Open System
Organizations take inputs from external environment, transform them, and send them back as outputs
- organizations need to learn to cope with the demand of environment in both input and output
What are the 6 components of external environment?
- Customers: what do customers want?
- Social/Political Factors: have to be sensitive to change of public opinion
- Economy: upturns and downturns
- Suppliers: need to get supplies from external environment like raw materials, equipment, and labour
- Competitors: competing for customers and supplies
- Technology: it is useful to adopt new technology for organization
Environment, Strategy, and Organizational Effectiveness
- Objective Organizational Environment:
- objective uncertainty and resources
-> managerial experience and personnel
- Perceived Organizational Environment:
- perceived uncertainty and resources - Strategy formula:
- vision, values, mission - Strategy Implementation:
- legitimacy establishment, structure, tech - Organizational Effectiveness
Vertical Division of Labor
- Concerned with the hierarchal levels of planning and decision making in an organization (who manages who)
Horizontal Division of Labor
- Concerned with specialization and departmentalization of basic tasks within an organization
What is departmentalization?
- A main component of horizontal division of labor
- assignment of jobs to departments
What are the 6 methods of departmentalization?
- Functional
- Product
- Matrix
- Customer
- Geographic
- Hybrid
What is Matrix Departmentation
- It is an attempt to combine both functional and product departmentation to capitalize on the strengths
- vice presidents for each responsibility/skill (HR, marketing, production, R&D)
- under each vice president there are managers for product A, B, C, D
- Matrix can also be based on geographic location instead of product
- remember the matrix diagram
Advantages of Matrix Departmentation
- flexible
- good communication between functional managers (VPs)
Disadvantages of Matrix Departmentation
- conflict between product/regional manager and functional manager
- managers need to be well trained
- role conflict and stress of employees bcuz they have to report to both functional and product manager
Liaison Role
- A person assigned to help coordination between departments
Task Force
- a group formed to help with coordination problems across departments
- once problems are solved, group is disbanded
- a representative from each department is included
Two other types of groups to help with coordination?
- self managed groups
- cross-functional groups
What is an integrator? What type of departments are they useful for?
- a person who is permanently assigned to help with coordination between departments
- they are useful for departments that:
1. operate in ambiguous environment
2. highly interdependent
3. have diverse goals and orientations
Who does an integrator report to?
- reports to an executive who are head of multiple departments
What type of power does an integrator have to rely on?
Expert power
- must speak the language of both departments
- must identify strongly with overall org. goals
Mechanistic Structure vs Organic Structure
Mechanistic: high centralization, formalization, tall and narrow span of control
Organic: decentralization wide span of control, less formalization
When does Mechanistic structures work and when does organic structures work?
Mechanistic:
- environment is stable
- technology is routine
Organic:
- when innovation is important
- more uncertainty in environment
- technology is changing
Ambidextrous Organization
One that exploits current competencies + explores emerging opportunities
- both organic and mechanistic
- hard to accomplish, tension between exploitation and exploration
- associated with innovation, good financial performance, longer survival
What is the most successful structure for achieving ambidexterity?
- the innovative unit has its own culture, structure, and processes but be integrated into the core of the firm from existing senior management
Network Organization
- functions are coordinated by MARKET MECHANISMS as well as managers/formal lines of authority
- emphasis placed on who can do what most effectively and economically
- two important things: diffusion of info and innovation
Virtual Organization
- an alliance between independent companies that share skills, costs, and access to each other’s markets (producers, designers, suppliers, distributors)
- companies offer up their best skills (core competencies)
- continually evolving independent companies
Types of Network Organizations?
- Stable Network (describe diagrams)
- Virtual Network (describe diagrams)
Porter’s 5 Forces
- Threats of New Entrant
- Power of Suppliers
- Rivalry
- Power of Buyers
- Threats of Substitute
