IACT 916 - Lecture 61 Organisational Designs To understand the different kinds of organisational designs To understand the different kinds of organisational

IACT 916 - Lecture 6 IACT 916 - Lecture 6 11

Organisational DesignsOrganisational Designs

To understand the different kinds of To understand the different kinds of organisational designsorganisational designs

To be able to identify the five different To be able to identify the five different configurations put forward by Mintzbergconfigurations put forward by Mintzberg

To be able to explain the difference between To be able to explain the difference between bureaucracy-based and adhocracy-based bureaucracy-based and adhocracy-based configurationsconfigurations

Determinants of Organisational Structure• Strategy• Organisation size• Technology• Environment• Power-control

Applications:• Managing the environment• Managing organizational change• Managing organizational culture• Managing organizational evolution

Organisational Structure Organisational

Effectiveness

Organisational Designs:• Design options• Bureaucracy• Adhocarcy


OutlineOutline

Standard ConfigurationStandard Configuration The Simple StructureThe Simple Structure The Machine BureaucracyThe Machine Bureaucracy The Professional BureaucracyThe Professional Bureaucracy The Divisional StructureThe Divisional Structure The AdhocracyThe Adhocracy Strengths & WeaknessesStrengths & Weaknesses Real-life ExamplesReal-life Examples


Standard ConfigurationsStandard Configurations

Every business has unique “fingerprints”Every business has unique “fingerprints”– Not clones of each other but are similarNot clones of each other but are similar

Unlimited number of configurations but these can Unlimited number of configurations but these can be categorised into major groupsbe categorised into major groups

Do clusters of companies in particular industries Do clusters of companies in particular industries have the same industry structures? have the same industry structures? – Why or why not?Why or why not?

– E.g. consider the structures of the “Big Six” consulting E.g. consider the structures of the “Big Six” consulting companies during the late 1990scompanies during the late 1990s


Common Elements in Common Elements in Organisations (Mintzberg)Organisations (Mintzberg)

1.1. The operating core:The operating core: employees who perform basic employees who perform basic work related to the production of goods & serviceswork related to the production of goods & services

2.2. The strategic apex:The strategic apex: top-level managers, who are top-level managers, who are charged with overall responsibility charged with overall responsibility

3.3. The middle line:The middle line: managers, who connect the managers, who connect the operating core to the strategic apexoperating core to the strategic apex

4.4. The techno-structure:The techno-structure: analysts, who have the analysts, who have the responsibility for effecting certain forms of responsibility for effecting certain forms of standardisation in the organisationstandardisation in the organisation

5.5. The support staff:The support staff: people who provide indirect people who provide indirect support services for the organisationsupport services for the organisation


Structures in FivesStructures in Fives(Mintzberg 1983)(Mintzberg 1983)

Techno-structureSupport

Staff

Operating Core

Middle line

Strategic apex


The Dominant PartThe Dominant Part

Any one of the five parts can dominateAny one of the five parts can dominate Depending on which part is “in control” a Depending on which part is “in control” a

structural configuration can be determinedstructural configuration can be determined Consider:Consider:

– The simple structureThe simple structure– The machine bureaucracyThe machine bureaucracy– The professional bureaucracyThe professional bureaucracy– The divisional structureThe divisional structure– AdhocracyAdhocracy


The Simple StructureThe Simple Structure

Owner

Manager(Store A)

Manager(Store B)

Manager (Store C)

Manager(Store D)

Not elaborate, authority centralised in a single person, little formalisationFlat organisation, organic operating coreExample: small retail store, electronics company run by a hard-driving entrepreneur, op-shop, an airline


Mintzberg’s Simple StructureMintzberg’s Simple Structure

Operating Core

Middleline

Strategic apex


Simple Structure:Simple Structure:Strengths & WeaknessesStrengths & Weaknesses

SimplicitySimplicity Fast and flexibleFast and flexible Little cost to maintainLittle cost to maintain No cumbersome layersNo cumbersome layers Minimum amount of goal ambiguityMinimum amount of goal ambiguity Weakness is limited applicabilityWeakness is limited applicability Increase in size, structure inadequateIncrease in size, structure inadequate


Simple Structure TrendsSimple Structure Trends

Use in formative years of an organisationUse in formative years of an organisation Number of employees is smallNumber of employees is small Regardless of size, when an organisation suddenly Regardless of size, when an organisation suddenly

confronts a hostile environment, management confronts a hostile environment, management resorts to a simple structureresorts to a simple structure

