Podcast
Questions and Answers
Which type of organizational structure is characterized by flexibility and the ability to respond quickly to market changes?
Which type of organizational structure is characterized by flexibility and the ability to respond quickly to market changes?
In which organizational structure are roles and responsibilities typically defined across multiple dimensions?
In which organizational structure are roles and responsibilities typically defined across multiple dimensions?
Which structure is least likely to promote quick decision-making due to its layers of management?
Which structure is least likely to promote quick decision-making due to its layers of management?
What is a characteristic feature of a holacracy in organizational structure?
What is a characteristic feature of a holacracy in organizational structure?
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Which type of organization typically lacks traditional management hierarchies and focuses on teams working together?
Which type of organization typically lacks traditional management hierarchies and focuses on teams working together?
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What is a key characteristic of effective organizational structures?
What is a key characteristic of effective organizational structures?
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According to Burns and Stalker's framework, which characteristic defines a mechanistic organizational structure?
According to Burns and Stalker's framework, which characteristic defines a mechanistic organizational structure?
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What does structural flexibility in an organization enable?
What does structural flexibility in an organization enable?
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Which of the following statements about organizational structure is correct?
Which of the following statements about organizational structure is correct?
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Which aspect is NOT associated with structural stability in organizations?
Which aspect is NOT associated with structural stability in organizations?
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What is a potential disadvantage of a highly mechanistic organizational structure?
What is a potential disadvantage of a highly mechanistic organizational structure?
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How does structural flexibility impact resource allocation in organizations?
How does structural flexibility impact resource allocation in organizations?
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What is a characteristic of an organic organizational structure according to Burns and Stalker?
What is a characteristic of an organic organizational structure according to Burns and Stalker?
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What was a key strategy employed by firms to achieve competitive advantage according to Stalker’s study?
What was a key strategy employed by firms to achieve competitive advantage according to Stalker’s study?
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What critical change does the dynamic capability approach emphasize in organizations?
What critical change does the dynamic capability approach emphasize in organizations?
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In response to environmental changes, what was one of Oticon's strategic adaptations?
In response to environmental changes, what was one of Oticon's strategic adaptations?
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What is the first step in the process of responding to environmental changes according to the dynamic capability framework?
What is the first step in the process of responding to environmental changes according to the dynamic capability framework?
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What does 'sensing' refer to in the context of dynamic capabilities?
What does 'sensing' refer to in the context of dynamic capabilities?
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Which of the following best describes what Oticon needed to address when responding to environmental changes?
Which of the following best describes what Oticon needed to address when responding to environmental changes?
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What are firms encouraged to develop in addition to operational capability, according to the discussed framework?
What are firms encouraged to develop in addition to operational capability, according to the discussed framework?
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What does the term 'seizing' refer to in the context of dynamic capabilities?
What does the term 'seizing' refer to in the context of dynamic capabilities?
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What is a key characteristic of a responsive organization?
What is a key characteristic of a responsive organization?
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What should organizations do after identifying a strategic change?
What should organizations do after identifying a strategic change?
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Which of the following best describes a learning organization?
Which of the following best describes a learning organization?
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Which of the following elements is NOT a characteristic of a learning organization?
Which of the following elements is NOT a characteristic of a learning organization?
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What does 'widening spans of control' refer to in an organization?
What does 'widening spans of control' refer to in an organization?
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Which aspect is essential for leadership in a learning organization?
Which aspect is essential for leadership in a learning organization?
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What does a 'service-driven' organization prioritize?
What does a 'service-driven' organization prioritize?
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Why is it important for organizations to be responsive and learning-oriented?
Why is it important for organizations to be responsive and learning-oriented?
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What is a characteristic of organizations that utilize a functional structure?
What is a characteristic of organizations that utilize a functional structure?
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Why is a product structure preferred when competitive changes increase?
Why is a product structure preferred when competitive changes increase?
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What is a major drawback of using a matrix structure?
What is a major drawback of using a matrix structure?
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What is a primary advantage of a divisionalized structure?
What is a primary advantage of a divisionalized structure?
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Which situation could lead to problems with divisionalization?
Which situation could lead to problems with divisionalization?
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What challenge does a network structure address in modern organizations?
What challenge does a network structure address in modern organizations?
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When is organizing by function most effective?
When is organizing by function most effective?
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What is a primary requirement for maintaining a matrix structure?
What is a primary requirement for maintaining a matrix structure?
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What defines the structure of Strategic Business Units (SBUs)?
What defines the structure of Strategic Business Units (SBUs)?
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What major risk comes from having dual reporting in a matrix structure?
What major risk comes from having dual reporting in a matrix structure?
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What can hinder the effective functioning of divisionalized structures?
What can hinder the effective functioning of divisionalized structures?
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In which market condition is a functional structure primarily beneficial?
In which market condition is a functional structure primarily beneficial?
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What aspect of organizational structure is influenced by cultural elements?
What aspect of organizational structure is influenced by cultural elements?
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What is the primary purpose of organizational structure?
What is the primary purpose of organizational structure?
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How does the business environment affect organizational structure?
How does the business environment affect organizational structure?
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Which aspect of organizational structure supports motivation and morale?
Which aspect of organizational structure supports motivation and morale?
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In Burns and Stalker’s study, what was identified as a key characteristic of organizational structure?
In Burns and Stalker’s study, what was identified as a key characteristic of organizational structure?
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What does the Star Model highlight in organizational design?
What does the Star Model highlight in organizational design?
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What distinguishes traditional structures from emerging structures in organizations?
What distinguishes traditional structures from emerging structures in organizations?
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Which of the following is NOT a purpose of organizational structure?
Which of the following is NOT a purpose of organizational structure?
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What role does organizational structure play in decision-making?
What role does organizational structure play in decision-making?
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What might be a consequence of a poorly designed organizational structure?
What might be a consequence of a poorly designed organizational structure?
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Which of the following best describes the relationship between structure and culture in an organization?
Which of the following best describes the relationship between structure and culture in an organization?
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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.
