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Part 3 Strategy Implementation
Part 3 Strategy Implementation		 Zappos: Success through customer service Customer service all in-house
Zappos: Success through customer service Customer service all in-house		 Zappos: Success through customer service Customer service all in-house
Zappos: Success through customer service Customer service all in-house		 Zappos: Success through customer service Customer service all in-house
Zappos: Success through customer service Customer service all in-house		 Zappos’ Core Values
Zappos’ Core Values
Zappos’ Core Values
Zappos’ Core Values		 Zappos’ Core Values
Zappos’ Core Values
How to Organize for Competitive Advantage
How to Organize for Competitive Advantage		 Organizational inertia Resistance to change Often leads to failure
Organizational inertia Resistance to change Often leads to failure		 Organizational Inertia
Organizational Inertia		 The Key Elements of Organizational Structure
The Key Elements of Organizational Structure		 The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure
The Key Elements of Organizational Structure		 The Key Elements of Organizational Structure
The Key Elements of Organizational Structure		 W. L. Gore & Associates: Informality and Innovation
W. L. Gore & Associates: Informality and Innovation		 W. L. Gore & Associates: Informality and Innovation
W. L. Gore & Associates: Informality and Innovation		 W. L. Gore & Associates: Informality and Innovation
W. L. Gore & Associates: Informality and Innovation
Assembling the Pieces: Mechanistic vs
Assembling the Pieces: Mechanistic vs		 Mechanistic vs
Mechanistic vs		 Matching Strategy and Structure
Matching Strategy and Structure		 Changing Organizational Structures and Increasing Complexity as Firms
Changing Organizational Structures and Increasing Complexity as Firms		 Functional Structure
Functional Structure
Typical Functional Structure
Typical Functional Structure		 Matching Business Level Strategy and Structure
Matching Business Level Strategy and Structure		 USA Today: one of the widest print circulations in U.S. USA Today
USA Today: one of the widest print circulations in U.S. USA Today		 USA Today: one of the widest print circulations in U.S. USA Today
USA Today: one of the widest print circulations in U.S. USA Today		 Functional Strategy: Drawbacks
Functional Strategy: Drawbacks
Multidivisional Structure
Multidivisional Structure		 Multidivisional Structure
Multidivisional Structure		 Typical M-Form Structure
Typical M-Form Structure		 Multidivisional Structure
Multidivisional Structure		 Matching Corporate-Level Strategy
Matching Corporate-Level Strategy
Typical (Global) Matrix Structure
Typical (Global) Matrix Structure		 Matching Global Strategy and Structure
Matching Global Strategy and Structure		 Organizational Culture: Values, Norms, and Artifacts
Organizational Culture: Values, Norms, and Artifacts		 Where Do Organizational Cultures Come From
Where Do Organizational Cultures Come From		 Where Do Organizational Cultures Come From
Where Do Organizational Cultures Come From
Where Do Organizational Cultures Come From
Where Do Organizational Cultures Come From		 Where Do Organizational Cultures Come From
Where Do Organizational Cultures Come From		 How Does Organizational Culture Change
How Does Organizational Culture Change		 Organizational Culture
Organizational Culture		 Organizational Culture
Organizational Culture
Carly Fiorina appointed CEO of HP in 1999 Engineered acquisition of
Carly Fiorina appointed CEO of HP in 1999 Engineered acquisition of		 Strategic Control and Reward Systems
Strategic Control and Reward Systems
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Organizational Design: Structure, Culture, and Control

содержание презентации «Organizational Design: Structure, Culture, and Control.ppt»
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1Organizational Design: Structure, 27operationally independent Each leader of
Culture, and Control. SBUs report to the corporate office
2Part 3 Strategy Implementation. 11–2. Examples: Zappos is an SBU under Amazon
3Zappos: Success through customer Skype is an SBU under Microsoft Paypal is
service Customer service all in-house No an SBU under eBay Companies using M-form
scripts or timed calls Flat Organizational structure GE, Honda. 11–27.