Clear who is ‘running the show’ and things are Clear who is ‘running the show’ and things are very centralised in generalvery centralised in general

Owner-managers like this structure because it Owner-managers like this structure because it grants them the most amount of controlgrants them the most amount of control


The Machine BureaucracyThe Machine Bureaucracy

Chief Executive

Sales &

Marketing

Business Development

OperationsHR &

PlanningFinance

Sales & Property

The key concept here is “standardisation”Highly routine operating tasks (functional)Centralised authority (chain of command)Very formalised rules and regulationsE.g. banks, department store, motor registry

GMs


Mintzberg’s Machine Mintzberg’s Machine BureaucracyBureaucracy

Techno-structureSupport

Staff

Operating Core

Middle line

Strategic apex


Machine Bureaucracy:Machine Bureaucracy:Strengths & WeaknessesStrengths & Weaknesses

Ability to perform standardised activities in a Ability to perform standardised activities in a highly efficient mannerhighly efficient manner

Results in economies of scaleResults in economies of scale Minimisation of duplication of resourcesMinimisation of duplication of resources Pervasiveness of rules and regulations acts as Pervasiveness of rules and regulations acts as

substitutes for managerial discretionsubstitutes for managerial discretion Specialisation can create sub-unit conflictSpecialisation can create sub-unit conflict Obsessive concern with following rulesObsessive concern with following rules


Machine Bureaucracy TrendsMachine Bureaucracy Trends

No one knows what’s happening overall until end No one knows what’s happening overall until end of quarter resultsof quarter results

Functional unit goals override the overall goals of Functional unit goals override the overall goals of the organisationthe organisation

Best-fit:Best-fit:– large size, simple and stable environment, and a large size, simple and stable environment, and a

technology that contains routine work that can be technology that contains routine work that can be standardisedstandardised

When things don’t precisely fit the rules, there is When things don’t precisely fit the rules, there is no room for modificationno room for modification


The Professional BureaucracyThe Professional Bureaucracy

Managing Director

Finance General Law

Employee Services

Planning Support

Information Services

Operational Support

Family Law

Criminal Law

Policy & Education

Social Work

Legal ServicesAdministration

Introduced, last 30 yearsCombines standardisation with decentralisationHire highly trained specialists for the operating coreFocused on social specialisation (individual skills) rather than functional specialisation (the division of labour)E.g. universities, legal & engineering design firms


Mintzberg’s Professional Mintzberg’s Professional BureaucracyBureaucracy

Techno-structure

Sup

port

Sta

ff

Operating Core

Middleline

Strategicapex


Professional Bureaucracy:Professional Bureaucracy:Strengths & WeaknessesStrengths & Weaknesses

Power rests with the operating core because they have Power rests with the operating core because they have the critical skills the company needs the critical skills the company needs

Requires top management to give up considerable Requires top management to give up considerable degree of control degree of control

But they have to since professionals need autonomy But they have to since professionals need autonomy to do their jobs effectivelyto do their jobs effectively

Sub-unit conflicts. Various functions seek to pursue Sub-unit conflicts. Various functions seek to pursue their own narrow objectives at the expense of the their own narrow objectives at the expense of the whole organisationwhole organisation

Rules are set by the professional organisationRules are set by the professional organisation


The Divisional StructureThe Divisional Structure

Managing Director

Executive GMCSR Gyprock

Executive GMMonier Roofing

Executive GMCSR America

Executive GMSugar

Executive GMCSR Readymix

Executive GMCSR Softgoods

Executive GMCSR Wood Panels

Power lies with middle managementDivisional structure is actually a set of autonomous units, each typically acting like a machine bureaucracy, coordinated with central headquartersCentral headquarters provides support services, legal, tax to all units.The divisions represent a set of “little companies”. E.g General MotorsE.g. CSR, Boral, Goodman Fielder


Mintzberg’s Divisional StructureMintzberg’s Divisional Structure

Middleline

Techno-structure Su

pport

Sta

ff

Operating Core

Strategicapex


Divisional Structure:Divisional Structure:Strengths & WeaknessesStrengths & Weaknesses

Unlike machine bureaucracy each divisional manager has full Unlike machine bureaucracy each divisional manager has full responsibility for a product or serviceresponsibility for a product or service

