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MASS PRODUCTION AND C.I.MMass Production C.I.M.
Structure
Supervisor spans of control Wide Narrow
Hierarchical Levels Many Few
Supervisor Role Controller Facilitator
Tasks Routine, simple Complex, adaptive
Specialization High Low
Operator discretion Low Considerable
Formalization High Limited
Human Resources
Interactions Low Considerable
Training Narrow, limited Broad, frequent
Expertise Standardized, manual/technical
Cognitive and social, developing, problem solving
Inter-organizational
Customer demand Stable, predictable Changing
Suppliers Many, arm’s length Few, interdependent
CHARACTERISTICS OF SERVICE AND PRODUCT ORGANIZATIONS
SERVICE BOTH PRODUCT
Boundary Roles Few Some Many
Geographical Dispersion
Considerable Some Low
Technical Expertise of Operators
High Moderate Low
Skill Emphasis Broad and interpersonal
Narrow and broad
Narrow and technical
Centralization Low Medium High
Formalization Low Medium High
Examples Airlines, hotels Fast food, real estate
Steel, cars
SERVICE BUSINESSES
CUSTOMER INTERACTION AND CUSTOMIZATION
LOW HIGH
LABOUR INTENSITYratio of labour cost to plant and equipment
LOWAIRLINES
HOTELS
HOSPITALS
MACHINERY REPAIRS
HIGH
MASS RETAILING
FAST FOOD RESTAURANTS
PROFESSIONAL SERVICES
ACCOUNTANTS
LAWYERS
VARIETY OF TASKS AND PROBLEMS
1. How many of your tasks are the same from day to day?
2. Do you do the same job in the same way most of the time?
3. How different are the problems you have to deal with on a daily basis?
ANALYSABILITY OF TASKS AND PROBLEMS
1. To what extent is there a clearly known way to do your major tasks?
2. To what extent is there a clearly defined body of knowledge that can be followed in your work?
3. How often do you have to deal with unforeseen problems and difficulties?
4. How much can you rely on established procedures and practices to do your job effectively?
Technology and Interaction
• Technology can also be thought of as ways in which groups of individuals interact.
FUNCTIONAL GROUPING
CONTEXT• ENVIRONMENT: LOW UNCERTAINTY, STABLE• TECHNOLOGY: ROUTINE, LOW INTERDEPENDENCE• SIZE: SMALL TO MEDIUM• GOALS: INTERNAL EFFICIENCY, TECHNICAL
SPECIALISATION AND QUALITYSTRENGTHS1. ECONOMIES OF SCALE WITHIN FUNCTIONS2. IN-DEPTH SKILL DEVELOPMENT3. BEST WHEN ONLY ONE OR A FEW SIMILAR PRODUCTSWEAKNESSES1. SLOW RESPONSE TIME TO ENVIRONMENTAL CHANGES2. DECISIONS MAY PILE ON TOP, HIERARCHY OVERLOAD3. POOR INTERUNIT CO-ORDINATION4. LESS INNOVATION5. RESTRICTED VIEW OF ORGANISATION GOALS.
DIVISIONAL GROUPING
CONTEXT• ENVIRONMENT: MODERATE TO HIGH UNCERTAINTY• TECHNOLOGY: NON-ROUTINE, HIGH INTERDEPENDENCE• SIZE: LARGE• GOALS: EXTERNAL EFFECTIVENESS, ADAPTATION,
CLIENT SATISFACTIONSTRENGTHS1. SUITED TO FAST CHANGE IN UNSTABLE ENVIRONMENT2. CLIENT SATISFACTION BECAUSE PRODUCT RESPONSIBILITY AND
CONTACT POINTS ARE CLEAR3. HIGH CO-ORDINATION ACROSS FUNCTIONS4. UNITS ADAPT TO DIFFERENCES IN PRODUCTS, REGIONS, CLIENTS5. BEST WHEN SEVERAL DIFFERENT KINDS OF PRODUCTSWEAKNESSES1. LOSE ECONOMIES OF SCALE IN FUNCTIONAL DEPARTMENTS2. POOR FUNCTIONAL CO-ORDINATION ACROSS PRODUCT LINES3. LOSE IN-DEPTH COMPETENCE AND TECHNICAL SPECIALISATION4. INTEGRATION AND STANDARDISATION ACROSS PRODUCT LINES IS
DIFFICULT
MULTI-FOCUSED GROUPING
CONTEXT• ENVIRONMENT: MODERATE TO HIGH UNCERTAINTY,
CHANGING CUSTOMER DEMANDS• TECHNOLOGY: ROUTINE OR NON-ROUTINE, WITH
INTERDEPENDENCIES ACROSS BOTH FUNCTIONS AND PRODUCT LINES
• SIZE: MEDIUM TO LARGE• GOALS: EXTERNAL EFFECTIVENESS AND
ADAPTATION PLUS EFFICIENCY WITHIN SOME FUNCTIONS
STRENGTHS1. ORGANISATION CAN ACHIEVE ADAPTABILITY AND CO-
ORDINATION IN SOME AREAS AND EFFICIENCY IN OTHERS2. BETTER ALIGNMENT BETWEEN CORPORATE LEVEL AND
DIVISION LEVEL GOALS3. ACHIEVES CO-ORDINATION BOTH WITHIN AND BETWEEN
PRODUCT LINESWEAKNESSES1. POTENTIAL FOR EXCESSIVE ADMINISTRATIVE OVERHEAD2. CONFLICT BETWEEN DIVISION AND CORPORATE DEPARTMENTS
Matrix: Advantages
According to Bartlett and Ghoshal (1993):
