Organizational Structure and Change Process
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Questions and Answers

Which type of organizational structure is characterized by flexibility and the ability to respond quickly to market changes?

  • Virtual organization
  • Functional structure
  • Agile organization (correct)
  • Hierarchic structure

In which organizational structure are roles and responsibilities typically defined across multiple dimensions?

  • Matrix structure (correct)
  • Divisionalized structure
  • Project-based structure
  • Flat structure

Which structure is least likely to promote quick decision-making due to its layers of management?

  • Simple structure
  • Network structure
  • Flat structure
  • Tall structure (correct)

What is a characteristic feature of a holacracy in organizational structure?

<p>Distributed authority among teams (A)</p> Signup and view all the answers

Which type of organization typically lacks traditional management hierarchies and focuses on teams working together?

<p>Borderless organization (C)</p> Signup and view all the answers

What is a key characteristic of effective organizational structures?

<p>Consistent and predictable management of daily work routines (C)</p> Signup and view all the answers

According to Burns and Stalker's framework, which characteristic defines a mechanistic organizational structure?

<p>Low degree of delegation and high uniformity of work (D)</p> Signup and view all the answers

What does structural flexibility in an organization enable?

<p>Opportunity to explore competitive possibilities (D)</p> Signup and view all the answers

Which of the following statements about organizational structure is correct?

<p>Effective structures promote innovation and stability. (B)</p> Signup and view all the answers

Which aspect is NOT associated with structural stability in organizations?

<p>Increased exploration of competitive advantages (C)</p> Signup and view all the answers

What is a potential disadvantage of a highly mechanistic organizational structure?

<p>Limited capacity for innovation and adaptability. (B)</p> Signup and view all the answers

How does structural flexibility impact resource allocation in organizations?

<p>Allows for dynamic allocation based on competitive needs. (A)</p> Signup and view all the answers

What is a characteristic of an organic organizational structure according to Burns and Stalker?

<p>Low specialization and a high degree of delegation. (B)</p> Signup and view all the answers

What was a key strategy employed by firms to achieve competitive advantage according to Stalker’s study?

<p>Innovation through differentiation (A), Cost minimization (D)</p> Signup and view all the answers

What critical change does the dynamic capability approach emphasize in organizations?

<p>Reconfiguring resources in response to change (B)</p> Signup and view all the answers

In response to environmental changes, what was one of Oticon's strategic adaptations?

<p>Implementation of structural changes (B)</p> Signup and view all the answers

What is the first step in the process of responding to environmental changes according to the dynamic capability framework?

<p>Noticing and responding to significant triggers (A)</p> Signup and view all the answers

What does 'sensing' refer to in the context of dynamic capabilities?

<p>Identifying external market opportunities (C)</p> Signup and view all the answers

Which of the following best describes what Oticon needed to address when responding to environmental changes?

<p>Dynamic capabilities (B)</p> Signup and view all the answers

What are firms encouraged to develop in addition to operational capability, according to the discussed framework?

<p>Dynamic capability (A)</p> Signup and view all the answers

What does the term 'seizing' refer to in the context of dynamic capabilities?

<p>Acting upon opportunities identified during the sensing phase (C)</p> Signup and view all the answers

What is a key characteristic of a responsive organization?

<p>Extensive and open information sharing (D)</p> Signup and view all the answers

What should organizations do after identifying a strategic change?

<p>Redesign the structure (D)</p> Signup and view all the answers

Which of the following best describes a learning organization?

<p>An organization that continuously learns and adapts (A)</p> Signup and view all the answers

Which of the following elements is NOT a characteristic of a learning organization?

<p>Strict control over information access (B)</p> Signup and view all the answers

What does 'widening spans of control' refer to in an organization?

<p>Increasing the number of employees managed by a supervisor (A)</p> Signup and view all the answers

Which aspect is essential for leadership in a learning organization?

<p>Fostering a sense of community (C)</p> Signup and view all the answers

What does a 'service-driven' organization prioritize?

<p>Performing service audits (C)</p> Signup and view all the answers

Why is it important for organizations to be responsive and learning-oriented?

<p>To cope with and create change (B)</p> Signup and view all the answers

What is a characteristic of organizations that utilize a functional structure?

<p>Specialists have a clear career path. (D)</p> Signup and view all the answers

Why is a product structure preferred when competitive changes increase?

<p>It improves speed of decision making. (C)</p> Signup and view all the answers

What is a major drawback of using a matrix structure?

<p>It often leads to dual reporting and potential conflict. (D)</p> Signup and view all the answers

What is a primary advantage of a divisionalized structure?

<p>It allows for decisions to be made closer to the point of action. (C)</p> Signup and view all the answers

Which situation could lead to problems with divisionalization?