More accountabilityMore accountability focus on outcomes focus on outcomes Grants managers broad range of experience in autonomous unitsGrants managers broad range of experience in autonomous units Autonomous units can be removed with little effect to the overall Autonomous units can be removed with little effect to the overall

organisationorganisation ““It’s a business within a business”It’s a business within a business” Duplication of activities and resourcesDuplication of activities and resources Can encourage divisional conflict, little collaborationCan encourage divisional conflict, little collaboration Can cause coordination problemsCan cause coordination problems


Divisional Structure TrendsDivisional Structure Trends

Primary criteria is product or market diversityPrimary criteria is product or market diversity Diversification strategy causes conflict in machine Diversification strategy causes conflict in machine

bureaucracies at the horizontal levelbureaucracies at the horizontal level Increase in size encourages divisional structuresIncrease in size encourages divisional structures Divisionalisation possible when the organisation’s Divisionalisation possible when the organisation’s

technical system can be efficiently separated into technical system can be efficiently separated into segments, one for each divisionsegments, one for each division


The AdhocracyThe Adhocracy

General Manager

Artistic directorDirector ofOperations

CommunicationsAdministrator

MarketingAdministrator

Head of Music Staff

Technical Administrator

ChorusDirector

WorkshopDirector

Various ArtistsWardrobeDirector

MediaDirector

ProgramEditor

Low formalisationDecentralisationFlexibilityResponsivenessDifferentiation:

High horizontalLow vertical

AgileVery highly skilled


Mintzberg’s AdhocracyMintzberg’s Adhocracy

Middle line

Operating Core

Strategic apex


Adhocracy:Adhocracy:Strengths & WeaknessesStrengths & Weaknesses

Few rules and regulationsFew rules and regulations– Loose and unwritten (inefficient configuration)Loose and unwritten (inefficient configuration)

When faced with problems needs to develop a novel When faced with problems needs to develop a novel solution to solve itsolution to solve it

Decision-making is decentralisedDecision-making is decentralised The traditional link between supervisor and employee The traditional link between supervisor and employee

become blurredbecome blurred Power flows to whomever has expertisePower flows to whomever has expertise Task force teamsTask force teams rapid change rapid change Conflict ever present. Can produce tension.Conflict ever present. Can produce tension.


Types of AdhocracyTypes of Adhocracy

The matrix:The matrix:– A structural design that assigns specialists from specific functional A structural design that assigns specialists from specific functional

department to work on one or more interdisciplinary teams, which are led department to work on one or more interdisciplinary teams, which are led by project leadersby project leaders

– Temporary vs permanent matrixTemporary vs permanent matrix

The network:The network:– A small central organisation that relies on other organisations to perform A small central organisation that relies on other organisations to perform

manufacturing, distribution, marketing or other functions on a contract manufacturing, distribution, marketing or other functions on a contract basisbasis

Other: task force, committee form, collegial formOther: task force, committee form, collegial form

Summary of 5 ConfigurationsSummary of 5 Configurations

CharacteristicCharacteristic Simple Simple StructureStructure

Machine Machine BureaucracyBureaucracy

Professional Professional BureaucracyBureaucracy

Divisional Divisional StructureStructure

AdhocracyAdhocracy

SpecialisationSpecialisation LowLow High High FunctionalFunctional

High SocialHigh Social High FunctionalHigh Functional High SocialHigh Social

FormalisationFormalisation LowLow HighHigh LowLow High within High within divisionsdivisions

LowLow

CentralisationCentralisation HighHigh HighHigh LowLow Limited Limited decentralisationdecentralisation

LowLow

EnvironmentEnvironment Simple Simple and and dynamicdynamic

Simple and Simple and stablestable

Complex and Complex and stablestable

Simple and Simple and stablestable

Complex Complex and and dynamicdynamic

General General Structural Structural ClassificationClassification

OrganicOrganic MechanisticMechanistic MechanisticMechanistic MechanisticMechanistic OrganicOrganic


Tomorrow’s OrganisationTomorrow’s Organisation

Drucker (information-based technology argument) and Drucker (information-based technology argument) and Peters (environmental uncertainty argument) claim that Peters (environmental uncertainty argument) claim that adhocracies are going to be dominant configuration of the adhocracies are going to be dominant configuration of the futurefuture

Movement towards flexible, team-based, porous Movement towards flexible, team-based, porous adhocraciesadhocracies

