Week 5 Chapter 1: What are Organizations Organization Theory in Action Current Challenges * Globalization: The fact that the world is getting smaller is dramatically true for today’s, organizations. With advances in technology and communications, the time it takes to exert influence around the world takes only seconds. Furthermore markets, technologies, and organizations are becoming increasingly interconnected. So it is crucial for businesses to adapt and be successful ‘* Ethics and Social Responsibility: Today's managers face tremendous pressure from the government and the public to hold their organizations and employees to high ethical and professional standards. ‘* Responsiveness: Itis crucial these days for businesses to respond quickly and decisively to environmental changes, organizational crises, or shifting customer expectations. For much of the twentieth century, organizations operated in a relatively stable environment, so managers could focus on designing structures and systems that kept the organization running smoothly and efficiently. There was little need to search for new ways to cope with increased competition, volatile environmental shifts, or changing customer demands. Today, globalization and advancing technology have accelerated the pace at which organizations in all industries must roll out new products and services to stay competitive. ‘* Intense Competition. This growing global interdependence creates new advantages, but it also means that the environment for companies is becoming extremely competitive. Companies in all industries are feeling pressure to drive down costs and keep prices low, yet at the same time they are compelled to invest in research and development or get left behind in the global drive for innovation. ‘* The Digital Workplace: In today's workplace, many employees perform much of their work on computers and may work in virtual teams, connected electronically to colleagues around the world. This way of working gives many advantages, but those advantages mean that organizational leaders not only need to be technologically savy but are also responsible for managing a web of relationships that reaches far beyond the boundaries of the physical organization, building flexible e-links between a company and its employees, suppliers, contract partners, and customers. ‘© Diversity: As organizations increasingly operate on a global playing field, the workforce—as well as the customer base—grows increasingly diverse. This growing diversity brings a variety of challenges, such as maintaining a strong corporate culture while supporting diversity, balancing work and family concerns, and coping with the conflict brought about by varying cultural styles. What is an organization? Definition Organisations: 1. social entities that; 2. are goal-directed; 3. are designed as deliberately structured and coordinated activity systems, and; 4. are linked to the external environment. The key element of an organization is not a building or a set of policies and procedures; organizations are made up of people and their relationships with one another. An organization exists when people interact with one another to perform essential functions that help attain goals. Managers deliberately structureand coordinate organizational resources to achieve the organization's purpose Some organizations are large, multinational corporations, others are small, family owned businesses, and still others are nonprofit organizations or governmental agencies. The organization design concepts discussed throughout this book, such as dealing with issues of power and conflict, setting goals and measuring effectiveness, coping with environmental uncertainty, implementing effective control mechanisms, and satisfying multiple stakeholders, apply to both nonprofit organizations such as they do to for profit businesses.These concepts and theories are adapted and revised as needed to fit the unique needs and problems of various small, large, profit, or nonprofit organizations. Importance of Organizations Organizations exist to do the following 1. Bring together resources to achieve desired goals and outcomes 2. Produce goods and services efficiently 3. Facilitate innovation 4, Use modern manufacturing and information technologies 5, Adapt to and influence a changing environment 6. Create value for owners, customers, and employees Accommodate ongoing challenges of diversity, ethics, and the motivation and coordination of employees. Chapter 2: Perspectives on Organizations Distinction between a closed and an open system. * A closed-system perspective focuses exclusively upon the organization. Minimal consideration is given to its dependencies upon, or capacities to influence, the environment. ‘* Open system thinking pays attention to the (open) boundary between the organization and its context. Developing a design that effectively manages the exchanges - of raw materials, people, products, etc. — across this boundary is, in an open systems perspective, key to survival and prosperity. A limitation of open- system thinking is that it presents an excessively neat picture of how organizations operate and relate to elements of their environment. In system thinking, each system is understood to comprise several subsystems, These subsystems are identified in relation to the specific functions they are conceived to perform for organizational survival. Henry Mintzberg suggests that every organization has five parts: * Technical core: includes diverse support staff who do the basic work of the