siChapter 11 part 2

Group: Nancy fayad, Tatiana khoury, Joumana Daher

Identify one of the factors that is mostly affecting the structure of the firm: Strategy, Size,
Technology, The external environment in the example and whether the type of structure is
moving closer to: O for Organic and M for Mechanistic (**Please refer to end note for more
information).

Mechanistic Organic
High specialization Cross-functional teams
Rigid departmentalization Cross-hierarchal teams
Clear chain of command Free flow of information
Narrow spans of control Wide spans of control
Centralization Decentralization,
High formalization Low formalization

Factor (s) influencing Is the

the structure : structure
A: Strategy closer to
B: Size organic
C: Type of technology (O ) or
used Mechanistic
D: Level of (M)
environmental
uncertainty
Company Z that has started as a small family business has been Size M
growing in the past 10 years and is now operating in several
businesses. Its number of employees grew from 100 to 2000
employees. It is now structured into operations, sales, HR and
finance departments. The operations and sales departments
are divided geographically.
Company R operates in the service industry and constantly Level of environmental o
needs to adapt to changes in its environment; mainly changes uncertainty
in consumer behavior and tastes. Its employees who work well
together are professionals, are highly driven and used to
making decisions independently and promptly.
Company J is a telecommunication company and controls the Type of technology M
market. The market where it operates has strong barriers to used
entry due to regulation and therefore the company has no
competitors and has stable demand for its services.
Company T is a manufacturing company that produces on a strategy M
mass production scale. Its technology is repetitive and has
many routine and uniform tasks.
Company X is an event management company pursuing Type of technology M
competitive advantage through meaningful and unique used
innovative solutions and themes for its diverse client base.
Company H is a small family business where the owners are strategy O
involved in all the aspects of the organization. Employees are
often responsible for completely different tasks and act as if
they are one family and there are very few rules and
regulations.
“Everybody in our company is responsible to be innovative. Size O
We changed the vast majority of our iPhone in a day…iPad we
changed the entire lineup in a day. We want ideas coming
from all of our 80,000 people, not five or three… you want
ideas coming from everywhere…you want people to explore…
High collaboration is essential for innovation. We integrate
hardware, software and services in such a way that most
consumers begin not to differentiate anymore… No
bureaucracy. We want this fast-moving agile company…Small
teams do amazing things together.” (Interview with Apple CEO
Bloomberg Business week December 2012)

Company T produces handmade bags and accessories with strategy O

each product being a unique piece sold in limited editions. The
use of machinery is kept at a minimum and artisans and artists
work together in independent teams spending days putting
together each item.

In an interview with HBR in 2004 Samuel Palmisano, IBM CEO Level of environmental O
at the time notes: “You could employ all kinds of traditional, uncertainty
top down management processes. But they wouldn't work at
IBM-or, I would argue, at an increasing number of twenty-first-
century companies. You just can't impose command-and-
control mechanisms on a large, highly professional workforce.
I'm not only talking about our scientists, engineers, and
consultants. More than 200,000 of our employees have college
degrees. The CEO can't say to them, "Get in line and follow
me." Or "I've decided what your values are." They're too smart
for that. And as you know, smarter people tend to be, well, a
little more challenging; you might even say cynical. But even if
our people did accept this kind of traditional, hierarchical
management system, our clients wouldn't. As we learned at
IBM over the years, a top-down system can create a
smothering bureaucracy that doesn't allow for the speed, the
flexibility, the innovation that clients expect today”
**A-Strategy and Structure: Flexibility and free-flowing information for innovative and
differentiated products while mechanistic better suited for Cost leadership. B-Size and
Structure: As an organization grows from small to large, its structure tends to change from
organic to mechanistic C-Technology and Structure; Type of technology used to transform
inputs to outputs. Routine technology where the same processes are repeated = mechanistic
organizations Non-routine technology require unique solutions = organic organizations. D-
Environmental Uncertainty and Structure: Mechanistic organizational structures tend to be
most effective in stable and simple environments. The flexibility of organic organizational
structure

1- Determine in the below list of statements taken from the article “Office democracies” whether
the statement refers to an advantage or a disadvantage of the Mtrix/project structure

Matrix/Project

Excerpts from ” office democracies” Advantage/Disadvantage of Matrix structure

“ For decades companies have been peeling off Advantage
excess layers of managers to simplify the chain of
command, therefore becoming more quick and
nimble”

“Such flattening of the organization …means by Advantage

definition that the bottom is much closer to the
top”

“It’s a lot to manage a lot of managers” disadvantage

“Factional rivalries, personal frictions..” Disadvantage

“I couldn’t develop a consistent track record and Disadvantage

my performance ratings suffered”

“you’d think the solution would be to get all the Disadvantage

bosses to talk to each other. That assumes they
want to. Why clash with someone powerful
when you can lord over someone who isn’t”

“ It can have creative benefits” with team Advantage

members from various departments
Matrix/project: Assigns specialists from different functional departments to work on projects led by a
project manager. They return to their functional areas once project is completed and join another team
for another project

Advantages

• A- Reduced Barriers among functional areas and across managerial levels. Information flows
across the organization.

• B- Experts and resources used efficiently and shared across projects

• C- Faster decision making

• D- Develop individuals with broader perspectives and skills who can deliver value across the
business and manage in a more interconnected environment

Disadvantages

• E- Multiple reporting and conflicting demands-in that competing agendas can pull employees in
different directions, which can lower productivity.

• F- Mid-level management can become frustrated with what appears to be a lack of clarity with
priorities.

• G-Task and personality conflicts

• H-Complexity in conducting Performance Evaluation.

2- Determine in the below list of statements taken from the article Accenture ”whether the
statement refers to an advantage or a disadvantage of the boundary less structure

Excerpts from the Accenture Article Advantage/Disadvantage

Spending time with clients cements relationships advantage

Frequent contacts with lower level employees .. advantage

we’d get information that we’d never get

Review projects and decide where consultants Advantage

are most needed

Employees can’t pop into colleagues’ offices for disadvantages

impromptu meetings “

Some matters especially personal issues require a Advantage

personal visit
 Personal contact is particularly important during Disadvantages
tough times …280 meetings…in 18 months with
groups of 12,000 employees

Tries to meet hundreds of young recruits”- to DISADVANTGE

sustain culture

Flexibility When a client in Copenhagen asked to Advantage

see a senior executive …Change plans and head
North

Advantages virtual/Boundary Less

• A-Highly flexible and Responsive.

• B-Draws on talent wherever it’s found.

• C-No overhead costs of headquarters-

• D-Removes boundaries

• E-Technology and globalization both support this particular type of organization.

Disadvantages virtual

• F- Lack of control.

• G- Communication difficulties.

• H- More challenging to sustain organizational culture

• I- Dependent on technology-security issues

• J- Interpersonal communication challenges