Barnwell & Robbins claim however that widest Barnwell & Robbins claim however that widest acceptance is still bureaucracyacceptance is still bureaucracy

Authority-control still the greatest influenceAuthority-control still the greatest influence


Applying the theoriesApplying the theories

To understand the application of organisation To understand the application of organisation theory in practicetheory in practice

Special Topics:Special Topics:– EnvironmentEnvironment

– ChangeChange

– CultureCulture

– EvolutionEvolution

– GenderGender


Environmental StrategiesEnvironmental Strategies

Domain choiceDomain choice Environmental scanningEnvironmental scanning RecruitmentRecruitment AdvertisingAdvertising LobbyingLobbying ContractingContracting

InsuringInsuring Geographical dispersionGeographical dispersion RationingRationing Co-optingCo-opting BufferingBuffering SmoothingSmoothing

Examples of environmental actionExamples of environmental action

TargetTarget Examples of Strategic ActionsExamples of Strategic Actions

GovernmentGovernment Recruit former government officialsRecruit former government officials

Commission research to influence governmentCommission research to influence government

CompetitionCompetition Advertise to build brand loyaltyAdvertise to build brand loyalty

Select a less competitive domainSelect a less competitive domain

Merge with competition to gain larger market shareMerge with competition to gain larger market share

SuppliersSuppliers Use multiple suppliersUse multiple suppliers

Negotiate long-term contractsNegotiate long-term contracts

Vertically integrate through acquisitionsVertically integrate through acquisitions

CustomersCustomers AdvertiseAdvertise

Use a differentiated price structureUse a differentiated price structure

Change domain to where there are more customersChange domain to where there are more customers

Financial InstitutionsFinancial Institutions Use multiple financial sourcesUse multiple financial sources

Establish a line of credit to draw upon when neededEstablish a line of credit to draw upon when needed


A model for managing change in A model for managing change in an organisationan organisation

Forces initiating change

Change agent

What is to be changed?Structure?

Technology?Process?

Change processUnfreezeMoveRefreeze

Implementation tacticsIntervention, Participation

Persuasion, Edict

Change

Organisational Effectiveness

FeedbackDeterminants

OrganisationalInitiator

Intervention Strategies

Implementation

Results

Examples of Structural ChangeExamples of Structural Change

Change in objectives– Strategic move from innovator to mass producer– Move from organic to mechanistic structure

Purchase of new equipment– New technological processes usually lead to changes in power and reporting

relationships Mergers or acquisitions

– Duplicate functions will inevitably be eliminated and new coordinating role will be introduced

Sudden internal or external hostility– Temporary crises are typically met by management’s central decision

making Decline in profits

– When company profit falls, management frequently resorts to a structural shake-up

– Personnel are shuffled, departments added/deleted, new authority relationships defined, decision-making patterns significantly altered

Tactics for Dealing with Resistance to ChangeTactics for Dealing with Resistance to Change

Education and communicationEducation and communication– Help employees see the logic of the changesHelp employees see the logic of the changes

ParticipationParticipation– Involve employees in change decisionsInvolve employees in change decisions

Facilitation and supportFacilitation and support– Paid leave of absence, new skills trainingPaid leave of absence, new skills training– Try to minimise the anxiety levels of the staffTry to minimise the anxiety levels of the staff

NegotiationNegotiation– Offer reward packages even during downturnsOffer reward packages even during downturns

Manipulation and co-optationManipulation and co-optation– Twisting and distorting facts to make them appear more attractive, Twisting and distorting facts to make them appear more attractive,

withholding undesirable information, rumour millwithholding undesirable information, rumour mill CoercionCoercion

– Application of direct threats to the resistors, e.g. loss of promotionApplication of direct threats to the resistors, e.g. loss of promotion Realigning staff profilesRealigning staff profiles

– Dismissal of trouble makers or introduction of change managersDismissal of trouble makers or introduction of change managers


Ranges of Organisational ChangeRanges of Organisational Change

Incremental change Radical change

Evolution Revolution

Maintain equilibrium Seek new equilibrium

Change individual parts or departments

Transform the entire organisation

Optimise existing structure & mgmt

Generate new structure & mgmt

Improve existing products Introduce path-breaking new products


What is organisation culture?What is organisation culture?