organization (production subsystem) + Technical support: scans the environment for problems, opportunities and technological developments. Responsible for creating innovations in the technical core, helping the organization change and adapt (technology, R&D and marketing research), ‘© Administrative support: responsible for the smooth operation and upkeep of the organization, including its physical and human elements(human resource, cleaning of buildings and service and repair of machines (HR & maintenance staf. ‘* Management - Top and Middle:responsible for directing and coordinating other parts of the ation, Top management provides direction, strategy, goals and policies for the entire ation or major divisions. Middle management is responsible for implementation and coordination at the departmental level{Top)Management: Provides direction, strategy, goals and policies for the entire organization Technical support: scans the (Middle}management: ‘Administrative support: support environment for problems, Responsible for implementation | | functions is responsible for the ‘opportunities and technical and coordination at the ‘Smooth operation and upkeep developments (R&D) departmental level of the organization. Technical core: Includes diverse support staff who do the basic work of the organization Organizational dimensions can be categorized in two types: structural and contextual. ‘* Structural dimensions provide labels to distinguish some key, internal characteristics of an organization. They provide a basis for comparing the composition of organizations. ‘* Contextual dimensions characterize both the organization as a whole, including its size, technology, etc. and the broader organizational setting. ‘he Ogsnieaiy 3 Haney of mtoty ‘4. Canalenin 5 Petesorain 6 Pomel ator Structural dimensions: 1. Formalization: the reliance upon written documentation in the organization (procedures, job descriptions, regulations and policy manuals). 2. Specialization: the degree to which organizational tasks are subdivided into separate jobs. Specialization is extensive; each employee performs only a narrow range of tasks. 3. Hierarchy of authority: describes who reports whom and the span of control for each manager. The hierarchy is related to span of control (the number of employees reporting to a supervisor). When this is narrow, specialization is high and hierarchy tends to be tall 4, Centralization: refers to the hierarchical level that has authority to make a decision. When decision- making is at top-level, the organization is centralized. 5, Professionalism: the term used to describe the level of formal education and training of ‘employees. This is considered high when employees require long periods of training to hold jobs in the organization. 6, Personnel ratios: refer to the deployment of people to various functions and departments. Include the administrative ratio, the clerical ratio, the professional staff ratio and the ratio indirect to direct labour employees. Is measured by dividing the number of employees by the total number of employees.Contextual dimensions: 1. Size: can be measured for the organization as a whole or for specific components, such as a plant or vision. The number of employees typically measures size. 2, Organizational technology: refers to the tools, techniques and actions used to transform inputs into outputs. It concerns how the organization actually produces the products and services it provides for customers and includes such things as flexible manufacturing, advanced information systems and the Internet. 3. Environment: includes all elements outside the boundary of the organization (industry, government, customers, suppliers and the financial community). 4. Goals and strategy: define the purpose and competitive techniques that set it apart from other organizations. Goals are often written down as an enduring statement of company intent. A strategy is the plan of action that describes resource allocation and activities for dealing with the environment and for reaching the organization's ‘goals’, 5, Culture: the underlying set of key values, beliefs, understandings and norms shared by employees. Performance and Effectiveness Outcomes Efficiency refers to the amount of resources used to achieve the organization's goalsilt is based on the quantity of raw materials, money and employees necessary to produce a given level of output. Effectiveness is a broader term, meaning the degree to which an organization achieves its goals. Stakeholder approach is the idea of balancing the preferences of different groups. A stakeholder is any group within or outside of the organization that has a stake in the organization, The Evolution of Organization Theory and Design Organization theory is a way to see and analyse organizations more accurately and deeply than one otherwise could. The way to see and think about organizations is based on patterns and regularities in organizational design and behaviour. The modern era of management theory began with the classical management perspective in the late nineteenth and early twentieth century with the emergence of the factory system during the Industrial Revolution. People began to find out ways of how to design and manage work in order to increase productivity and help organizations attain maximum efficiency, Historical perspectives: * The classical perspective sought to apply rational calculations to turn organizations into efficient, well-oiled machines. This perspective is associated with the development of extended hierarchies