Chapter 5, 6 & 7: Organization Structure (PDF)

lOMoARcPSD|40186229 -Strategies need to be tailored to (changing) conditions CH5: Structuring organizations Structural design elements Structure dened: The formal arrangement of tasks in a business organisation -Why structure?  Knowing who is in charge of what  Allocating resources...

lOMoARcPSD|40186229 -Strategies need to be tailored to (changing) conditions CH5: Structuring organizations Structural design elements Structure dened: The formal arrangement of tasks in a business organisation -Why structure?  Knowing who is in charge of what  Allocating resources  Creating coherence and consistency among activities -Design elements: 1. Dierentiation and integration 2. Centralisation and decentralisation 3. Formalisation and informalisation Dierentiation: dividing organisational practices into distinct tasks by smaller units Integration: coordinating distinct tasks of smaller units to accomplish coherent organisational practices -Dierentiation: Dierentiation: Setting up individual tasks to match individual capabilities and to accomplish learning eects Favours eciency, may undermine motivation Creating units to accomplish joint tasks and to cluster related tasks 14 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Generates complementarity, may engender narrow focus -Types of units: Functional departmentalisation Product departmentalisation Geographic departmentalisation Hybrid departmentalisation Matrix departmentalisation -Integration: 15 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Integration: Coordinating tasks within a unit and across units Coordination mechanisms  Direct supervision  Mutual adjustment  Standardisation of skill, process, and output Span of control: larger when task homogeneity and standardization -Centralization & Decentralization: Centralisation: concentration of decision-making Pro:  Low coordination costs  Consistency and integration  Speed of overall response Con:  Info overload  Demotivating  Slowness of local response Decentralisation: dispersion of decision-making -Horizontal decentralisation -Vertical decentralisation Pro:  Manageability of info  Match with specic expertise  Speed of local response Con:  High coordination costs  Consistency and integration  Slowness of overall response 16 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 -Formalisation & Informalisation: Types of (in)formalisation: Position (job), Process (work, interactions) Formalisation: prescribed characteristics of expected behaviour Pro:  Reducing uncertainty  Reducing process variability  Reducing product variability  Enhancing procedural fairness  Dissuading undesired behaviour Con:  Ignoring environmental changes  Dissuading process improvement options  Dissuading desirable product adaptations  Ignoring situational diversity  Dissuading employee creativity Informalisation: emerging characteristics of expected behaviour Pro:  Responding to the unforeseen  Improving processes  Tailoring products  Matching situational diversity  Tapping into employee creativity Con:  Provoking uncertainty-related anxiety  Risking loss of process quality  Risking generation of undesired products  Risking arbitrary, unfair decisions  Risking undesirable employee behaviour Contingencies impacting structure 17 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Internal contingencies: Size and age, Technology External contingencies: Environmental complexity, Environmental turbulence / dynamics Size and age: Larger and older organisations: more formalised structure, more elaborate structure Technology: More regulating technology: higher formalisation Unit production: smaller teams than mass production Environmental complexity: Higher complexity: more decentralisation Environmental turbulence (dynamics): Higher turbulence: more organic structure Viable congurations Conguration: combination of design elements Viable conguration: coherent and consistent combination of design elements matching organisational contingencies Basic conguration Simple structure 18 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Machine bureaucracy Professional bureaucracy Divisionalised form Adhocracy Wrap-up -Organisations should eectively use all design elements to shape a suitable structure -Contingencies are crucial, yet only partially controllable -The adopted organisational structure should tightly match with relevant contingencies CH6: Managing sustainably Meaning of sustainable business Denition: Professional activities accomplishing economic viability and stakeholder satisfaction within planetary boundaries -Related terms: Sustainable business: Economic viability and stakeholder satisfaction within planetary boundaries. 19 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Machine bureaucracy Professional bureaucracy Divisionalised form Adhocracy Wrap-up -Organisations should eectively use all design elements to shape a suitable structure -Contingencies are crucial, yet only partially controllable -The adopted organisational structure should tightly match with relevant contingencies CH6: Managing sustainably Meaning of sustainable business Denition: Professional activities accomplishing economic viability and stakeholder satisfaction within planetary boundaries -Related terms: Sustainable business: Economic viability and stakeholder satisfaction within planetary boundaries. 19 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Corporate (social) responsibility (CSR): Business practices focused on ethical, social, and environmental impacts. Inclusive business: Integrates underserved communities into value chains. Shared value: Business strategies that create economic value while addressing societal challenges. Corporate citizenship: Companies acting responsibly towards society and the environment. Circular business: Business models that promote reuse, recycling, and reduction of waste. Drivers of sustainable business -What drives sustainable business?  