Organisational culture is the Organisational culture is the pattern of basic pattern of basic assumptionsassumptions that a given group has that a given group has invented, invented, discovered or developeddiscovered or developed in learning to cope with in learning to cope with its problems of its problems of external adaptation and internal external adaptation and internal integrationintegration, and that have worked well enough to , and that have worked well enough to be considered valid, therefore, to be be considered valid, therefore, to be taught to new taught to new membersmembers as the new way to perceive, think and as the new way to perceive, think and feel in relation to those problems.feel in relation to those problems.

Characteristics Where Cultures Characteristics Where Cultures DifferDiffer Individual initiative- degree of freedomIndividual initiative- degree of freedom

Risk tolerance- encouraged to be innovativeRisk tolerance- encouraged to be innovative

Direction- degree of clear objectivesDirection- degree of clear objectives

Integration- sub-unit coordinationIntegration- sub-unit coordination

Management support- clear communicationManagement support- clear communication

Control- number of rules & regulationsControl- number of rules & regulations

Identity- with a unit, organisation, professionIdentity- with a unit, organisation, profession

Reward system- salary increases, favouritesReward system- salary increases, favourites

How Employees “Learn” CultureHow Employees “Learn” Culture

StoriesStories– Circulation through time and spaceCirculation through time and space– Legendary tales become factLegendary tales become fact

RitualsRituals– Recognition for work doneRecognition for work done– Social habits (levels of acceptability)Social habits (levels of acceptability)

Material SymbolsMaterial Symbols– Office furniture, logos, style, interior designOffice furniture, logos, style, interior design

Observation & ExperienceObservation & Experience– The notion of “watch and learn”. Subtle but powerful!The notion of “watch and learn”. Subtle but powerful!

LanguageLanguage– Learning the “lingo” that goes with the job = acceptabilityLearning the “lingo” that goes with the job = acceptability


Five Phases of GrowthFive Phases of Growth

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Sm

all

Larg

e

Young MatureRevolution stage

Leadership crisis

Creativity

Direction

Autonomy Delegation

Control Coordination

Red TapeCollaboration

Crisis of?

AGE OF ORGANISATION

SIZ

E O

F O

RG

AN

ISA

TIO

N


Stages of Decline and Widening Stages of Decline and Widening Performance GapPerformance Gap

Stage 1Blinded

Stage 2Inaction

Stage 3Faulty Action

Stage 4Crisis

Stage 5Dissolution

Organisational Performance

Good Info

Prompt Action

Correct Action

Effective Reorganisa

tion

NO CHOICES

Decline Begins Dissolution

Dysfunctional Consequences of DeclineDysfunctional Consequences of Decline

CentralisationCentralisation– Participation decreasesParticipation decreases

– Control emphasisedControl emphasised No long-term planningNo long-term planning

– Crisis drives out strategic Crisis drives out strategic planningplanning

ScapegoatingScapegoating– Leaders blamed for pain and Leaders blamed for pain and

uncertaintyuncertainty TurnoverTurnover

– Competent leaders tend to leave Competent leaders tend to leave first causing leadership anaemiafirst causing leadership anaemia

Low moraleLow morale– Few needs are metFew needs are met– Infighting is rampantInfighting is rampant

Loss of slackLoss of slack– Uncommitted resources are Uncommitted resources are

used to cover operating used to cover operating expensesexpenses

Loss of credibilityLoss of credibility– Leaders lose confidence of Leaders lose confidence of

subordinatessubordinates Non-prioritised cutsNon-prioritised cuts ConflictConflict

– Competition for resourcesCompetition for resources


Business Intelligence (BI)Business Intelligence (BI) Knowledge Management (KM)Knowledge Management (KM) E-Commerce and C-CommerceE-Commerce and C-Commerce Supply Chain ManagmentSupply Chain Managment Customer relations management (CRM)Customer relations management (CRM) Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP)

Managing new technologies:Managing new technologies: 22

E-Commerce OverviewE-Commerce Overview TerminologyTerminology C- CommerceC- Commerce The Emerging E-Business ModelThe Emerging E-Business Model E-Commerce vs C-CommerceE-Commerce vs C-Commerce B2B Electronic Marketplaces or Exchanges B2B Electronic Marketplaces or Exchanges C-Commerce Case Study: Contract ManufacturingC-Commerce Case Study: Contract Manufacturing New Rules for Business RelationshipsNew Rules for Business Relationships Evolution of Business ModelsEvolution of Business Models Recombinant Business Models for Virtual EnterprisesRecombinant Business Models for Virtual Enterprises New Rules for ITNew Rules for IT Five Styles of E-Business ComputingFive Styles of E-Business Computing


TerminologyTerminology

E-Commerce describes electronic-based business E-Commerce describes electronic-based business transactions [eg. The transmission of purchase orders or transactions [eg. The transmission of purchase orders or other business documents between business partners] and other business documents between business partners] and includes technologies such as electronic data interchange includes technologies such as electronic data interchange [EDI]. [EDI].