and bureaucratic procedures of control. The principles of scientific management (Taylor) postulate that decisions about organizations and job design should be based on a precise, scientific study of individual situations to determine which method of doing a job delivers the greatest output. On this basis, managers standardize procedures for doing each job, select workers with the most appropriate abilities, train them to follow the standard procedures, carefully plan work, and provide wage incentives to increase output. Scientific management was based upon closed systems thinking. © Another version of a classical perspective is a focus on administrative principles (Fayol) considered the design and functioning of the organization as a whole. Henri Fayol proposed 14 principles of management, such as ‘each subordinate receives orders from only ‘one superior’ (unity of command) and ‘similar acitivities in an organization should be grouped together under one manager’ (unity of direction). Administrative principles contributed to the development of bureaucratic organizations, which emphasized designing and managing ‘organizations on an impersonal, ostensibly rational basis by establishing clearly defined authorityand responsibility, formal record keeping and uniform application of standard rules. One problem of the classical perspective is that it has limited attention to the social context and to human feelings The Hawthorne Studies conclude that positive treatment of employees, even by simply acknowledging their presence and contribution, improved their motivation and productivity. Principals of scientific management and administration assume that there is ‘one best way’ of organizational design. This thinking however suggests that the contingencies are always the same. Contingency means that what structure or system is viable depends upon the particular circumstances or context of its design. Chaos theory suggests that relationships in complex, adaptive systems are nonlinear and made up of numerous interconnections and divergent choices. In order to make quick decisions, many organizations are being redesigned and/or developed to become so-called learning organizations. The principle of the learning organization is for communication and collaboration to be actively promoted so that everyone is engaged in identifying and solving problems, enabling the organization to continuously experiment, improve and increase its capability. The learning organization is based on equality, open information, little hierarchy and a culture that encourages adaptability and participation, enabling ideas to bubble up from anywhere that can help the organization seize opportunities and handle crises. Efficient performance versus the learning organization ‘Structure — From Vertical to Horizontal. The most common organizational structure has been one in which activities are grouped together by common work from the bottom to the top of the organization. However, in a rapidly changing environment, the hierarchy becomes overloaded. Top executives are not able to respond rapidly enough to problems or opportunities. in the learning organization, the vertical structure that creates distance between managers at the top of the ‘organization and workers in the technical core is disbanded. Structure is created around horizontal workflows or processes rather than departmental functions. ‘* Tasks — Routine Tasks to Empowered Roles. A task is a narrowly defined piece of work assigned to a person. A role ont the other hand is a part in a dynamic social system. In learning organizations, ‘employees play a role in the team or department and roles may be continually redefined or adjusted. There are few rules or procedures, and knowledge and control of tasks are located with workers rather than with supervisors or top executives. * Control Systems — From Formal to Shared Information, In young, small organizations, communication is generally informal and face-to-face. However, when organizations grow large and complex, the distance between top leaders and workers in the technical core increases, so formal systems are often implemented to manage the information. In learning organizations, information serves a very different purpose. The widespread sharing of information keeps the organization functioning at an optimum level. ‘* Strategy - From Competitive to Collaborative. In traditional organizations designed for efficient performance, strategy is formulated by top managers and imposed on the organization. In the learning organization, in contrast, the accumulated actions of an informed and empowered workforce contribute to strategy development. ‘* Culture — From Rigid to Adaptive, The cultural values, ideas, and practices that helped attain success can be detrimental to effective performance in a rapidly changing environment. A danger is that the corporate culture becomes fixed. In a learning organization, the culture encourages openness, equality, continuous improvement, and change.Chapter 3: Strategy, Organizational Design and Effectiveness An organi: ional goal is a desired state of affairs or outcome that members of an organization are entreated to reach. A goal represents a result or end point, generally identified by a small elite of executives, toward which it is intended that the efforts of organizational members will be directed. a fe Gea! aneaineent eo \ eee \ Pa | lace ) Be ple) atic) Soo = ee! let ~ ‘aoenties ane « Tprartactor ~ Em) Interorganizntional Endages Waatooses since competence loader sie