Organizational Structure F Need to create division of labor F Need to integrate these groups to ensure organizational effectiveness F Dimensions of Macro Structure F Microstructure Management Dimensions and Processes

Firm Growth as Evolutionary Process Single Business Geographic Diversification (Foreign Sales as %Total Sales) Product Diversification (Product Diversity) Product and Geographic Diversification

Horizontal Differentiation F degree to which tasks are divided into distinct homogeneous groups –function-wise –geographic-wise –product-wise –production stage-wise

Vertical Differentiation F Number of levels within the organization

Spacial Dispersion F Degree to which activities are located in different areas

Pressures for Global Efficiency and Centralization Pressures for Local Responsiveness and Decentralization High Low High Low Horizontal Differentiation? Vertical Differentiation? Spacial Dispersion? Structure Follows Strategy

Export U.S. Germany Mexico Malaysia

Functional Structure w/ International Sales Division

Multidomestic U.S. Germany Mexico Malaysia

Geographic Structure

Pure Global U.S. Germany Mexico Malaysia

Global Functional Structure For Single-business Firms

Product Division Structure For Product-diversified Firms

Transnational (1) U.S. Germany Mexico Malaysia

Matrix Structure (A)

Matrix Structure (B)

Transnational (2) U.S. Germany Mexico Malaysia Engines Final Assembly Trim, seats, glass Steel

Matrix Structure (B)

Mixed Structure

Stopford-Wells Structure Model Product Diversity Lo Hi Foreign Sales as % of Total Sales 0% 100% Intl. Division Product Divisions Geographic Divisions Mixed / Matrix / Network

Formalization F Degree to which rules, procedure, lines of authority/responsibility are enunciated or specified F More formality: eliminates confusion and uncertainty, limits creativity and innovation F Less formality: imbues flexibility, creative solutions.

Centralization F Degree to which authority and decision making is at higher levels of the organization F Centralized: tight org control, managers are order-takers F Decentralized: managers closest to product and/or customer able to make decisions

Data Management Control Mechanisms F Information systems F Measurement systems F Resource allocation procedures F Strategic planning F Budgeting processes

Managers’ Management Control Mechanisms F Choice/selection of key managers F Career paths F Rewards and punishment systems F Management development F Patterns of socialization

Organizational Learning/ Conflict Resolution Control Mechanisms F Decision responsibility assignments F Integrators F Transnational teams F Coordination committees F Task forces

Decentralized Federation Configuration Model Flows? Controls?

Changing Role of Top Management F Paradoxes…how to be: – global and local –big and small –centralized and decentralized F Old way…strategy-structure-systems: –chief strategist –structural architect –information and control systems

Vertical Structural Hierarchy F Top-down view: –order, symmetry, uniformity –neat decomposition of tasks & responsibilities F Bottom-up view: –reporting lines –documentation –reviews F The organization has its face toward the CEO and its ass toward the customer. –Jack Welch, CEO General Electric

Structural Management of a Portfolio of Processes F Entrepreneurial process F Competence-building process F Renewal process

Entrepreneurship F Def.: externally-oriented, opportunity- seeking, ownership-motivated F Employees are most important asset F Grow and divide principal F 25-5 rule F The market is far better judge of new products than some analyst or manager

Competence-Building F Traditional role…cross-unit “matchmaker” F New role…informational conduit, facilitator (on-line dating) F Kao’s VAN: dense info network linking mfg, mkt, R&D, engineering, etc. –sift through data for customer clues and latent technologies F Intel’s “crisis support” culture

Renewal F Reduce complacency F Groves: Only the Paranoid Survive F An organization should stretch itself to the point where it almost becomes unglued –Jack Welch, CEO General Electric F ABB: Challenge business units with scenario-planning exercises F New 3M CEO’s: 30-5 rule