Advantage

• Focused strategy
• Designed to help an organization target a
  specific niche in an industry, unlike both the
  low-cost and differentiation strategies, which
  are designed to target industrywide markets

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Types of Task Interdependencein Organization
Design
Pooled
Sequential
Reciprocal


C
C
C




A
A
A
B
B
B
Complex
Simple
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Organization Design Options
Virtual Design
Complex
Network Design
Multinational Design
Multidivisional Design
Environmental Factors
Product Design
Place Design
Simple
Functional Design
Pooled
Reciprocal
Technological Factors
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Mechanistic and Organic Organizations

• Mechanistic organization
• Characterized by a reliance on formal rules and
  regulations, centralization of decision making,
  narrowly defined job responsibilities, and a
  rigid hierarchy of authority
• Organic organization
• Characterized by low to moderate use of formal
  rules and regulations, decentralized and shared
  decision making, broadly defined job
  responsibilities, and a flexible authority
  structure with fewer levels in the hierarchy

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Characteristics of Bureaucracy

• The organization operates according to a set of
  rules that are intended to tightly control
  employees behavior
• All employees must carefully follow extensive
  impersonal rules and procedures in making
  decisions
• Each employees job involves a specified area of
  expertise, with strictly defined obligations,
  authority, and powers to compel obedience

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Characteristics of Bureaucracy

• Each lower-level position is under the tight
  control and direction of a higher one
• Candidates for jobs are selected on the basis of
  technical qualifications
• The organization has a career ladder promotion
  is by seniority or achievement and depends on the
  judgment of superiors

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Organic and MechanisticDesign Features

• Hierarchy of authority
• Centralization
• Division of labor
• Rules
• Procedures
• Impersonality
• Chain of command
• Unity of command
• Span of control

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Organizational Uses ofFunctional Design

• Permits clear identification and assignment of
  responsibilities
• Employees easily understand the design
• People doing similar tasks and facing similar
  problems work together, thus increasing the
  opportunities for interaction and mutual support
• Employees tend to lose sight of the organization
  as a whole
• Coordination across functional departments often
  becomes difficult

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Organizational Uses ofFunctional Design

• With the exception of marketing, most employees
  have no direct contact with customers and may
  lose sight of the need to meet or exceed customer
  expectations
• May be effective when the organization
• Has a narrow product line
• Competes in a uniform environment
• Pursues a low-cost or focused business strategy
• Does not have to respond to the pressures of
  serving different types of customers

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Organizational Uses of Place Design

• Each department or division is in direct contact
  with customers in its locale and can adapt more
  readily to their demands
• Lower costs for materials, freight, and perhaps
  labor may result
• Marketing strategies and tactics can be tailored
  to geographic regions
• Control and coordination problems increase
• Employees may begin to emphasize their own units
  goals and needs rather than those of the entire
  organization

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United Technologies
CEO
Otis Elevators Escalators Moving walks
UT Auto- motive Automotive electrical
systems Electric motors Automotive
interior exterior trim
Flight Systems Helicopters Propellers Space
life support systems
Carrier Heating air conditioning
Building controls Refriger- ation
equipment
Pratt Whitney Jet engines Rocket
engines Industrial gas turbines
Source http//www.utc.com
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Organizational Uses ofProduct Design

• Reduces the information overload that managers
  face in a purely functional design
• More effective handling of the business is
  possible
• Addition of product lines, diverse customers, and
  technological advances increases the complexity
  and uncertainty of an organizations business
  environment
• Product design may incorporate features of
  functional and place designs into the
  organization of each product division

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Organizational Uses ofMultidivisional Design

• Eases problems of coordination by focusing
  functional expertise and knowledge on specific
  goods or services
• A firm must have a large number of managerial
  personnel to oversee all the product lines
• Higher costs result from the duplication of
  various functions
• Often reduces the environmental complexity facing
  any one team, department, or division
• Horizontal mechanisms help in dealing with
  complex environments

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Basic Options in Multinational Design
Functions
Functions
Marketing
Manufacturing
Product line
Finance
Human Resources
Others
Place
Country or Region Organization
Global Product Organization
Matrix
Country Responsiveness, Adaptation, Competitors,
Manufacture, Customer
Global Integration, Products, Competitors, Factori
es, Customers
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Organizational Uses ofMultinational Design

• Worldwide product-line divisions will be more
  dominant than geographically based divisions
  under certain conditions
• A worldwide product-line division may not be as
  effective at opening up new territories as a
  geographically organized division
• A division operating under a place design often
• Can establish relations with host governments
• Invest in distribution channels
• Develop brand recognition
• Build competencies that no single product-line
  division could afford

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Key Elements of Network Design

• Distinctive competence
• Responsibility
• Goal setting
• Communication
• Information technology
• Organization design
• Balanced view

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Organizational Uses ofNetwork Design

• Effective in creating alliances of flexible
  partnerships
• Can create successful external relationships
  through
• Importance
• Investment
• Interdependence
• Integration
• Information
• Institutionalization

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Key Developments inInformation Technology

• Open systems
• Distributed computing
• Real time
• Global networking

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Organizational Uses of Virtual Design

• Structure can be changed quickly to meet changing
  conditions and situations
• Boundaries between an organization and its
  customers and suppliers are blurred
• Employees continually master new manufacturing
  and information technologies, speeding the
  production process and the flow of information
  through the organization

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Organizational Uses of Virtual Design

• Employees respond quickly to changing customer
  demands with customized products and services
  available at any time and place
• Employees are reciprocally interdependent
• Managers delegate authority and responsibility to
  employees while providing a clear vision of the
  organizations purpose and goals