• Decrease bureaucracy
• Create ‘distributed entrepreneurship’
• Delegation of responsibilities
• Thinning out of corporate (HO) staff (<100)
• Aligning and supporting initiatives
• Integrating resources and capabilities
Matrix: Disadvantages
• Lack of clarity over who is responsible for decisions
• Lack of clarity over how much time should be spent on different tasks
• In-fighting between two line managers• Decision-making process could be
lengthened• Excessive demands placed on senior
managers to cope with information
MATRIX STRUCTURESCONTEXT• ENVIRONMENT: HIGH UNCERTAINTY• TECHNOLOGY: NON-ROUTINE, MANY INTERDEPENDENCIES• SIZE: MODERATE, A FEW PRODUCT LINES• GOALS: MULTIPLE, CUSTOMER RESPONSIVENESS, PRODUCT
INNOVATION AND TECHNICAL SPECIALISATIONSTRENGTHS1. ACHIEVES CO-ORDINATION NECESSARY TO MEET DUAL DEMANDS FROM
ENVIRONMENT2. FLEXIBLE USE OF HUMAN RESOURCES ACROSS PRODUCTS3. SUITED TO COMPLEX DECISIONS AND FREQUENT CHANGES IN UNSTABLE
ENVIRONMENT4. PROVIDES OPPORTUNITY FOR FUNCTIONAL AND PRODUCT SKILL
DEVELOPMENTWEAKNESSES1. PARTICIPANTS EXPERIENCE DUAL AUTHORITY, WHICH CAN BE FRUSTRATING
AND CONFUSING2. PARTICIPANTS NEED GOOD INTERPERSONAL SKILLS; EXTENSIVE TRAINING
REQUIRED3. TIME CONSUMING - FREQUENT MEETINGS AND CONFLICT-RESOLUTION
SESSIONS4. WILL NOT WORK UNLESS PARTICIPANTS UNDERSTAND IT AND ADOPT
COLLEGIAL RATHER THAN VERTICAL-TYPE RELATIONSHIPS5. REQUIRES DUAL PRESSURE FROM ENVIRONMENT TO MAINTAIN POWER
BALANCE
THE PROJECT-BASED FIRM
Advantages• Reduces overhead costs• Improves speed and efficiency• Increases adaptability
Disadvantages• Time-consuming and difficult to identify and manage
processes• Limited organisational learning• Threat to management (downsizing and deskilling)
Applicability• Sectors and Firms that meet the following criteria:
– Workforce generally highly skilled and well-motivated– Sector undergoing major change (from competition and/or
technology change)– High level of consensus
Types of Project-Based FirmsSingularity (‘Uniqueness’) of Goals and Outputs
Low High
Separation
and
Stability
of
Work Roles
Low
Organisational
PBFs producing multiple and varied outputs with different and changeable skills and roles.
E.g. strategic consultancy, enterprise software, innovative business services.
Precarious
PBFs producing risky, unusual outputs with varied and changeable skills and roles.
E.g. some dedicated biotechnology firms, internet software firms, such as Vermeer Technologies, many Silicon Valley companies
High
Craft
PBFs producing multiple, incrementally related outputs with distinct and stable roles and skills. E. g. some business and professional services including London advertising firms, Danish furniture and machinery firms, some IT consulting.
Hollow
PBFs producing single outputs and coordinating tasks through standardised, separate and stable roles and skills.
E. g. complex construction projects, many feature films in the UK and USA
Formal Management Control Systems
System Content
Budget Financial data
Statistical Reports Non-financial data
Performance appraisal Evaluation on basis of goals
Standard operating procedures
Rules, regulations and policies
Organisational Control Strategies
Type of Control
Output/ Market-based Bureaucratic Normative Personal and Direct
Characteristics of the Control System
Behaviour Control Low High Unclear High
Formalisation High High Low Low
Subordinate Involvement Limited Low High Low
Scope and variety of Information
Low Medium High High
Requirements (Features of the Organization/Task)
Standard outputs Yes No No No
External benchmark of performance (e.g. price)
Yes No No No
Process knowledge No Yes No Yes
Employee commitment No No Yes No
Stable environment No Yes No No
Culture: Two Definitions
Drennan (1992: 3): Culture is ‘how things are done around here’. It is what is typical of the organization, the habits, the prevailing attitudes, the [established] pattern of accepted and expected behaviour.
