Presentation Slides

Environmental Behavior Design.

to Accompany

Prepared by Nghia D. Tran

Learning Objectives for Designing Organizations

Explain how environmental, strategic, and

technological factors affect the design of organizations

State the differences between mechanistic and

organic organizations
Describe four traditional organization designs

functional, place, product, and multidivisional

Describe three contemporary organization designs

multinational, network, and virtual

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Important Factors in an Organizations Environment

Suppliers Distributors Competitors Customers

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Strategies for Building a Competitive Advantage

Low-cost strategy
Based on an organizations ability to provide a product or service at a lower cost than its rivals

Differentiation strategy
Based on providing customers with something unique and makes the organizations product or service distinctive from its competition
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Strategies for Building a Competitive Advantage

Focused strategy
Designed to help an organization target a specific niche in an industry, unlike both the low-cost and differentiation strategies, which are designed to target industrywide markets

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Types of Task Interdependence in Organization Design

Pooled
C

Sequential
C

Reciprocal
C

Simple
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Complex

Organization Design Options

Virtual Design Complex

Network Design

Environmental Factors

Multinational Design Multidivisional Design Product Design Place Design Functional Design Pooled

Simple

Technological Factors
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Reciprocal

Mechanistic and Organic Organizations

Mechanistic organization
Characterized by a reliance on formal rules and regulations, centralization of decision making, narrowly defined job responsibilities, and a rigid hierarchy of authority

Organic organization
Characterized by low to moderate use of formal rules and regulations, decentralized and shared decision making, broadly defined job responsibilities, and a flexible authority structure with fewer levels in the hierarchy
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Characteristics of Bureaucracy

The organization operates according to a set

of rules that are intended to tightly control employees behavior All employees must carefully follow extensive impersonal rules and procedures in making decisions Each employees job involves a specified area of expertise, with strictly defined obligations, authority, and powers to compel obedience
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Characteristics of Bureaucracy

Each lower-level position is under the tight

control and direction of a higher one

Candidates for jobs are selected on the basis

of technical qualifications
The organization has a career ladder;

promotion is by seniority or achievement and depends on the judgment of superiors

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Organic and Mechanistic Design Features

Hierarchy of authority Centralization Division of labor Rules Procedures Impersonality Chain of command Unity of command Span of control
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Organizational Uses of Functional Design

Permits clear identification and assignment of

responsibilities Employees easily understand the design People doing similar tasks and facing similar problems work together, thus increasing the opportunities for interaction and mutual support Employees tend to lose sight of the organization as a whole Coordination across functional departments often becomes difficult
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Organizational Uses of Functional Design

With the exception of marketing, most employees

have no direct contact with customers and may lose sight of the need to meet or exceed customer expectations May be effective when the organization:

Has a narrow product line Competes in a uniform environment Pursues a low-cost or focused business strategy Does not have to respond to the pressures of serving different types of customers

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Organizational Uses of Place Design

Each department or division is in direct contact

with customers in its locale and can adapt more readily to their demands Lower costs for materials, freight, and perhaps labor may result Marketing strategies and tactics can be tailored to geographic regions Control and coordination problems increase Employees may begin to emphasize their own units goals and needs rather than those of the entire organization
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United Technologies
CEO

Pratt & Whitney

* Jet engines * Rocket engines * Industrial gas turbines

Carrier
* Heating & air conditioning * Building controls * Refrigeration equipment

Otis
* Elevators * Escalators * Moving walks

UT Automotive
* Automotive electrical systems * Electric motors * Automotive interior & exterior trim

Flight Systems
* Helicopters * Propellers * Space life support systems

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Organizational Uses of Product Design

Reduces the information overload that managers face in

a purely functional design

More effective handling of the business is possible Addition of product lines, diverse customers, and

technological advances increases the complexity and uncertainty of an organizations business environment
Product design may incorporate features of functional

and place designs into the organization of each product division

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Organizational Uses of Multidivisional Design

Eases problems of coordination by focusing

functional expertise and knowledge on specific goods or services A firm must have a large number of managerial personnel to oversee all the product lines Higher costs result from the duplication of various functions Often reduces the environmental complexity facing any one team, department, or division Horizontal mechanisms help in dealing with complex environments
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Basic Options in Multinational Design

Product line

Place

Country or Region Organization

Country Responsiveness, Adaptation, Competitors, Manufacture, Customer

Matrix

Global Product Organization

Global Integration, Products, Competitors, Factories, Customers

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Organizational Uses of Multinational Design

Worldwide product-line divisions will be more

dominant than geographically based divisions under certain conditions A worldwide product-line division may not be as effective at opening up new territories as a geographically organized division A division operating under a place design often:

Can establish relations with host governments Invest in distribution channels Develop brand recognition Build competencies that no single product-line division could afford
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Key Elements of Network Design

Distinctive competence Responsibility Goal setting Communication Information technology Organization design

Balanced view

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Organizational Uses of Network Design

Effective in creating alliances of flexible partnerships
Can create successful external relationships through:
Importance Investment Interdependence

Integration
Information Institutionalization
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Key Developments in Information Technology

Open systems Distributed computing Real time Global networking

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Organizational Uses of Virtual Design

Structure can be changed quickly to meet

changing conditions and situations Boundaries between an organization and its customers and suppliers are blurred Employees continually master new manufacturing and information technologies, speeding the production process and the flow of information through the organization
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Organizational Uses of Virtual Design

Employees respond quickly to changing

customer demands with customized products and services available at any time and place Employees are reciprocally interdependent Managers delegate authority and responsibility to employees while providing a clear vision of the organizations purpose and goals
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