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CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 2 Organizational Environment The set of resources surrounding an organization.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 3 Forces that Affect Supply of Resources: Economic Forces Competitors Technological Forces Distributors Environmental Forces Customers International Forces Suppliers

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 4 FIGURE 16.1 Forces in an Organization's Environment

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 5 Organizational Environment - Key Terms Differentiation - measures the degree to which a function or division develops orientations that allow its members to manage the specific environmental force that each function or division is dealing with. Integration - the degree of coordination or mutual adjustment between functions.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 6 FIGURE 16.2 Using a Functional Structure to Manage Environmental Forces

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 7 FIGURE 16.3 The Effect of Uncertainty on Differentiation and Integration

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 8 Mechanistic Structure An organization structure that is designed so that individuals and functions behave in predictable ways and can be held accountable for their actions.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 9 Characteristics of Mechanistic Structures: Tall, centralized hierarchy of authority. Top-down communication and decision making. Great use of standardization; many detailed rules and standard operating procedures (S.O.P.s). Clearly specified tasks and roles and a defined division of labor.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 10 Organic Structure An organizational structure that is designed so that individuals and functions can behave flexibly and respond quickly to frequently changing and unusual situations.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 11 Characteristics of Organic Structures: Flat, decentralized hierarchy of authority. Lateral communication and decision making between people in different departments.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 12 Characteristics of Organic Structures: Great use of mutual adjustment: much face- to-face communication in task forces and teams. Deliberately ill-defined tasks and roles and a loose division of labor.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 13 Advice to Managers Analyze the set of forces in the environment surrounding your organization and the degree of uncertainty associated with each force.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 14 Advice to Managers Evaluate the way your organizational structure and culture are designed to manage these forces. Are the levels of differentiation and integration appropriate? Is your organization sufficiently mechanistic or organic?

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 15 Advice to Managers Implement organizational design changes that will improve your organization’s ability to respond to its environment.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 16 Technology The combination of human resources and raw materials and equipment that workers use to convert raw materials into finished goods and services.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 17 Woodward’s Model of Technology Small-batch technology Mass production technology Continuous-process technology

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 18 Small-Batch Technology Technology that relies on the skills and knowledge of individual workers to produce one-of-a-kind, customized goods and services or small quantities of goods and services.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 19 Mass Production Technology Technology that results in the production of large numbers of identical products.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 20 Continuous-Process Technology Technology in which the manufacturing process is entirely mechanized and the workers’ role is to monitor the machines and computers that actually produce the goods.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 21 Thompson’s Technological Types Mediating Technology Long-Linked Technology Intensive Technology

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 22 Mediating Technology Technology that links independent but standardized tasks.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 23 Long-Linked Technology Technology that is applied to a series of programmed tasks performed in a predetermined order.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 24 Intensive Technology Technology that is applied to tasks that are performed in no predetermined order.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 25 FIGURE 16.4 Types of Technology Identified by Thompson

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 26 Perrow’s Model of Technology Task Variety - the number of new and different demands that a task places on an individual or a function. Task Analyzability - the degree to which standardized solutions are available to solve problems that arise.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 27 Perrow’s Model of Technology Routine Manufacturing - high task analyzability; low task variety Craftswork - low task analyzability; low task variety Nonroutine Research - low task analyzability; high task variety Engineering Production - high task analyzability; high task variety

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 28 FIGURE 16.5 Perrow's Model of Technology Source: Adapted from C. Perrow, Organizational Analysis: A Sociological View (Belmont, Calif.: Wadsworth, 1970), p. 78.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 29 Advice to Managers Use Woodward’s, Thompson’s, and Perrow’s frameworks to identify the main contingencies associated with operating the technologies in your organization. Decide whether your organization’s current structure and culture are matched to the needs of your technology.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 30 Advice to Managers Implement any changes in organizational design such as decentralizing authority or raising the level of integration by empowering workers, that may allow you to operate your technology more effectively.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 31 Types of Organizational Strategies Cost Leadership Strategy - aims to attract customers with low prices that are made possible by low costs. Differentiation Strategy - aims to attract customers with unique or distinctive goods and services.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 32 Types of Organizational Strategies Focused Cost-Leadership Strategy - aims to attract one kind of customer or group of customers with a low-cost product. Focused Differentiation Strategy - aims to attract one kind of customer or group of customers with a differentiated product.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 33 FIGURE 16.6 Types of Organizational Strategies

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 34 Organizational Design - Potential Benefits: Increased Efficiency Increased Quality Increased Innovation and Creativity Increased Responsiveness to Customers

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 35 Advice to Managers Evaluate the way you are currently pursuing your strategy, and decide how you might improve efficiency, quality, innovation, or customer responsiveness to increase performance. Consider implementing a T.Q.M. program to discover ways to increase performance.

CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 36 Advice to Managers Evaluate how your organization’s structure and culture are helping or hurting organizational performance, and implement any organizational design changes that will help to increase your competitive advantage.