org Flashcards
(79 cards)
Porter´s Competetive Strategies.
3 dimensions.
Describe organizational design.
- Differentiation: Distinguishing one´s products or services from others in the industry.
Org design: strong horizontal coordination. Strong capability in research. Reward employee´s creativity. - Low-cost: Emphasizing low cost compared to competitors.
Org design: strong central authority, routine tasks, tight cost control. - Focus: Concentration on a specific regional market or buyer group. Then it uses differentiation or low-cost.
Miles and Snow´s strategy
Managers formulate strategies that fit the external environment.
Prospector: Innovate, take risks and seek out new opportunities. Suited to a dynamic, growing environment. Where creativity is more important the efficiency. Example: High tech companies such as Google.
Defender: Almost opposite to the prospector. Concerned with stability and internal efficiency and control to produce reliable and high-quality products. for existing customers. Suitable in a declining industry or a stable environment. Ex: Paramount Picture.
Analyzer: Trying to maintain a stable business while innovating on the periphery. Middle of the prospector and the defender. Balances efficiency and learning.
Reactor: Not really a strategy. Reactors respond to environmental threats and opportunities. Top management has not defined a long-range plan or given the organization an explicit mission or goal.
Similarities and differences in Porters and Miles and Snow´s strategy
Low-cost (porters) is similar to the defender (miles and snow´s). Design characterized by:
- efficiency approach
- standardization, and control
- employees perform routine tasks
- centralized authority, vertical coordination
Diffrentiation is similar to the prospector. Design characterized by:
- learning approach
- employees encouraged to experiment
- less rule-driven
- flexible or more fluid structures
- horizontal coordination
Difference between effectiveness and efficiency
Effectiveness: Degree to which an organization realizes its goals.
Efficiency: Refers to the internal working of the organization and the amount of resources used to produce a unit of output.
Contingency effectiveness approaches
Namnge 3 stycken och skriva. Indicators, usefulness and problems
- Resoursce-based approach: Measures effectiveness through monitoring the input side of organization. How to successfully
Indicators: Abilities to use tangible resources, abilities to respond to changes.
Usefulness: Valuable when other performance indicators are difficult to obtain
Problems: assumes the stability of the market, does not consider the changing value of resources.
- Internal Process Approach: Measures effectiveness based on indicators of internal health and efficiency.
Indicators: 7 indicators ex: strong corporate culture, positive work climate, teamwork
Usefulness: Important and nowadays widely used
Problems: evaluation is often subjective, little attention to the external environment. - Goal Approach: Measures progress in terms of achievement of output goals.
Indicators: Using operative goals
Usefulness: widely used, as output goals can be readily measured
Problems: the issue of multiple goals, conflicting goals, subjective indicators of goals achievement
Functional Grouping
General
Strengths
Weaknesses
Structured around common functions or tasks. Common in organizations with tight controls and a lot of vertical (and little need for horizontal) coordination.
Strengths:
Allows economies of scale
Enables in-depth knowledge and skill development
Enables organizations to accomplish functional goals
Is best with only one or a few products.
Weaknesses: Slow response time to environmental changes. Hierarchy overload. Poor horizontal coordination Less innovation A restricted view of goals
Divisional structure
General
Strengths
Weaknesses
Structure around products, services, and projects. Strategic business units, product structure
Strengths: Responses to change in unstable environment.
High coordination between departments.
Allows units to adapt to differences
Best in large organizations with several products
Decentralizes decision making
Weaknesses:
Eliminates economies of scale
Poor coordination between product lines
Eliminates in-depth competence and technical specialization
Integration and standardization across product lines difficult
Matrix structure
General
Strengths
Weaknesses
Matrix structure embraces two structural grouping alternatives simultaneously.
Strengths: Achieves coordination to meet dual demands
Flexible sharing of human resources across products
Suited to complex decisions and unstable environment
Best in medium-sized organizations with multiple products
Weaknesses:
Dual authority –> confusion
Needs good interpersonal skills and extensive training
Time-consuming
Needs a common understanding
Requires effort to maintain the power balance
Horizontal grouping
Employees are organized around the core work process, the end-to-end work, information and material flow that provide value directly to customers or support strategic development. All the people who work on a process brought together in a group.