Fast pertorsaace Organizational Purpose An organization's mission is the overall, officially stated goal attributed to an organization, it’s the organization's reason for its existence. Itis also known as official goals. The mission statement communicates to current and prospective employees, customers, investors, suppliers and competitors what the organization stands for and what itis trying to achieve. Operative goals Operative goals describe specific measurable outcomes and are often concerned with the short run. Operative goals typically pertain to the primary tasks an organization must perform, similar to the subsystem activities. ‘+ Overall performance goals include profitability, growth and output volume, but may extend to other performance measures of reputation, corporate responsibility and soon. ‘+ Resource goals refer to the acquisition of needed material and financial resources from the environment. They may involve obtaining financing for the construction of new plants, finding less expensive sources for raw materials or hiring top-quality technology graduates. ‘© Market goals relate to the market share or market standing desired by the organization. ‘* Employee development refers to the training, promotion, health and safety and growth of employees. It includes both managers and workers * Innovation goals refer to internal flexibility and readiness to adapt to unexpected changes in the environment, Innovation goals are often defined with respect to the development of specific new services, products or production processes. ‘* Productivity goals concern the amount of output achieved from available resources. The importance of goalsBoth official goals and operative goals are important for the organization, but they serve very different purposes. oficial goals, mission: Official goals and mission statements describe a value Operative goals: system for the organization and set an overall purpose and vision; operative goals represent the primary tasks of the organization. Official goals legitimize the organization; operative goals are more explicit and well defined. A Framework for Selecting Strategy and Design A strategy is a plan for interacting with the competitive environment to achieve organizational goals. Goals define the direction of travel, and strategies define how to get there. Two models for formulating strategies are the Porter model of competitive strategies and Miles and Snow's strategy typology. Porter model of competitive strategies Porter suggests that a company can adopt one of three strategies: differentiation, low-cost leadership, or focus. The focus strategy, in which the organization concentrates on a specific market or buyer group, is further divided into focused low cost and focused differentiation Managers evaluate 2 factors: ‘= Competitive advantage ‘* Scope of competition * Differentiation. In a differentiation strategy, organizations attempt to distinguish their products or services from others in the industry. An organization may use advertising, distinctive product features, exceptional service, or new technology to achieve a product perceived as unique. This strategy usually targets customers who are not particularly concerned with price, so it can be quite profitable. A differentiation strategy can reduce rivalry with competitors and fight off the threat of substitute products because customers are loyal to the company’s brand. Example: Ferrari ‘* Low-Cost Leadership. The low-cost leadership strategy tries to increase market share by keeping costs low compared to competitors. With a low-cost leadership strategy, the organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight controls to produce products or services more efficiently than its competitors. Low-cost doesn’t necessarily mean low- ¢, but in many cases, low-cost leaders provide goods and services to customers at cheaper prices. Example: Aldi * Focus. With Porter's third strategy, the focus strategy, the organization concentrates on a specific regional market or buyer group. The company will try to achieve either a low-cost advantage or a differentiation advantage within a narrowly defined market. Example: Rolex Miles and Snow's strategy typology The Miles and Snow typology is based on the idea that managers seek to formulate strategies that will be congruent with the external environment. The four strategies that can be developed to manage and exploit the external environment are the prospector, the defender, the analyser and the reactor. 1. The prospector strategy is to innovate, take risks, seek out new opportunities and grow. This strategy is suited to a dynamic, growing environment, where creativity is more important than efficiency. 2. The defender strategy is almost the opposite of the prospector. Rather than taking risks and seeking out new opportunities, the defender strategy is concerned with stability or even retrenchment. This strategy seeks to hold onto current customers, but it neither innovates nor seeks to grow. The defender is concerned with internal efficiency and control to produce reliable, high- quality products for existing customers. Useful in declining industry or stable environment.3. The analyser tries to maintain a stable business while innovating on the periphery, lies between the prospector and defender. Some products will be targeted toward stable, low innovation environments. Others will be targeted toward new, more dynamic environments. 