mgmt 310 ch 7 - organizational design


primary mechanisms by which indivs and firms come together to create a desired outcome

organizational design

the formal systems, levers and decisions and organization adopts in pursuit of its strategy

cost leadership org design employs

a. operational efficiency
b. cost reduction
c. internal alignment integration

differentiation strategy employs

a. innovation
b. creativity
c. flexibility
d. speed

division of labor

how work in a firm is divided amongst employees

vertical specialization

how much an employee creates, executes and administers activities in a certain area of the firm

horizontal specialization

wide range of activities performed in a certain job


more control is warranted in organizational design to ensure that jobs are performed satisfactorily and efficiently (specific definitions of roles and responsibilities)


less control, open organizational structure where roles and responsibilities are loosely defined

clan approach

self supervising teams responsible for a set of tasks
a. self regulation can be a good thing
b. uncertain conditions and work activities are difficult to measure

bureaucracies are good for

large orgs in steady environment

organizational structure

pattern of org roles, procedures and relationships that enable coordinated action amongst employees

3 primary functions of org structure

1. defines roles of labor force
2. coordination of activities
3. defines borders of firm

functional form

a. organizes by main activities that need to be formed
b. good for small business, bus with limited products/services
c. efficient
d. unable to change with environment

functional organizational structure

-R & D

network form

a. "knowledge workers" organized to work as indiv contributors
b. informal structure
c. very adaptable to environmental changes
d. duplication of resources

mutual adaptation

process by which firms impact the industry environment then adapt to the changes made,critically important in industries where change is a constant, such as technology and fashioin


structural mechanisms and process that allows workers to coordinate activities to bring value to customers


informal methods such as culture and incentives to get employees to bring more value to cusomer

capability development

building skills needed to help customer


making relationships with parties outside the firm


unit operating on own rules and does not share info

Bureaucratic Approach

An extreme form of organizational control in which systems are highly formalized and are characterized by extensive rules, procedures, policies, and instructions (WATCHED LIKE A HAWK)

Divisional Structure

groups diverse functions into separate divisions

Matrix Structure

both divisional and functional managers have equal authority in the organization

network structure

knowledged workers are organized to work as individual contributors or to be a part of a work cluster that provides a certain expertise for the organization

Functions of an Organization

-Defines the roles of the labor force
-Coordinates activities between members
-Identifies the borders of the firm and external relationships

Divisional Form

-Can be organized around products, geographies, or clients
- Each division is accountable for its own profit and loss

Matrix Form

-Combines the positive elements from different organizational configurations too:
-Cope with strong environmental pressures
-Assist complex internal interrelationships
To facilitate optimized performance uses:
-Technological expertise within functions

Decision Rights

rights that include, initiation, approving, implementing, and controlling various types of strategic or tactical decisions


the process by which managers transfer decisions rights to individual employees

Centralized Organization

org. structure characterized by formal structure that control employee behavior by concentrating decisions in a top-down, hierarchinal fashion

Decentralized Organization

org. structure where key decisions are made at all levels of the firm, not mandated from the top

Informal Structures

contribute in defining an organization, develop over a period of time, not listed in the firm's bylaws or management practices

Role of leadership across Life-Cycle Stages

1. Start-Up
2. Growth
3. Decline

Start Up

-Opportunity identification
-Focus on innovation
-Access to capital


-Consolidation and control


-Cost Management

Ambidextrous Organizations

-Maintain efficiency in current strategic operations while preparing for imminent changes
-create a seperate team to work on future opportunities while the rest of the firm focuses on the primary business
Advantage: creates a forum for innovation and crea

When organizational efficiency is imperative, what is the best coordinating mechanism?

Bureaucratic Approach

Proctor and gamble most likely has what kind of structure?


In business, "silos" refer to

Organizational groups that exhibit territoriality and do not share information

Companies that seek to pursue a cost leaderships strategy will most likely make organizational design decisions that emphasize:

Operational Efficiency

________ is defined as the extent to which an employee creates, executes, and administers activities in a certain area of a firm.

Vertical Specialization

What is a true statement of a clan approach to control?

It is ideal for organizations that have constantly changing environments

Which of the following is a disadvantage of a functional organizational structure?

it is not suited to deal with the environmental changes in an organization

Which of the following is a valid difference between a divisional and a functional organizational structure?

In divisional structures, core functions are often duplicated in each division

What organizational structure is most likely to have the highest levels of accountability?


The process by which managers transfer decision rights to individual employees is known as _______.


An organizational structure characterized by formal structures that control employee behavior in a top-down, hierarchical fashion is known as a:

centralized organizational structure

As a firm matures and grows in size, it tends to emphasize:

division in labor

_________ involves developing relationships with parties outside a firm to increase the value of the firm's offerings


A firm can become more customer-centric by:

developing a cooperative environment in which workers are rewarded for busting through silos to deliver customer solutions