Structure = Flexibility Job rotation = 28Organizing the Diversified Firm. The
trained talent 4 weeks of orientation multidivisional organization, as
training Including 2 weeks on customer documented by Alfred D. Chandler in
service phones. Chapter Case 11. Zappos: Strategy and Structure, was pioneered in
An Organization Designed to Deliver the 1920s by pioneering firms such as:
Happiness. 11–3. DuPont, General Motors, Sears and Standard
4Zappos’ Core Values. EXHIBIT 11.1. Oil; By 1967, two-thirds of Fortune 500
11–4. Companies are multidivisional.
511–5. 29
6LO 11-1 Define organizational design 30Organizing the Diversified Firm. Three
and list its three components. LO 11-2 key features of organizational structure:
Explain how organizational inertia can 1. The division of tasks; 2. The depth of
lead established firms to failure. LO 11-3 the hierarchy (span of control); 3. The
Define organizational structure and extent of authority delegation (how much
describe its four elements. LO 11-4 decentralization?). 11–30.
Compare and contrast mechanistic versus 31Typical M-Form Structure. EXHIBIT
organic organizations. LO 11-5 Describe 11.7. Functional Structure. Matrix
different organizational structures and Structure. 11–31.
match them with appropriate strategies. LO 32
11-6 Describe the elements of 33Multidivisional Structure. Use with
organizational culture and explain where various corporate strategies Related
organizational cultures can come from the diversification Co-opetition among SBUs
how they can be changed. LO 11-7 Compare Transfer core competences across SBUs
and contrast different strategic control Centralized decision making Unrelated
and reward systems. 11–6. diversification Decentralized decision
7How to Organize for Competitive making Competing for resources. 11–33.
Advantage. Organizational design Goal is 34Matching Corporate-Level Strategy.
to translate strategies into realized ones EXHIBIT 11.8.
Structure Processes Procedures Structure 3511–35.
follows strategies Structure must be 3611–36.
flexible Yahoo failed to make changes to 37Evolutionary Stability of the
their organizational structure. Jerry Multidivisional Form. Parable of the Two
Young ousted in 2008. 11–7. Watchmakers 10,000 parts Watchmaker #1
8 needs to put all parts together or the
9 watch falls apart and he needs to start
10Organizational inertia Resistance to all over with his 10,000 parts. Watchmaker
change Often leads to failure because of #2 has developed 100 subsystems of 100
the environmental dynamics: competition, parts. This is the “principle of
technology, strategy…etc. Organizational near-decomposability” (I.e., a system that
strategy and structure are not static… But contains localized sub-systems).
rather are dynamic! A tightly-coupled and 38Evolutionary Stability of the
coherent activity system that works well Multidivisional Form. Hierarchical systems
in a static environment may be subject to (containing sub-systems) will evolve much
problems of inertia in a dynamic more rapidly from elementary constituents
environment. Organizational Inertia and than will non-hierarchic systems
the Failure of Established Firms. 11–10. containing the same number of elements. In
11Organizational Inertia. EXHIBIT 11.2. organization theory this is called the
11–11. effectiveness of “loose coupling.” The
12LO 11-1 Define organizational design advantage of “loose coupling” is that if
and list its three components. LO 11-2 there is poor performance in division 2 it
Explain how organizational inertia can does not lead to failure of the entire
lead established firms to failure. LO 11-3 system. 11–38.
Define organizational structure and 39Effectiveness of Multidivisional Form.
describe its four elements. LO 11-4 Effective Divisionalization involves:
Compare and contrast mechanistic versus Identification of separable economic
organic organizations. LO 11-5 Describe activities within the firm; Giving
different organizational structures and quasi-autonomous standing to each division
match them with appropriate strategies. LO (usually of a profit center nature);
11-6 Describe the elements of Monitoring the efficiency performance of
organizational culture and explain where each division; Awarding incentives;
organizational cultures can come from the Allocating cash flow to high yield uses;
how they can be changed. LO 11-7 Compare and Performing strategic planning
and contrast different strategic control (diversification, acquisition, and related
and reward systems. 11–12. activities). 11–39.