4, The reactor strategy is not really a strategy at all. Reactors respond to environmental threats and opportunities in an ad hoc fashion. Contingency Effectiveness Approaches The goal approach to organizational effectiveness is External concerned with the output side and whether the organization achieves its goals in terms of desired levels of output. The resource-based approach assesses effectiveness by observing the beginning of the process and evaluating whether the ‘organization effectively obtains resources necessary som pos Environment for high performance. The internal process approach looks at internal activities and assesses effectiveness by indicators of internal health and pgraucetoved efficiency. ‘rch There are three different approaches to judge efficiency 1. The goal approach measures progress toward attainment of output goals. Indicators of this approach are operative goals instead of official goals. Operative goals relate to actual activities. Issues with this approach are multiple goals (achievement of one goal might mean low attainment of another) and subjective indicators (how to measure goal attainment) of goal attainment. 2. The resource-based approach is this approach are: .cted to the input side of the transformation process. Indicators of ‘* Bargaining position: the ability to obtain from the environment scarce and valued resources, including financial resources, raw materials, human resources, knowledge and technology‘* The abilities of the organization's decision-makers to perceive and correctly interpret the salient properties of the external environment ‘+ The ability to use tangible and intangible resources in day-to-day organizational activities ‘* The ability to respond appropriately to changes in the environment This approach is valuable when other indicators of performance are difficult to obtain. Shortcoming is that the approach may not adequately consider the organization's link to customers. 3, The internal process approach measures effectiveness as internal organizational health and efficiency. Indicators of this approach are: Strong corporate culture and positive work climate Team spirit, group loyalty and teamwork Confidence, trust and communication between workers and management Decision-making near sources of information, regardless of where those sources are on the organizational chart Undistorted horizontal and vertical communication; sharing of relevant facts and feelings ‘* Rewards to managers for performance, growth and development of subordinates, and for creation of cooperative work groups ** Interaction between all parts of the organization, with conflict that occurs over projects being resolved in ways that are collectively beneficial and productive. Shortcomings: total output and the organization's relationship with the external environment are not evaluated, and many aspects of inputs and internal processes are not readily or meaningfully quantifiable. ‘The competing values model tries to balance a concern with different kinds and aspects of effectiveness rather than focusing on one approach. The competing values model acknowledges that organizations do many things that have many outcomes. It combines several indicators of effectiveness into a single framework. It is based on the assumption that there are disagreements and competing viewpoints about what constitutes effectiveness. Indicators: ‘The first value dimension pertains to organizational foeus, which is whether dominant value concern issues that are internal or external to the firm. Internal focus reflects a management concern for the well being and productivity of employees, and external focus represents an emphasis on well-being with respect to stakeholders in the environment, such as shareholders, customers and suppliers. ‘The second value dimension pertains to organization structure, and whether stability or flexibility is the dominant structural considerationSTRUCTURE Flexibility ‘Open Systems Model Goal values growth, ‘resource acquisition mo Subgoels:leibilty, readiness, ‘external evaluation rocus [inauy Internal Process Model Goal values stability, equilibrium Subgosls: information management, ‘communication ‘Controt Models of Effectiveness Values A combination of external focus and flexible structure leads to an open systems emphasis (dominant value is establishing a good relationship with key stakeholders in the environment). The rational goal emphasis represents management values of structural control and external focus. The primary goals are productivity and efficiency. The internal process emphasis is in the lower left section and reflects the values of internal focus and structural control, The human relations emphasis incorporates the values of an internal focus and a flexible structure. Management is concerned primarily with the development. Chapter 4: Fundaments of Organization Structure There are three components in the definition of organization structure: 1. Organization structure designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors. 2. Organization structure identifies the grouping together of individuals into departments and of departments into the total organization. 