<p>Fast growth of a division altering its characteristics. (D)</p> Signup and view all the answers

What challenge does a network structure address in modern organizations?

<p>Connecting widely dispersed and mobile employees. (B)</p> Signup and view all the answers

When is organizing by function most effective?

<p>In small, predictable environments. (A)</p> Signup and view all the answers

What is a primary requirement for maintaining a matrix structure?

<p>Effective communication between product and functional managers. (A)</p> Signup and view all the answers

What defines the structure of Strategic Business Units (SBUs)?

<p>Divided based on distinct product ranges or customer locations. (C)</p> Signup and view all the answers

What major risk comes from having dual reporting in a matrix structure?

<p>Conflict over resource prioritization. (B)</p> Signup and view all the answers

What can hinder the effective functioning of divisionalized structures?

<p>Conflicts over shared centralized services. (C)</p> Signup and view all the answers

In which market condition is a functional structure primarily beneficial?

<p>In small organizations with predictable changes. (A)</p> Signup and view all the answers

What aspect of organizational structure is influenced by cultural elements?

<p>Global structural configuration. (C)</p> Signup and view all the answers

What is the primary purpose of organizational structure?

<p>To divide work into specific jobs and departments (A)</p> Signup and view all the answers

How does the business environment affect organizational structure?

<p>It can greatly influence the way organizations are structured (B)</p> Signup and view all the answers

Which aspect of organizational structure supports motivation and morale?

<p>Establishment of formal lines of authority (C)</p> Signup and view all the answers

In Burns and Stalker’s study, what was identified as a key characteristic of organizational structure?

<p>Formal configuration of roles and governance (C)</p> Signup and view all the answers

What does the Star Model highlight in organizational design?

<p>The reciprocal relationship between strategy and structure (A)</p> Signup and view all the answers

What distinguishes traditional structures from emerging structures in organizations?

<p>Traditional structures often rely on hierarchical models (D)</p> Signup and view all the answers

Which of the following is NOT a purpose of organizational structure?

<p>Increasing competition among individuals (D)</p> Signup and view all the answers

What role does organizational structure play in decision-making?

<p>It establishes clear lines for decision-making authority (A)</p> Signup and view all the answers

What might be a consequence of a poorly designed organizational structure?

<p>Confusion and miscommunication among employees (B)</p> Signup and view all the answers

Which of the following best describes the relationship between structure and culture in an organization?

<p>Structure supports and reflects the culture of the organization (A)</p> Signup and view all the answers

Flashcards

Organizational Structure

The way a company is organized, including how tasks are divided and who reports to whom.

Organizational Structure

A formal arrangement of roles, governance, authority, and decision-making channels in an organization.

Purpose of Organizational Structure

To divide work, assign tasks, coordinate diverse tasks, establish relationships, and set formal authority lines within an organization.

Structural Stability

The ability of an organization to consistently manage daily tasks.

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Structural Flexibility

The capacity of an organization to adjust to new opportunities.

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Strategy-Structure Relationship

A two-way relationship where organizational structure supports strategy, and the structure is shaped by the business environment.

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Mechanistic Structure

A structured form of organization with high specialization, low delegation, and high uniformity.

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Impact of Business Environment

The business environment significantly influences organizational structure.

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Structure and Culture

Organizational structure supports organizational culture.

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Organic Structure

Flexible organization with low specialization, high delegation, and low uniformity.

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Motivation & Morale

Organizational structure influences employee motivation and morale.

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Burns and Stalker's Taxonomy

Categorization of organizational structures into Mechanistic and Organic types based on their characteristics.

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Decision-Making

The way decisions are made within an organization is affected by its structure.

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Organizational Design

The process of creating or modifying the structure of an organization.

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Taxonomy Study (Burns & Stalker)

A basic study categorizing organizational structures, as investigated by Burns and Stalker analyzing Scottish firms.

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Basic Strategies

General approaches an organization can take to improve its position in the market.

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Organizational Design

The process of structuring a business to achieve its objectives effectively.

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Star Model

A model illustrating the relationship between strategy, structure, and the environment in an organization.

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Dynamic Capability

The ability of a firm to sense, seize, and reconfigure resources to maintain competitiveness in a changing environment.

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Environmental Change

Significant external or internal factors that trigger a need for adaptation in a firm.

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Sensing

Recognizing and responding to environmental changes.

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Seizing

Taking advantage of opportunities presented by environmental change.

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Reconfiguration of Resources

Adjusting resources to support new strategies in response to environmental change.

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Cost Minimization

A strategy focused on reducing costs to increase profitability.

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Innovation (Differentiation, First Mover)

A strategy that creates unique products or services to gain a competitive advantage, typically by being an early adopter.