As new web interaction software evolves [such as As new web interaction software evolves [such as customer service, email forms, catalogues and customer service, email forms, catalogues and personalization], the term loses some of its attraction and personalization], the term loses some of its attraction and is often subsumed under the more popular e-business is often subsumed under the more popular e-business term.term.



E-Business applications enable and manage relationships E-Business applications enable and manage relationships between an enterprise, its functions and processes and between an enterprise, its functions and processes and those of its customers, suppliers, value chain, community those of its customers, suppliers, value chain, community or industry. These applications may not themselves be or industry. These applications may not themselves be enterprise -wide but are aimed at optimizing the external enterprise -wide but are aimed at optimizing the external relationships. relationships.

C-Commerce is the set of electronically enabled C-Commerce is the set of electronically enabled collaborative interactions among an enterprise, its collaborative interactions among an enterprise, its customers, business partners, suppliers and employees.customers, business partners, suppliers and employees.



Enterprise Relationship Management is a concept Enterprise Relationship Management is a concept that describes a business environment in which all that describes a business environment in which all constituents share a common application set, constituents share a common application set, crafted to the needs of the individual, that will crafted to the needs of the individual, that will link all parts of the internal enterprise with all of link all parts of the internal enterprise with all of its external customers and partners. its external customers and partners.

C-CommerceC-Commerce C-Commerce [collaborative commerce] is a new business C-Commerce [collaborative commerce] is a new business

model. The aim is to achieve dynamic collaboration among model. The aim is to achieve dynamic collaboration among internal personnel, business partners, and customers internal personnel, business partners, and customers throughout a given trading community or market. throughout a given trading community or market.

Enterprises leverage the Internet to gain revenue and profit Enterprises leverage the Internet to gain revenue and profit improvement by going beyond supply chain models and improvement by going beyond supply chain models and information sharing The evolution to c-commerce enables a information sharing The evolution to c-commerce enables a dynamic ‘virtual enterprise’. The virtual enterprise has been a dynamic ‘virtual enterprise’. The virtual enterprise has been a research and development aim for many years but could not research and development aim for many years but could not be supported due to lack of suitable technology. Today with be supported due to lack of suitable technology. Today with stable Internet platforms [even mobile Internet platforms] stable Internet platforms [even mobile Internet platforms] collaborative technologies can be deployed across enterprises. collaborative technologies can be deployed across enterprises.


C-Commerce contd.C-Commerce contd.

This will change many mission critical business This will change many mission critical business processes such as sourcing, product design, processes such as sourcing, product design, selling and production. selling and production.

The corresponding changes in business process The corresponding changes in business process will drive a new generation of business will drive a new generation of business applications which will require enterprises to applications which will require enterprises to change their fundamental IT architectures.change their fundamental IT architectures.


The Emerging E-Business ModelThe Emerging E-Business Model

C-Commerce is the result of two developments:C-Commerce is the result of two developments: The range of business participants [the connection The range of business participants [the connection

paradigm] expanding from those within an enterprise and paradigm] expanding from those within an enterprise and its traditional trading partners to include the cybermarket its traditional trading partners to include the cybermarket enterprises in the trading communityenterprises in the trading community

The enterprises focus [the business paradigm] progressing The enterprises focus [the business paradigm] progressing from departmental productivity and external transaction from departmental productivity and external transaction handling to collaborative interactionhandling to collaborative interaction

Customers will have more synchronized supply chains Customers will have more synchronized supply chains formed around customer demands, many of which will be formed around customer demands, many of which will be uniqueunique


Emerging E-Business Model contd.Emerging E-Business Model contd.