Strengths: Flexibility and rapid response to changes, focus on the delivery of value, employees have a broader view of organization goals, focus on teamwork and collaboration, improve quality of life for employees.
Weaknesses:
Determining core processes is difficult
Requires many changes
Traditional managers often don´t like giving up power and authority
Requires significant training of employees
Can limit in-depth skill development
Virtual network structure
Central hub surrounded by a network of outside specialists
Extends the concept of horizontal coordination and collaboration beyond the boundaries of the organization
The most common strategy is outsourcing
Departments are basically separate organizations that are electronically connected for information sharing and completion of tasks.
Strengths:
Enables obtaining talent and resources worldwide
Allows immediate scale and reach without huge investments
Highly flexible and responsive and to changing needs
Reduces administrative cost
Weaknesses:
Managers don´t have hands-on control over many activities and employees
Time-consuming to manage relationships
Weak employee loyalty and corporate culture
A culture characterized by a strategic focus on the external environment through flexibility and change.
adaptability culture
The structuring of the organizations according to individual products, services, products groups, major projects of profit centers
divisional structure
The code of moral principles and values that governs the behavior of a person or group with respect to what is right or wrong.
ethics
Vertical power
All employees along the vertical hierarchy have access to some sources of power. There are four types of vertical power: formal position, resources, control of decision premises and information and network centrality.
Formal position: Certain rights, responsibilities, and prerogatives arise to top positions. The power from formal positions is sometimes called legitimate power. Senior managers use symbols and language to perpetuate their legitimate power. The power to middle managers and lowel-level employees is mainly built into the organizational´s structural design. The allocation to middle managers and low-level employees is important because power enables employees to be productive. By designing tasks and interactions along the hierarchy, everyone can exert more influence.
Resources: Organizations allocate huge amounts of resources. These resources are allocated downward from top managers. Resources can use as reward and punishment. Low-level depend on the top managers the resources needed to perform their tasks.
Control of decision premises and information: Top managers place constraints on decisions made at lower levels by specifying a frame of reference and guidelines for decision-making. Top-manager decides which goals an organization wants to achieve, the lower-level decides how the goal is to be reached.
Network centrality: Being centrally located in the organization. Top managers are more successful when they put themselves at the center of a communication network, building connections throughout the company.
People: Top leaders often increase their power by surrounding themselves with a group of loyal executives. They can use their central positions to build alliances. This also works in the opposite direction, lower-level people have greater power when they have positive relationships and connections with executives.
Horizontal power
Horizontal power reflects the relationships across departments or divisions. Horizontal power is not defined by hierarchy or the organization chart. Some departments will have greater power than others. Horizontal power is difficult to measure, however, the theoretical concept that explains relative power is called strategic contingencies which are activities both inside and outside an organizational. Departments involved with strategic contingencies for the organization tend to have greater power.
Power sources provide a useful way to evaluate sources of horizontal power.
- Dependency: Power is derived from having something someone else wants. The power of department A is over department B is greater when department B depends on department A.
- Financial resources: Control over resources is an important source of power. The golden rule: “the person with the gold makes the rules” .
- Centrality: Reflect on a department´s role in the primary activity of an organization. For example, the production department is more central and usually have more power than the staff groups. Centrality is associated with power since it reflects the contribution made to the organization.
- Nonsubstitutability: Power is also determined by nonsubstitutability which means that a department´s function cannot be performed by others readily available resources. Similarly, if an employee cannot easily be replaced, his or her power is great.
- Coping with uncertainty: departments that reduce uncertainty for the organization will increase their power.
The key characteristic of the four primary types of organizational decision-making processes.
Mention the pros and cons
- Management science approach:
It focuses on mathematical and statistical information. Management science is an excellent device for organizational decision-making when problems are analyzable and when the variables can be identified and measured.