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Imitation Strategy (Second Mover)

A strategy to compete with a first mover by creating similar products or services, but often less expensively.

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Centralized Structure

Decision-making authority is concentrated at the top of the organization.

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Decentralized Structure

Decision-making authority is distributed throughout the organization, often empowering lower levels.

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Flat Organization

An organizational structure with fewer hierarchical levels; with wider spans of control.

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Tall Organization

An organizational structure with many hierarchical levels and narrow spans of control.

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Responsive Organization

An organization that can quickly adapt and change to meet the needs of a dynamic environment.

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Simplify, De-layer

A strategy to improve organizational agility by reducing unnecessary layers of management and simplifying structures.

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Widen Spans of Control

Expanding the number of employees a manager is responsible for to reduce bureaucracy and empower teams.

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Empower Workers

Giving employees more autonomy and responsibility to make decisions and solve problems without needing constant approval.

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Boundaryless Organization

A company that has minimal internal barriers to information flow and collaboration, promoting seamless integration.

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Service-Driven Organization

An organization focused on providing excellent customer service and anticipating future needs.

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Service Audit

A systematic evaluation of an organization's services to identify strengths, weaknesses, and areas for improvement.

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Structure Follows Strategy

The organizational structure should be designed to effectively support the company's strategic goals.

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Function Structure

A structure where employees are organized based on specialized tasks or functions they perform, like marketing, finance, production.

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Product Structure

A structure where employees are grouped around specific products or product lines, allowing for dedicated focus on a single product.

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Matrix Structure

A structure that combines elements of functional and product structures, allowing employees to report to both a functional manager and a project manager.

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Advantages of Matrix Structure

Increased flexibility, better resource utilization across projects, enhanced communication and coordination between specialists.

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Challenges of Matrix Structure

Dual reporting can create conflict and stress, potential power struggles, ambiguity about roles and responsibilities.

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Divisional Structure

An organization is divided into semi-autonomous divisions, each responsible for a specific product range, geographic area, or customer segment.

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Advantages of Divisional Structure

Decentralized decision making, increased accountability, improved market responsiveness, development of general managers.

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Challenges of Divisional Structure

Potential conflicts between divisions over resources, coordination difficulties, duplication of efforts, possible loss of central control.

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Network Structure

A decentralized, flexible organizational form where key functions are outsourced to external partners, creating a network of relationships for expertise and resources.

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Global Structural Issues

Challenges in designing organizational structures that effectively manage operations across different countries and cultures.

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Cultural Implications in Organizational Design

The impact of different cultural values and norms on the effectiveness of organizational structures and processes.

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Learning Organization Concept

An organizational structure that encourages continuous learning, knowledge sharing, and adaptation to improve performance.

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Impact of COVID-19 on Organization Structure

The pandemic forced organizations to adapt and evolve their structures to accommodate remote work, virtual collaboration, and changing employee needs.

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Keeping Employees Connected

Crucial challenge in today's organizations, especially with remote work and dispersed teams, to maintain a sense of belonging and effective communication.

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Managing Widely Dispersed Employees

Organizational structure changes needed to effectively manage employees who are working remotely from various locations.

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Study Notes

Organizational Structure

  • Organizational structure is a formal configuration of roles, governance, authority, and decision-making channels.
  • This structure relates to strategy and the environment.
  • Traditional and emerging structures exist.
  • Pre-work: Oticon case study.

Objectives

  • Understand how organizational structure relates to strategy and the environment.
  • Explore traditional and emerging organizational structures.
  • Examine the Oticon case study.

Change as Process/Cycle

  • Recognizing the need for change and starting the process.
  • Diagnosing what needs to be changed and formulating a vision of a preferred future state.
  • Planning, implementing the change, and reviewing progress.
  • Leading and managing people issues.
  • Sustaining the change.

Purposes of Organizational Structure

  • Dividing work into specific jobs and departments
  • Assigning tasks and responsibilities associated with individual jobs
  • Coordinating diverse organizational tasks
  • Clustering jobs into units and establishing relationships among individuals, groups, and departments
  • Establishing formal lines of authority

The Star Model

  • Direction, skills/mindsets, people, strategy, structure, power, rewards, motivation, processes, information.
  • A model demonstrating the interconnectedness of organizational design elements.

Why Organizational Structure Matters

  • Strategy and structure have a reciprocal relationship, impacting one another significantly.
  • The business environment has a significant impact on structural design.
  • Structure influences motivation and morale.
  • Decision-making, coordination, and innovation are affected by structure.

Effective Organizational Structures

  • Provide stability: The capability to consistently and predictably manage daily work routines.
  • Provide flexibility: The opportunity to explore competitive possibilities, and shape needed competitive advantages.