Business applications are expanding from a domain Business applications are expanding from a domain [traditional ERP] and e-commerce orientation to a c-[traditional ERP] and e-commerce orientation to a c-commerce focus. As they evolve the architectures that commerce focus. As they evolve the architectures that support them are changing, driving enterprises to support them are changing, driving enterprises to modernize their IT infrastructure that is rapidly becoming modernize their IT infrastructure that is rapidly becoming outdated and inhibits competitivenessoutdated and inhibits competitiveness

C-commerce-enabled applications will replace static, web-C-commerce-enabled applications will replace static, web-enabled supply chain/value chain applications as the enabled supply chain/value chain applications as the dominant application model by 2004[0.8 probability]dominant application model by 2004[0.8 probability][Bond,00][Bond,00]

C-Commerce vs E-CommerceC-Commerce vs E-Commerce E-Commerce is a transaction-centred e-business E-Commerce is a transaction-centred e-business

model used to buy and sell goods, whereas C-model used to buy and sell goods, whereas C-Commerce is a collaboration-centred e-business model Commerce is a collaboration-centred e-business model that enables the virtual enterprisethat enables the virtual enterprise

E-Commerce is designed to construct a virtual link E-Commerce is designed to construct a virtual link between a predefined community of trading partners between a predefined community of trading partners for the purpose of buying and selling goods and for the purpose of buying and selling goods and services. Content is generally confined to web services. Content is generally confined to web catalogues of finished goods, and collaboration catalogues of finished goods, and collaboration mechanisms centre on exchanging messages or mechanisms centre on exchanging messages or purchasing transactionspurchasing transactions

C-Commerce vs E-CommerceC-Commerce vs E-Commerce C-Commerce is a form of B2B interaction C-Commerce is a form of B2B interaction

designed to allow trading partners to serve as designed to allow trading partners to serve as virtual collaborators across a wide range of virtual collaborators across a wide range of business processes.business processes.

A C-Commerce framework acts as a virtual A C-Commerce framework acts as a virtual conduit for connecting information repositories, conduit for connecting information repositories, business applications and business processes, business applications and business processes, allowing companies to exploit opportunities in the allowing companies to exploit opportunities in the Internet-connected economy more easily.Internet-connected economy more easily.

B2B Electronic Marketplaces or ExchangesB2B Electronic Marketplaces or Exchanges

Among the fastest growing manifestations of e-businesses are Among the fastest growing manifestations of e-businesses are B2B electronic marketplaces or exchanges that allow a B2B electronic marketplaces or exchanges that allow a community of users to engage in a variety of commerce community of users to engage in a variety of commerce activities within a given portal. Most exchanges are currently activities within a given portal. Most exchanges are currently centred around the e-commerce buy/sell/auction model. By centred around the e-commerce buy/sell/auction model. By 2002 this number will have grown to 3000.2002 this number will have grown to 3000.

Most of these marketplaces will fail due to inability to attain Most of these marketplaces will fail due to inability to attain critical mass of users and difficulties in constructing a stable critical mass of users and difficulties in constructing a stable and sustainable business model.and sustainable business model.

It is said that this will shift to a more collaborative marketplace It is said that this will shift to a more collaborative marketplace using the virtual enterpriseusing the virtual enterprise

Case Study:Case Study: Contract ManufacturingContract Manufacturing

Collaborative Design – Collaborative Design – Customer designs are uploaded via a web Customer designs are uploaded via a web interface into Celestica [contract manufacturer] CPC framework.interface into Celestica [contract manufacturer] CPC framework.

The designs are then checked for integrity and manufacturability The designs are then checked for integrity and manufacturability using Celestica’s DFM program. Suggested corrections and using Celestica’s DFM program. Suggested corrections and changes are then communicated to the customerchanges are then communicated to the customer

Results: a reduction in setup time from 7 days to 1 day and has Results: a reduction in setup time from 7 days to 1 day and has improved first pass accuracy from 10 % to 95 %improved first pass accuracy from 10 % to 95 %

Collaborative Sourcing – Collaborative Sourcing – service offered by Celestica – evaluates service offered by Celestica – evaluates customer design of components and offers suggested customer design of components and offers suggested replacements to yield greater savings. Celestica can offer replacements to yield greater savings. Celestica can offer customer 6% - 8% saving on component spendingcustomer 6% - 8% saving on component spending


Collaborative Manufacturing – Collaborative Manufacturing – product and product and process information is passed via an interface to process information is passed via an interface to the local plant ERP system. In addition, the local plant ERP system. In addition, production process knowledge like assembly and production process knowledge like assembly and test information is captured in the framework and test information is captured in the framework and is leveraged by other plants bringing up the same is leveraged by other plants bringing up the same production lines. production lines.