3. Organization structure includes the design of systems to ensure effective communication, coordination and integration of efforts across departments. An organization chart (picture right) is the visual representation of a whole set of underlying activities and processes in an organization Centralized decision-making means that problems and decisions are funnelled to top levels of the hierarchy Ee for resolution (emphasis on control), Decentralized decision-making means ; decision- making authority is pushed down to lower Ea Ea En organizational levels (emphasis on learning).Vertical Organization Horizontal Organization Designed for ficiency Designed for Learning eerie 9 Cs Vertical linkages are used to coordinate activities between the top and bottom of an organization and are designed primarily for control of the organization. Following devices improve vertical linkages: ‘© Hierarchical referral. The first vertical device is the hierarchy, or chain of command. When a problem arises that employees don’t know how to solve, it can be referred up to the next level in hierarchy. ‘© Rules and plans. when problems and decisions are repetitious, a rule or procedure can be established so employees know how to respond without communicating directly with their manager. * A vertical information system is a strategy for increasing vertical information capacity. It includes the periodic reports, written information and computer-based communications distributed to managers. Horizontal linkage refers to the amount of communication and coordination horizontally across organizational departments. These are often not drawn on the organization chart. The following devices improve horizontal coordination and information flow: © Information systems * Direct contact: a way to promote this is to create a special liaison role. This is located in one department but has the responsibility for communicating and achieving coordination with another department. * Task forces: task force is a temporary committee composed of representatives from each organizational unit affected by a problem. Each member represents the interests of a department or division and can carry information from the meeting back to that department. * Full-time integrator: full-time integrator has a title and is located outside the departments and has the responsibility for coordinating several departments ‘* Teams: a virtual team is made up of organizationally of geographically dispersed members who are linked primarily through advanced information and communications technologies. Four dimensions to teamwork are: job enlargement, job enrichment, cooperation & high performance. Department grouping affects employees because they share a common supervisor and common resources, are jointly responsible for performance, and tend to identify and collaborate with one another. Functional grouping places together employees who perform similar functions or work processes or who bring similar knowledge and skills to bear. Divisional grouping means people are organized according to what the organization produces.Multifocused grouping means an organization embraces two structural grouping alternatives simultaneously (matrix or hybrid). Horizontal grouping means employees are organized around core work processes, the end-to- end work, information and material flows that provide value directly to customers or support strategic development. Virtual network grouping means that the organization is a loosely connected cluster of separate components. Departments are separate organizations that are electronically connected for the sharing of information and completion of tasks. In a functional structure, activities are grouped together by commen function from the bottom to the top of the organization. This structure is most effective when in-depth expertise is critical to meeting organizational goals, when the organization needs to be controlled and coordinated through the vertical hierarchy, and when efficiency is important. Comat Revaed i : jA divisional structure is also known as product structure or strategic business-units. With this structure, divisions can be organized according to individual products, services, product groups, major projects or programmes, divisions, businesses or profit centres. See strengts and weaknesses of a divisional structure below: 41 Sued to fst change in state stcorest teenie posi reponsily aed reac pons are cat 2 Invahes hig cootinaton acess ‘ureoes 4, lows units aot aeroces bn products gona customers 5. owt nrg ogartten with several posits ‘6 Dovenralas dection mang Another basis for structural grouping is the organization's users or customers: geography. This is the most common structure in this category is geography. Each region of the country may have distinct tastes and needs. Each geographic unit includes all functions required to produce and market products or services in that region. The strengths and weaknesses of a geographic divisional structure are like the divisional organization characteristics listed here above. The organization can adapt to the specific needs of its own region, and employees identify with regional adapt to the specific needs of its own region, and employees identify with regional goals rather than with national goals. Horizontal coordination within a region is emphasized rather than linkages across regions or to the national office. A matrix structure is developed in an effort to give equal emphasis and attention to product and function, or product and geography. The matrix Ea is more likely to be introduced when technical expertise and product innovation and change are assessed to be of equal importance. The matrix structure can be a workable structure when one or more of the following conditions are met: * Condition 1: pressure exists to share scarce resources across product lines. The organization is often medium sized and has a moderate number of product lines. There are pressures for the shared and flexible use of people and equipment