Organizational Design - Burns and Stalker (1961)

  • Mechanistic: High work specialization, low delegation, high uniformity of work, short span of control (e.g. Apple's iPhone factory).
  • Organic: Low specialization, high delegation, low uniformity, high span of control (e.g. Google's HQ).

Basic Strategies

  • Cost minimization
  • Innovation (differentiation – first mover, imitation).

Structure and the Environment

  • High stability, low complexity, low diversity, and low hostility = being efficient
  • Low stability, high complexity, high diversity, and high hostility = being flexible

Group Discussion Exercise

  • Questions about the environmental changes impacting Oticon, how Oticon adjusted its strategy in response to environmental changes, and what structural changes Oticon made in response to these adjustments.

Oticon Examples (Pre-1991 vs Post-1991)

  • Pre-1991: Mono-job culture, traditional/hierarchical, hardwood-panelled offices, communication by memo.
  • Post-1991: Multi-job culture., spaghetti organization, open-plan/mobile offices, dialogue and action.

Strategic Cognition of Change (Teece et al., 1997, 2007)

  • Firms need dynamic capability to develop the ability to address and adapt to change: This includes sensing (recognizing a need for change), seizing (taking advantage of change opportunities), and reconfiguring resources.

Dynamic Capabilities and Environment Change

  • The process of sensing, seizing, and managing threats/transforming is part of dynamic capability.

Dynamic Capabilities

  • Showcasing the interconnected processes involved in sensing, seizing, and managing threats/transforming. Included are selected micro-foundations (processes involving internal R&D, supplier relations, and customer innovation), defining the boundary of the enterprise (decentralization and near-decomposability), and building governance (creating loyalty & commitment). Further, this includes continuous alignment and realignment of tangible and intangible assets and knowledge management.

Centralized vs Decentralized Structure

  • Diagrams showing the differences between centralized (all authority at the top) and decentralized (authority distributed throughout the organization).

Flat vs Tall/Hierarchical Org Structure

  • Diagrams illustrating flat versus tall/hierarchical organizational structures.

Strengths and Weaknesses of Decentralized Designs

  • Strengths (e.g., meshes well with change & growth, high task focus, high responsiveness to customer needs, concurrent tasks):
  • Weaknesses (e.g., potential for innovation restriction, difficulty in pooling resource allocation, potential issues with coordination & prioritization).

Types of Organizational Structure

  • Entrepreneurial and simple structures
  • Functional and divisionalized structures
  • Matrix and project-based structures
  • Network structures
  • Virtual organizations
  • Borderless organizations
  • Agile organizations and
  • Holacracy

Organizing by Function

  • A hierarchical structure with functional departments (e.g., operations, marketing, R&D, sales) reporting to a top manager.
  • Relatively simple, specialists' expertise, economies of scale as production rises, good for small single-products, predictable situations

Organizing by Product

  • Separating the business into distinct product divisions, each with its own functional departments (e.g., R&D, manufacturing, marketing, finance).
  • Suitable for firms diversifying into multiple products, speed of decision-making, knowledge of the customers/markets.

Matrix Structure

  • Combines functional and product structures, creating dual lines of authority (e.g., both functional managers and project managers).
  • Enables specialists from different functions to work together on projects, but can create conflict/stress, priority issues of resources/time and costs, undermines authority (functional managers) and specialists' identity.

Divisionalized Structure

  • Separate divisions or strategic business units (SBUs) based on different product ranges or geographical locations of customers.
  • Profit responsibility is delegated to divisions.
  • Top management freed to focus on overall strategic matters.

Network Structure

  • A network of interconnected organizations or departments, with flexible work structures.

Today's Organizational Design/Structure Challenges

  • Keeping employees connected in dispersed settings
  • Adapting to the implications of the COVID-19 pandemic
  • Managing global structural issues
  • Addressing cultural implications of design elements
  • Building a learning organization

A Responsive Organization?

  • How to respond to organizational challenges through approaches such as simplification, de-layering, and enabling employee empowerment.
  • (Further points like developing boundaryless and service-driven organizations)

The Learning Organization

  • An organization with the capacity for continuous learning, adaptation, and change through knowledge management.
  • Key characteristics: open team-based structure, extensive information sharing, leadership fostering shared vision, culture of shared values, trust, openness, community sense.

Summary

  • Structure responds to the environment and follows strategy.
  • Re-design structure in response to significant strategic changes.
  • Build responsive and learning organizations to adjust to changing environments.

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Description

This quiz explores the relationship between organizational structure, strategy, and the environment. It covers traditional and emerging structures with a focus on the Oticon case study. Additionally, it outlines the change process including planning, implementation, and sustaining change.

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