1. Alternative Organizational Structures
What are alternative ways to design an organizational structure?
What are the advantages and disadvantages of various design alternatives ?
How do we make these choices in light of organizational context?
External environment
Organizational life-cycle
Organizational technology

2. Functional Structures
Strengths:
Economies of scale
in-depth skill development
Stable Environment
Routine Technology
Weaknesses:
Slow in responding environment
Hierarchy overload
Poor horizontal coordination
Emphasis on functional goals
Less emphasis on innovation

3. Divisional Structures
Structures that are uni-focussed in that the divisions
are organized according to product groups, services,
geography,programs, or markets.
Product Structure (Self contained product groups structure)
Geographic Structure
Market Structure

4. Self contained product groups structure
Strengths:
increases coordination across functions
allows adaptations
decentralizes decision making
accommodates large size
Weaknesses:
reduces coordination across product lines
reduces economies of scale
reduces specialization
reduces standardization

5. Geographic Structure

6. Divisional Market Structure

7. Hybrid Structures Product division structure Multidivisional structure
Structures that are multi-focussed in that both
product and function, or product and geography,
are emphasized at the same time.
Product division structure
Multidivisional structure
Product team structure

8. Product division structure

9. Multidivisional structure

10. Product team structure
Product Development
Teams
PTM
Product Div..

11. Generic Hybrid Structures
Product Division Advantages
More adaptive at division level without sacrificing efficiency in centralized functions
Better alignment between functional and divisional goals Disadvantages
Higher administrative overhead
Misalignment between vertical & horizontal coordination
Multi-Divisional
Advantages
More sophisticated control & integration systems
Better capital resource allocation decisions
corporate level can focus on long-term strategies Disadvantages
Measurement of divisional performance
New layers in management
Product Team
Advantages
Higher decentralization
Higher integration at team level
responsive to market demands and shorter development time Disadvantages
Limited coordination across teams
Loss of corporate control

12. Matrix Structure Strengths Reduces functional barriers
Increases communication
Flexible use of human resources
Product & functional focus
Weaknesses
Lacks stable control structure
Ambiguity of dual authority
Time consuming
May increase costs

13. A Critical Contextual Factor: THE EXTERNAL ENVIRONMENT
Why is it important?
Need for INFORMATION
Need for RESOURCES
How is it conceptualized? The Critical Dimensions of Environment
Complexity (Homogeneous ---- Heterogeneous)
Dynamism (Stable ---- Unstable)
Munificence (Resource Rich ---- Resource Poor)
Organization of the environment (Market Structure)

14. Environmental Dimensions and Organizational Design
Internal Strategies
Specialization
Buffering
Departments
Centralization
Coordination
Standardization
Complexity
Contingency
Perspective
Dynamism
Task
Environment
External Strategies
Strategic alliances
Cooptation
Interlocking directorates
Executive recruitment
Public relations
Mergers & Acquisitions
Political activity
Trade Associations
Munificence
Resource
Dependency
Perspective
Market Str.

15. Pharmaceutical Industry
Years between the launch of a drug
and its first competitor
Internal Strategies
Supply chain management
Reduction of inventories
Strategic sourcing
Advertising directly to consumers
Differentiated advertising

16. Strategies for managing environmental Uncertainty
Add new positions and departments as the task (Specific) environment becomes more complex.
Establish buffer mechanisms to protect the technical core of the organization from environmental changes.
Create new boundary roles that monitor the environmental demands.

17. Strategies for Managing Symbiotic Interdependencies
Symbiotic interdependencies arise when the output of one organization is input for another.
Interorganizational Strategies:
Developing a good reputation
Co-optation
Strategic alliances
Long-term contracts
Networks
Minority ownership
Joint-ventures
Mergers, takeovers, and vertical integration

18. Strategies for Managing Competitive Interdependencies
Competitive interdependencies arise when organizations compete for similar scarce inputs or outputs.
Interorganizational Strategies
Collusion and cartels
Trade associations
Political activity (Regulations and lobbying)
Strategic alliances
Mergers and takeovers