Instrumental motives (‘the business case’)  Relational motives (‘the social case’)  Moral motives (‘the normative case’)  Legal motives (‘the coercive case’) Instrumental motives (‘the business case’)  Sales generation (new markets, price premium)  Cost reduction (eco-eciency, lower cost of capital, employee motivation)  Risk reduction (less litigation risk) Relational motives (‘the social case’)  Good relations with internal and external stakeholders  Maintaining legitimacy (‘licence to operate’) Moral motives (‘the normative case’)  Sense of duty (deontology)  Higher-order values Legal motives (‘the coercive case’)  Regulatory compliance  Avoidance of nes or closure Mainstreaming of sustainable business Mainstreaming: integrating sustainable business into core activities Institutionalisation: Accomplishing durable, widely adopted, taken-for-granted (business) practices 20 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 -Institutionalisation process: 1. Trigger -Being sensitised to strong (external) pressure: Accidental opportunity, Media scandal, Moral wake-up, Legislation 2. Innovative practice -Responding to trigger: Local and ad-hoc action (ESH, HR, compliance ocers), Satisfying specic stakeholder demands, Disconnected from core business 3. Theorisation -Demonstrate relevance beyond initial action: Economic opportunities, Corporate legitimacy, Corporate values, Similar regulation 4. Diusion -Formulate and communicate sustainability targets -Involve all business actors: Line and sta functions, Procurement, production, marketing, R&D, … , From MT to shop oor, Supply chain partners 5. Maintenance -Link projects to core business -Weave socioenvironmental activities into structure and culture -Integrate socioenvironmental targets into KPIs -Make new targets increasingly ambitious Wrap-up -Sustainable business simultaneously considers economic, ecological, and social aspects -Organisations increasingly have a variety of good reasons to pursue sustainability -Sustainable practices will only last when fully incorporated into ‘business as usual 21 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 CH7: Managing internationally The international environment International Convergence: Tthe process by which countries become more alike in economic, political, social, and technological aspects due to globalization and shared challenges. -International PESTEL analysis:  Political: political openness turning into nationalism  Economic: neoliberalism turning into (regionalised) protectionism  Social: increasing (inequity-related) social tensions  Technological: burst of IT-related innovations, selectively spread  Ecological: local and global ecological boundaries crossed  Legal: increasing disrespect of private property rights and multilateral agreements -Ghemawat’s CAGE framework: match rm-environment  Cultural distance: Dierences in language, religion, social norms, and values between countries.  Administrative and political distance: Dierences in government policies, regulations, and political systems between countries.  Geographic distance: Physical distance and dierences in climate, time zones, and infrastructure between countries.  Economic distance: Dierences in economic development, income levels, and cost structures between countries. Internationalization strategies ! Reminder: The Strategy Diamond ! Economic logic types: Cost saving, Market access, Competition, Government policies -Economic logic: Cost saving: International factor market dierences: Lower labour costs, Lower capital costs, Lower natural-resource costs 22 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 Scale economies: International specialisation Logistics: Lower transport costs -Economic logic: Market access: Serving foreign customers with similar needs: Enhancing sales markets Serving global customers: Selling to customers with operations in multiple countries Leveraging marketing skills: Enhancing the reach of a rm’s competitive advantage -Economic logic: competition: Optimising interdependent markets: Coordinating activities to absorb international market uctuations Following main competitors: Ensuring oligopolistic suppliers will not pre-empt foreign markets -Economic logic: Government policies: Trade discouragement: Tari and non-tari barriers to trade Location-specic practices: National (technological) standards and (nancial) controls FDI stimulation: Subsidies, tax benets, infrastructure -Arenas: Cost savings:  Arbitrage to minimise factor costs  Specialisation to optimise scale economies  Proximity to minimise logistic costs Market access:  Similarity to extend existing sales markets  Following global customers  Similarity to leverage on existing skills Competition:  Regional market optimisation  Following competitors Government policies:  Foreign investments inside protected markets 23 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229  Local activities to align to local practices  Foreign investments to benet from stimuli -Vehicles: types: Importing / exporting: Procuring from / selling to another country Licensing / franchising: selling a name, technology, or process for production / service abroad Joint venture: equity alliance abroad with a (local) partner Wholly owned subsidiary: aliate abroad in full ownership Mobility and capabilities: -Dierentiators: Operational excellence:  Low-cost production  Scale economies  Organisational superiority  Logistic superiority Customer intimacy:  Marketing superiority  Global customer orientation  (Local government orientation) Product leadership:  Technological superiority  Design superiority  Product quality superiority 24 Downloaded by Hong Van Do ([email protected])  lOMoARcPSD|40186229 -Staging: Sequence (typical):  Exporting  Sales subsidiaries  Production subsidiaries  Locally oriented, autonomous subsidiaries  Globally specialised subsidiaries Speed:  Slow: greeneld expansion (organic growth)  Fast: browneld expansion (acquisition)  One (relatively close) market at a time (cf. Uppsala model)  Many markets simultaneously (cf. born-global rms) Internationalisation structures Domestic structure + export Domestic structure + internat. Division Multidomestic structure Transnational structure Wrap-up -Internationalisation is prevalent in most businesses -Internationalisation both extends and changes the nature of managing 25 Downloaded by Hong Van Do ([email protected])