13The Key Elements of Organizational 40Weaknesses of Multidivisional Form.
Structure. Organizational structure Dysfunctional Aspects of the
determines Work efforts of individuals and Multidivisional: Emphasis on short-term
teams Resource distribution Key building perspective; Loss of economies of scope;
blocks Specialization Formalization Duplication of R&D, marketing, etc.;
Centralization Hierarchy. 11–13. Emphasis on financial manipulation instead
14The Key Elements of Organizational of developing firm capabilities and
Structure. Specialization: degree to which resources; and Large conglomerates may
a task is divided Division of labor have excessive political power.
Example: U.S. Military (Army, Air Force, 41Matrix Structure. A combination of
Navy, Marines) Formalization: codified functional and M-form structure Creation
rules and formal procedures Detailed of dual line of authority and reporting
written rules and policies Examples: NASA, lines Each SBU receives support both
McDonald’s. 11–14. horizontally and vertically Very versatile
15The Key Elements of Organizational Enhanced learning from different SBUs.
Structure. Centralization: where the 11–41.
decision is made Centralized decision 42Typical (Global) Matrix Structure.
making ? slow response time and reduced EXHIBIT 11.9. 11–42.
customer satisfaction Example: BP’s 43
Mexican Gulf Oil Spill Hierarchy: formal, 44
position-based reporting lines Tall 45Matching Global Strategy and
structure vs. flat structure Tall Structure. EXHIBIT 11.10.
structure? higher degree of centralization 46LO 11-1 Define organizational design
Flat structure ? lower degree of and list its three components. LO 11-2
centralization Span of control. 11–15. Explain how organizational inertia can
16W. L. Gore & Associates: lead established firms to failure. LO 11-3
Informality and Innovation. Bill Gore Define organizational structure and
articulated 4 core values Fairness to each describe its four elements. LO 11-4
other Freedom to grow knowledge and skills Compare and contrast mechanistic versus
Ability to make one's own commitments organic organizations. LO 11-5 Describe
Consult with others before taking action different organizational structures and
W. L. Gore is organized in an informal and match them with appropriate strategies. LO
decentralized manner Empowered employees 11-6 Describe the elements of
(no job titles, no job descriptions, organizational culture and explain where
informal team organization, soft reporting organizational cultures can come from the
lines) Face-to-face communication All how they can be changed. LO 11-7 Compare
associates are shareholders of the and contrast different strategic control
company. STRATEGY HIGHLIGHT 11.2. 11–16. and reward systems. 11–46.
1–16. 47Organizational Culture: Values, Norms,
17Assembling the Pieces: Mechanistic vs. and Artifacts. Organizational culture
Organic Organizations. Organic Collectively shared values and norms
organizations Low degree of specialization Value: what is considered important Norms:
and formalization Flat structure appropriate employee behaviors and
Decentralized decision making Uses virtual attitudes Artifacts: expression of culture
team due to information technology in items such as physical design, stories,
Examples: Zappos, W. L. Gore, and many and celebrations Socialization Internalize
high-tech firms Mechanistic organizations organization’s value and norms through
High degree of specialization and interactions Think of Zappos’ core values
formalization Tall hierarchy Centralized GM’s culture became strategic liability.
decision making Example: McDonald’s. Video 11–47.
on Web 2.0 Changing workplace. 11–17. 48Where Do Organizational Cultures Come
18Mechanistic vs. Organic Organization. From? Founder imprinting Founders defined
EXHIBIT 11.3. and shaped the culture Apple (Steve Jobs)
19LO 11-1 Define organizational design Disney (Walt Disney) Microsoft (Bill
and list its three components. LO 11-2 Gates) Wal-mart’s “low cost” culture by
Explain how organizational inertia can Sam Walton Recruit people that fit the
lead established firms to failure. LO 11-3 culture Zappos vs. GE. 11–48.