Pros: Can accurately and quickly solve problems that are too explicit for humans processing.
Cons: It is very complex and can be hard to understand. Quantitive data are not rich and do not convey tacit knowledge.
- Carnegie model:
It focuses on the political and social dimensions. Decisions are based on a coalition between several managers that have agreed about goals and problem priorities.
Pros: Goals are often ambiguous and inconsistent between departments, which often lead to that the managers disagree about problem priorities. By building a colation between managers they can agree on problem priorities and make more rational decisions since managers exchange different points of view to gather information.
Cons: Satisfice instead of optimizing.
- Incremental Decision Process Model: Focuses on structured frequencies of activities. Three major steps: identification, development phase, and selection phase. Bigger decisions are based on a series of small decisions. Organizations move through several decision points and barries: sometimes need to go back to one specific decision point and re-do the choice. Trial and error.
Pros: Can lead to organizational learning.
Cons: ??? - Garbage can model: Focuses on flows of multiple decisions in an organization. The garbage can model assist in considering the whole organization and the frequent decisions being made by managers throughout. The decision model is not seen as a sequence of steps that begins with a problem and ends with a solution.
Consequences: Solutions may be proposed even when problems do not exist. Choices are made without solving probmes. Problems may persist without being solved. A few problems are solved.
Why do companies need to grow?
They need to grow in order to compete globally. Furthermore, they need to grown in order to dominate markets and thereby expand their size and command resources to compete profitability on a global scale and to be able to invest in new technology and to control distribution channels. Greater size also gives companies power in the marketplace and thus increases revenues.
Compare and contrast big and small organization
Large organizational is often more standardized, mechanic, complex and have a vertical hierarchy. Small organizations have a more flat structure and are more organic. Small organizations can quickly react to customer needs or shifting environmental and market conditions. Furthermore, small organizations have a more free-flowing management style that enables innovation and entrepreneurship. Compared to small organizations, a large organization is more stable and is able to get back to business more quickly after a disaster, which gives employees a sense of security.
Big-company/small company hybrid
This means combining a large corporation´s resources and reach with a small company´s simplicity and flexibility. The divisional structure is a way for large organizations to strive to attain a big-company/small-company hybrid. One method is to reorganized into smaller autonomous divisions that have the freedom and a small-company approach.
Current challenges
- Globalization
- Ethical and social responsibility
- Responsiveness
- Digital workplace
- Diversity
These challenges are met by organizations developing into more adaptive, learning, flexible, innovative type of organization that can adapt to faster changes, better handles different demands on heterogeneous markets, that can give employees more responsibility through greater participation.
In structural terms, this often mean moving from functional to divisional, from vertical to horizontal, more cross-functional teams, more decentralized, decision making, more of virtual network structure.
In cultural terms it often means moving to more of experimenting, more of cross-functional communication, more of value-based- and less rules-based behavior.
From closed to open systems
A closes system focuses exclusively upon the organization. Minimal consideration is given to its dependecies upon or capacities to influence that lie beyond. Open systems thinking pays more attention to open boundaries between the organization and the environment. Organizations are both consumers of resources (inputs) and exporters of resources (output). According to open systems organizations attempt to control a changing environment.
Structural dimensions
Formalization: refers to the reliance on written documentation. Larger organization tends to be more formalized than smaller.
Specialization: is the degree to which organizational tasks are subdivided into separate jobs. High specialization = each employee performs a narrow range of tasks.
Hierarchy of authority: describes who reports to whom and the span of control for each manager. When spans are narrow, specialization is high and the hierarchy is tall.
Centralization: refers to the hierarchical level that has the authority to make a decision. When decisions are only made by the top management, the organization is considered to be centralized.
Professionalism: describes the level of formal education and training of employees
Personnel ratio: refers to the deployment of employees.
organizational goal
Is the desired state of affairs or outcome that members of an organization are entreated to reach.
Mission
The mission is the organization´s reason for existence. The mission (sometimes called official goals) conveys the organization´s vision, shared values and beliefs.