Plants can now bring up a new line in response to Plants can now bring up a new line in response to a demand spike in 48 hoursa demand spike in 48 hours

Case Study: Contract Manufacturing IICase Study: Contract Manufacturing II


New Rules for Business RelationshipsNew Rules for Business Relationships

Exploiting efficient cyber markets across the Exploiting efficient cyber markets across the business landscape will provide a greater business landscape will provide a greater competitive advantage than having tightly competitive advantage than having tightly integrated predefined supply chainsintegrated predefined supply chains

Evolution of Business ModelsEvolution of Business Models

2000 2000 The enterprise as an The enterprise as an

organization organization Physical organisationPhysical organisation e-commercee-commerce Bricks and mortarBricks and mortar Vertical or horizontal Vertical or horizontal

integrationintegration ‘‘black-box’ trading partner black-box’ trading partner

relationshipsrelationships Supply chain partnersSupply chain partners

2005 2005 The enterprise as an The enterprise as an

organismorganism Virtual organisationVirtual organisation c-commercec-commerce Click and mortarClick and mortar Recombinant integrationRecombinant integration

Collaborative systemsCollaborative systems

Cyber trading communitiesCyber trading communities


Recombinant Business ModelsRecombinant Business Models

Recombinant business models are more flexible ways of Recombinant business models are more flexible ways of dealing with business partnersdealing with business partners

They emphasize flexibility and agility when dealing with They emphasize flexibility and agility when dealing with the various business relationships that need to be the various business relationships that need to be constructed to satisfy a given business process or market constructed to satisfy a given business process or market opportunity.opportunity.

The recombinant model avoids the idea of tightly coupled The recombinant model avoids the idea of tightly coupled opportunistic approachopportunistic approach


New Challenges for ITNew Challenges for IT

The C-Commerce technology model will create The C-Commerce technology model will create major businesses and technology upheaval for major businesses and technology upheaval for business application vendors with monolithic business application vendors with monolithic architecturesarchitectures

Traditional monolithic client/server architectures Traditional monolithic client/server architectures offered by leading manufacturing application offered by leading manufacturing application vendors today will be severely challenged by new vendors today will be severely challenged by new architectures aligned with the vision of agile c-architectures aligned with the vision of agile c-commercecommerce

New models for ITNew models for IT

Along with web-centric and web-aware architectures, Along with web-centric and web-aware architectures, application architectures need to be more agile to reflect application architectures need to be more agile to reflect the agile organizationthe agile organization

Previous manufacturing architectures are hierarchical Previous manufacturing architectures are hierarchical Agile and holonic architectures need to be investigatedAgile and holonic architectures need to be investigated Many organisations are trying to develop agile structures Many organisations are trying to develop agile structures

using recombinant business models etc. using recombinant business models etc. IT is also experimenting with agile approaches to IT is also experimenting with agile approaches to

software development and to IT architecturessoftware development and to IT architectures These agile architectures support rapid changes in the These agile architectures support rapid changes in the

ITS in response to changes in the environmentITS in response to changes in the environment

Holonic architecturesHolonic architectures

(The term holonic describes an entity that maintains its (The term holonic describes an entity that maintains its individuality while functioning as part of a whole)individuality while functioning as part of a whole)

Holonic architectures Holonic architectures evolve and self-organise over time to evolve and self-organise over time to optimise survivability, adaptability, flexibility, efficiency and optimise survivability, adaptability, flexibility, efficiency and effectiveness. effectiveness.

Holonic organisations recognize that different people think in Holonic organisations recognize that different people think in different manners. Some people are abstract, others concrete; different manners. Some people are abstract, others concrete; some are strategic planners, others action oriented. Holonic some are strategic planners, others action oriented. Holonic organizations use technology that allows people to work together organizations use technology that allows people to work together while choosing the best way of getting their work done. These while choosing the best way of getting their work done. These organizations allow people to work the way that they find the best. organizations allow people to work the way that they find the best.

Holonic software development requires constant learning and Holonic software development requires constant learning and individual adaptation. It encourages diversityindividual adaptation. It encourages diversity

Documents

IACT 916 - Lecture 61 Organisational Designs To understand the different kinds of organisational designs To understand the different kinds of organisational