Define organizational structure and 49How Does Organizational Culture
describe its four elements. LO 11-4 Change? Core competency? core rigidity
Compare and contrast mechanistic versus Culture no longer has good fit with the
organic organizations. LO 11-5 Describe environment Cultural change is needed
different organizational structures and Cultural change Brings new leadership
match them with appropriate strategies. LO Mergers and acquisitions. 11–49.
11-6 Describe the elements of 50Organizational Culture. Culture must
organizational culture and explain where be valuable, rare, inimitable, and
organizational cultures can come from the non-substitutable (RBV) Causal ambiguity
how they can be changed. LO 11-7 Compare and social complexity Organizational
and contrast different strategic control culture is an important resource Southwest
and reward systems. 11–19. Airlines Friendly and energized employees
20Matching Strategy and Structure. work collaboratively Zappos Deliver WOW
Simple structure Small firms with low through service. 11–50.
complexity Top management makes all 51Carly Fiorina appointed CEO of HP in
important strategic decisions Low degree 1999 Engineered acquisition of Compaq in
of formalization and specialization A 2002 Carly Fiorina needed the acquisition
basic organizational structure Examples: to initiate structural and cultural change
small advertising, consulting, accounting, in HP to overcome inertia Board of
and law firms. 11–20. Directors fired her in 2005 Hired Mark
21Changing Organizational Structures and Hurd who was himself fired in 2010…
Increasing Complexity as Firms Grow. Continued turnover at top of HP; Mark Hurd
EXHIBIT 11.4. was replaced by Leo Apotheker, who in turn
22Functional Structure. Functional was replaced by Meg Whitman in September
structure Groups of employees with 2011. Carly Fiorina at HP: Cultural Change
distinct functional areas The areas of via Shock Therapy. STRATEGY HIGHLIGHT
expertise correspond to distinct stages in 11.4. 11–51. 1–51.
the company value chain activities 52Organizational Culture. Cultural
Example: College of Business, Finance impact on employee behavior Motivates
Department , … etc. Recommended with employees by appealing to their ideas
narrow products/services Matches well with Strengthen employee commitment,
business-level strategy Cost leadership ? engagement, and effort Culture is vital to
Mechanistic organization Differentiation ? an organization Stronger founder
Organic organization Integration strategy imprinting leads to higher performance
? Ambidextrous organization. Effective alignment allows development and
23Typical Functional Structure. EXHIBIT refines organizational core competency.
11.5. 11–23. 11–52.
24Matching Business Level Strategy and 53LO 11-1 Define organizational design
Structure. EXHIBIT 11.6. and list its three components. LO 11-2
25USA Today: one of the widest print Explain how organizational inertia can
circulations in U.S. USA Today.com, a new lead established firms to failure. LO 11-3
independent SBU under Gannett Although Define organizational structure and
attracted readers and advertising dollars, describe its four elements. LO 11-4
USA Today.com lost key editorial talent Compare and contrast mechanistic versus
due to uneven resource distribution organic organizations. LO 11-5 Describe
Integration of USA Today and USA Today.com different organizational structures and
to eliminate duplication of resources and match them with appropriate strategies. LO
reduce waste. STRATEGY HIGHLIGHT 11.3. USA 11-6 Describe the elements of
Today: Leveraging Ambidextrous organizational culture and explain where
Organizational Design. 1–25. organizational cultures can come from the
26Functional Strategy: Drawbacks. Lacks how they can be changed. LO 11-7 Compare
effective communication channels across and contrast different strategic control
departments Lack of linkage between and reward systems. 11–53.
functions Often solved the problems by 54Strategic Control and Reward Systems.
having cross-functional teams It cannot Internal governance mechanisms Culture
effectively address a higher level of Sanctions Input controls Rules and
diversification. 11–26. standard operating procedures Budgets
27Multidivisional Structure. Behavior guidelines Output controls
Multidivisional structure Consists of Result-oriented ROWEs (results only work
several distinct SBUs Each SBU is environment). Dan Pink’s RSA Video. 11–54.
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