11-1

Session 20

Implementing Strategy Through

Restructuring and Reengineering
the Companys Structure
 11-2

Learning Objectives
1. Identify four traditional organizational structures
and the pros and cons of each
2. Characterize differences between views on
traditional 20th Century organizational structures
and 21st century organizational structure needs
3. Explain how outsourcing can create agile, virtual
organizations, along with its pros and cons
4. Explain what is meant by boundaryless
organizations and why they are important
5. Explain the dimensions of restructuring
 11-3
Traditional Organizational
Structures
Organizational structure refers to the formalized
arrangement of interaction between and
responsibility for the tasks, people, and resources
in an organization
It is most often seen as a chart,
often a pyramidal chart, with
positions or titles and roles
in cascading
fashion
 11-4
New Winthrop Organization Chart
Board Of Trustees

Office of the President

Internal Trustee & Presidential

Audit Support

Public
Lifelong Learning Institute
Affairs

Intercollegiate University Public

Athletics Events Events

University University Development Finance & Academic Student

Advancement & Alumni Relations Business Affairs Life

University Enrollment Educational Facilities Design Facilities College of Library Residence Student
Development
Relations Management Foundation and Development Management Arts & Sciences Services Life Affairs

Printing Alumni Real Estate College of Institutional Dining

Admissions Information Technology Human Resources Career Development
Services Relations Foundation Business Administration Effectiveness Services

Marketing Student Financial Procurement & College of Records & Campus Health & Counseling
Recruitment Aid Risk Management Education Registration Police Services

Winthrop Real Estate Budgeting & College of Visual Sponsored Programs

Bookstore
Management Financial Accounting & Performing Arts & Research

University
Post Office
College

February 20, 2007 Graduate

February 20, 2007 Studies
 11-5

Simple Organizational Structure

A simple organizational structure is one where
there is an owner and a few employees and where
the arrangement of tasks, responsibilities, and
communication is highly informal and
accomplished through direct supervision
This type of structure can be very demanding on
the owner-manager
Most businesses in this country and around the
world are of this type
 11-6

Functional Organizational Structure

A functional organizational structure is one on
which the tasks, people, and technologies
necessary to do the work of the business are
divided into separate functional groups (such as
marketing, operations, and finance) with
increasingly formal procedures for coordinating
and integrating their activities to provide the
businesss products and services
 11-7

Functional Organization Structures

 11-8

Divisional Structure
A divisional organizational structure is one in which a
set of relatively autonomous units, or divisions, are
governed by a central corporate office but where each
operating division has its own functional specialists who
provide products or services different from those of other
divisions
This expedites decision making in response to varied
competitive environments
The division usually is given profit responsibility
 11-9

Divisional Organization Structure

 11-10

Strategic Business Unit

The strategic business unit (SBU) is an
adaptation of the divisional structure whereby
various divisions or parts of divisions are grouped
together based on some common strategic
elements, usually linked to distinct product/market
differences
The advantages and disadvantages of the SBU
form are very similar to those identified for
divisional structures
 11-11

Holding Company Structure

A final form of the divisional organization is the
holding company structure, where the corporate
entity is a broad collection of often unrelated
businesses and divisions such that it (the corporate
entity) acts as financial overseer holding the
ownership interest in the various parts of the
company but has little direct managerial
involvement
 11-12

Matrix Organizational Structure

The matrix organizational structure
is one in which functional and staff
personnel are assigned to both a basic
functional area and to a project or
product manager
The matrix form is intended to make
the best use of talented people within
a firm by combining the advantages of
functional specialization and product-
project specialization
 11-13

Matrix Organizational Structure

 11-14

Product-Team Structure
The product-team structure seeks to simplify
and amplify the focus of resources on a narrow but
strategically important product, project, market,
customer, or innovation
The product-team structure assigns functional
managers and specialists to a new product,
project, or process team that is empowered to
make major decisions about their product
 11-15

The Product-Team Structure

 11-16

What a Difference a Century Makes

 11-17
Trends Affecting Organizations
st
in the 21 Century

Globalization

The Internet

Speed
 11-18
Efforts to Improve
Traditional Structures
Redefine the role of corporate headquarters from
control to support and coordination
Balance the demands for control/differentiation
with the need for coordination/integration
Restructure to emphasize and support strategically
critical activities
Reengineer strategic business processes
Downsize and self-manage
 11-19
Creating Agile, Virtual
Organizations
Virtual organization: a temporary network of
independent companiessuppliers, customers,
subcontractors, even competitorslinked
primarily by information technology to share
skills, access to markets, and costs
An agile organization is one that identifies
a set of business capabilities central to high-
profitability operations and then builds a virtual
organization around those capabilities
 11-20
OutsourcingCreating
a Modular Organization
Outsourcing is simply obtaining work previously
done by employees inside the companies from
sources outside the company
A modular organization provides products or
services using different, self-contained specialists
or companies brought togetheroutsourcedto
contribute their primary or support activity to
result in a successful outcome
Business process outsourcing (BPO) is the most
rapidly growing segment of the outsourcing
services industry worldwide
 11-21

Types of Boundaries
Horizontal boundariesbetween different
departments or functions in a firm.
Vertical boundariesbetween operations and
management, and levels of management, between
corporate and division
Geographic boundariesbetween different
physical locations; between different countries or
regions of the world and between cultures
External interface boundariesbetween a
company and its customers, suppliers, partners,
regulators, and competitors
 11-22

Becoming Boundaryless
Jack Welch coined the term boundaryless to
illustrate his vision for GE
Outsourcing, strategic alliances, product-team
structures, reengineering, restructuringall are
ways to move toward boundaryless organization
Technology, particularly driven by the Internet,
has and will be a major driver of the boundaryless
organization
 11-23
Ambidextrous Learning
Organization
The evolution of the virtual organizational
structure as an integral mechanism managers use
has brought with it recognition of the central role
knowledge plays in implementation
The shift from exploitation to exploration (Ragan)
indicates the growing importance of organizational
structures that enable a learning organization to
allow global companies the chance to build
competitive advantage
An ambidextrous organization emphasizes
coordination over control as well as flexibility