Daft (2007: 239): Culture is the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and is taught to new members.
Describing Organizational CultureBrown (1995: 8):• Artefacts• Symbols and symbolic action • Language in the form of jokes, metaphors, stories,
myths and legends – and advertising• Behaviour patterns in the form of rites, rituals,
ceremonies and celebrations• Norms of behaviour• Heroes• Beliefs, values, attitudes• Ethical codes• Basic assumptions• History
STRENGTH OF ORGANISATIONAL CULTURES
Intensity of Commitment to Organisational Beliefs and
Norms
Low High
Proportion of Employees Sharing Organisational Beliefs and Norms
Low Weak Elitist
High Diffuse Strong
Types of Organisational Cultures Autocracy Task Role Professional
Delegation of discretion and involvement in problem solving
Low High Low High
Conformity to established rules and procedures
Limited Limited High Considerable
Flexibility High High Low Limited
Sources of innovation and learning
Owner-manager
Project teams of specialists
Managers Professionals
Ability to integrate different knowledge and skills
Limited High Limited to managerial hierarchy
Limited to professional
groups
Typical control system Personal Normative and output
Bureaucratic Normative and some
bureaucratic
Contrasting Organisational Practices I
a) Process-oriented vs. Results-oriented
Extent of focus on outputs and results
b) Employee-oriented vs. Job-oriented
Extent to which managers focus on employee development rather than immediate task performance
c) Parochial vs. Professional
Extent of staff identification with organisational unit and company or occupation and skill
Contrasting Organisational Practices II
d) Open system vs. Closed systemExtent to which organisation is internally focused and
separate from environment
e) Loose control vs. Tight controlExtent to which staff are expected to conform to
organisational norms of behaviour
f) Normative vs. PragmaticExtent of commitment to meeting customer needs
An Example of Open vs Closed Systems?
• Sanofi chief lays out distinctive strategy• http://www.ft.com/cms/s/0/1b23c578-d7d0-11de-b578-
00144feabdc0.html 03 December 2009
• In a swipe at Gerard Le Fur, his predecessor and former head of research and development, who was appointed chief executive and ousted within months, he said: "We had really a scientific organisation that really lived within its own walls; not a lot of external partnerships, virtually no contact with our commercial organisations."
• …• Mr Viehbacher also criticised the "ridiculous" Sanofi-
Aventis name in China, where he said most company names have just three syllables. It would be shortened to Sanofi, he said. "We have to be much more adapted to our markets and customers and fight globalisation," he said.
Distinctive Organisational Cultures
Depend on:
• Selection
• Training
• Rituals, Symbols and Legends
• Reward Systems
• Promotion and Career Structures
• Top Management Behaviour
WORLDWIDE FUNCTIONAL STRUCTURE
• Similar advantages and disadvantages to domestic functional structures (economies of scale within functions, skill development, but slow response and decision-making).
• But less effective in many MNCs: inability to adapt readily to the greater local diversity of business environments.
• Typically found in firms with narrow product ranges in relatively stable technical environments where technical excellence is crucial.
Question
• What sort of industry characteristics might lead MNCs to establish world-wide geographic groups?
WORLDWIDE GEOGRAPHIC GROUPS
• Typically found in low technology industries where sales and marketing are key functions and vary regionally. Product range diversity tends to be limited in such MNCs and products are often modified extensively to suit local markets.
WORLDWIDE GEOGRAPHIC GROUPS An Example: Unilever
• Unilever Executive• is responsible for managing profit and loss, and delivering growth
across our regions, categories and functions.• Paul Polman - Chief Executive Officer• James A Lawrence - Chief Financial Officer• Sandy Ogg - Chief HR Officer
• Professor Geneviève Berger - Chief Research & Development Officer
• Manvinder Singh (Vindi) Banga - President Foods
• Douglas Anderson Baillie - President of Western Europe • Harish Manwani - President, Asia Africa• Michael B. Polk - President, Americas
Worldwide Product Structure
• Often found in large MNCs that have a variety of diverse product ranges that need little adaptation for different markets, and where technological scale economies are important.
Worldwide Product Structure An Example: Lafarge
• Chairman and Chief Executive Officer• Chief Financial Officer• Vice-President Organization and Human
Resources• Vice-President Strategy, Business Development
and Public Affairs• Vice-President Communications
• Co-President of the Cement Business * 3• Co-President of the Aggregates and Concrete
Business * 2• President of the Gypsum Business