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Explain what is meant by organization architecture. The organization is comprised of the formal organizational structure, the control systems, incentive systems, organizational culture, and the people— known as the organization architecture. |
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Explain the advantages and disadvantages of centralization and decentralization. Organizational decisions are either made at the higher management levels (centralization) or at lower-levels (decentralization). The type of organizational environment will dictate which decision structure to operate under. For example, an environment with high uncertainty and rapid change works best under a decentralized structure. A decentralized structure’s advantages include freeing up overburdened top management, a motivated employee environment, greater flexibility and decision response, better decisions, and increased autonomous subunits. Advantages of a centralized structure include better coordination of tasks, consistency within the organization, avoidance of duplication, and transformation and directional change ability. |
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Discuss the pros and cons of tall versus flat structures. The size of an organization and the nature of the organization’s industry determine whether the organization will have many layers of management (tall structures) or fewer layers of management (flat structures). As an organization expands, processes, tasks, and people increase to meet the growing needs of the organization. Because of these increases, layers of management may need to be added in order for the organization to maintain control and avoid being stretched too thin. However, with the tall management structures comes the possible disadvantage of information distortions, expensive duplication of efforts, delayed decisions, and increased overhead costs. |
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Outline the different kinds of structure a firm can operate within and explain how strategy should determine structure. Horizontal differentiation describes the structure of the firm and displays how organizations are divided into subunits. The simplest structure, functional, works best for firms with a single line of business and whose focus is in one geographic location. Multidivisional structures works best for firms with many product divisions that need decentralized decision-making capabilities. Geographic structures are for firms spread out geographically and require specialized attention to each region. Hybrid geographic-functional structures work best for firms that are geographically dispersed and are engaged in several different businesses. The matrix structures are for global firms that are geographically dispersed that require focus for each national and regional market. |
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Describe the different integrating mechanisms managers can use to achieve coordination within a firm, and explain the link between strategy, environment, and integrating mechanisms. The structure of the firm creates the challenge of coordinating activities among subunits, thus requires different integrating mechanisms to solve the challenge. The formal integrating mechanism is used for structures with the need for direct contact between subunits, team networks, and matrix structures. Informal knowledge networks are integrating systems used in firms with high integration needs that value teamwork structures and cross-unit cooperation. Strategy and coordination systems work best in firms with high product innovation needs that requires coordination between R&D, manufacturing and marketing functions. |