across the product lines. * Condition 2: Environmental pressures exist for two or more critical ‘outputs, such as for in- depth technical knowledge (functional structure) and frequent new products (divisional structure). The dual pressure requires sharing of power between the functional and product sides of the organization, and a dual- authority structure is needed to maintain that balance. * Condition 3: The environmental domain of the organization is both complex and uncertain. Frequent external changes and high interdependence between departments require a largeamount of coordination and information processing in both vertical and horizontal directions Many companies have found a balanced matrix hard to implement and maintain because one side of the authority structure often dominates. For employees, serving two masters can prove a confusing and excessively demanding experience. As a consequence, two variations of matrix structure have evolved — the functional matrix and the product matrix. In a functional matrix, the functional bosses have primary authority and the project or product managers simply coordinate product activities. In a product matri the project or product managers have primary authority and functional managers simply assign technical personnel to projects and provide advisory expertise as needed. The horizontal structure organizes employees around core processes. Re-engineering, or business process re-engineering, involves the redesign of a vertical organization along its horizontal workflows and processes. A process refers to an organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers. Characteristics of such organizations are: * Structure is created around cross-functional core processes ratherthan tasks, functions or geography. ‘© Self-directed teams, not individuals, are the basis of organizational design and performance. Process owners have responsibility for each core process in its entirety. People on the team are given the skills, tools, motivation and authority to make decisions central to the team'sperformance. Team membersare cross-trained to perform one another's jobs. ‘+ Teams have the freedom to think creatively and respond flexibly to new challenges that arise. ‘© Customers drive the horizontal corporation. Effectiveness is measured by en-of-process performance objectives, base on the goal of bringing value to the company's stakeholders including customers and investors. © The culture is one of openness, trust and collaboration, focused on continuous improvement.Outsourcing is the contracting out of aspects of work to other companies. This is an example of inter- organizational relationships and organizations can take outsourcing to the extreme with creating a virtual network structure. With a virtual network structure, organisations subcontracts many or most of its major processes to separate companies and coordinates their activities from a small headquarters organization. |. Enables even smal organizations 10 =, Managers do not have nands-on control over Obtain talent and resources worldwide ‘many activities and employees. 2, Gives a company immedatescae 2, aqures a great deal of ime to manage and reach without huge investments relationships and potartial confcts with Safest acter ei: «Gen ees focitios 3. There isa risk of organizational fllura fa 3. Enables the organization to be highly partner falis to deliver or goes out of business flexible and responsive to changng =. Employee loyalty and corporate culture might needs be weak because employes fee! they can bs 4, Reduces administrative overhead costs replaced by contact servicoe The hybrid structure combines characteristics of various approaches tailored to specific strategic needs. Most companies combine characteristics of functional, divisional, geographic, horizontal, or network structures to take advantage of the strengths of various structures and avoid some of the weaknesses. Hybrid structures tend to be used in rapidly changing environments because they offer the organization greater flexibility. One type of hybrid that is often used is to combine characteristics of the functional and divisional structures. When a corporation grows large and has several products or markets, it typically is organized into self-contained divisions of some type. Functions that are important to each product or market are decentralized to the self-contained units. However, some functions that are relatively stable and require economies of scale and in-depth specialization are also centralized at headquarters. A second hybrid approach that is increasingly used today is to combine characteristics of functional, divisional, and horizontal structures Structural Alignment Managers may use a variety of structural characteristics to meet the needs of the total organization. Many large organizations also outsources some of its activities to other firms. A hybrid structure is often preferred over the pure functional, divisional, horizontal, or virtual network structure because it can provide some of the advantages of each and overcome some of the disadvantages. Vertical control tends to be associated with goals of efficiency and stability, while horizontal coordination is associated with learning, innovation and flexibility. The following are symptomatic of structural deficiency: * Decision-making is delayed or lacking in quality. * The organization does not respond innovatively to a changing environment ‘+ Employee performance declines and goals are not being met * Too much conflict is evident