1616. CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 2 Organizational Environment The set of resources

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Copyright © 1999 Addison Wesley Longman

2 CHAPTER 16 Determinants of Organization Structure and Culture

Organizational Environment

The set of resources surrounding an organization.



Forces that Affect Supply of Resources:

• Economic Forces• Competitors• Technological Forces• Distributors

• Environmental Forces• Customers• International Forces• Suppliers



FIGURE 16.1 Forces in an Organization's Environment



Organizational Environment -Key Terms

• Differentiation - measures the degree to which a function or division develops orientations that allow its members to manage the specific environmental force that each function or division is dealing with.

• Integration - the degree of coordination or mutual adjustment between functions.



FIGURE 16.2 Using a Functional Structure to Manage Environmental Forces



FIGURE 16.3 The Effect of Uncertainty on Differentiation and Integration



Mechanistic Structure

• An organization structure that is designed so that individuals and functions behave in predictable ways and can be held accountable for their actions.



Characteristics of Mechanistic Structures:

• Tall, centralized hierarchy of authority.

• Top-down communication and decision making.

• Great use of standardization; many detailed rules and standard operating procedures (S.O.P.s).

• Clearly specified tasks and roles and a defined division of labor.



Organic Structure

• An organizational structure that is designed so that individuals and functions can behave flexibly and respond quickly to frequently changing and unusual situations.



Characteristics of Organic Structures:

• Flat, decentralized hierarchy of authority.

• Lateral communication and decision making between people in different departments.



Characteristics of Organic Structures:

• Great use of mutual adjustment: much face-to-face communication in task forces and teams.

• Deliberately ill-defined tasks and roles and a loose division of labor.



Advice to Managers

• Analyze the set of forces in the environment surrounding your organization and the degree of uncertainty associated with each force.



Advice to Managers

• Evaluate the way your organizational structure and culture are designed to manage these forces. Are the levels of differentiation and integration appropriate? Is your organization sufficiently mechanistic or organic?



Advice to Managers

• Implement organizational design changes that will improve your organization’s ability to respond to its environment.



Technology

The combination of human resources and raw materials and equipment that workers use to convert raw materials into finished goods and services.



Woodward’s Model of Technology

• Small-batch technology

• Mass production technology

• Continuous-process technology



Small-Batch Technology

• Technology that relies on the skills and knowledge of individual workers to produce one-of-a-kind, customized goods and services or small quantities of goods and services.



Mass Production Technology

• Technology that results in the production of large numbers of identical products.



Continuous-Process Technology

• Technology in which the manufacturing process is entirely mechanized and the workers’ role is to monitor the machines and computers that actually produce the goods.



Thompson’s Technological Types

• Mediating Technology

• Long-Linked Technology

• Intensive Technology



Mediating Technology

• Technology that links independent but standardized tasks.



Long-Linked Technology

• Technology that is applied to a series of programmed tasks performed in a predetermined order.



Intensive Technology

• Technology that is applied to tasks that are performed in no predetermined order.



FIGURE 16.4

Types of Technology Identified by Thompson



Perrow’s Model of Technology

• Task Variety - the number of new and different demands that a task places on an individual or a function.

• Task Analyzability - the degree to which standardized solutions are available to solve problems that arise.



Perrow’s Model of Technology

• Routine Manufacturing - high task analyzability; low task variety

• Craftswork - low task analyzability; low task variety

• Nonroutine Research - low task analyzability; high task variety

• Engineering Production - high task analyzability; high task variety



FIGURE 16.5 Perrow's Model of Technology

Source: Adapted from C. Perrow, Organizational Analysis: A Sociological View (Belmont, Calif.: Wadsworth, 1970), p. 78.



Advice to Managers

• Use Woodward’s, Thompson’s, and Perrow’s frameworks to identify the main contingencies associated with operating the technologies in your organization.

• Decide whether your organization’s current structure and culture are matched to the needs of your technology.



Advice to Managers

• Implement any changes in organizational design such as decentralizing authority or raising the level of integration by empowering workers, that may allow you to operate your technology more effectively.



Types of Organizational Strategies

• Cost Leadership Strategy - aims to attract customers with low prices that are made possible by low costs.

• Differentiation Strategy - aims to attract customers with unique or distinctive goods and services.



Types of Organizational Strategies

• Focused Cost-Leadership Strategy - aims to attract one kind of customer or group of customers with a low-cost product.

• Focused Differentiation Strategy - aims to attract one kind of customer or group of customers with a differentiated product.



FIGURE 16.6 Types of Organizational Strategies



Organizational Design -Potential Benefits:

• Increased Efficiency

• Increased Quality

• Increased Innovation and Creativity

• Increased Responsiveness to Customers



Advice to Managers

• Evaluate the way you are currently pursuing your strategy, and decide how you might improve efficiency, quality, innovation, or customer responsiveness to increase performance.

• Consider implementing a T.Q.M. program to discover ways to increase performance.



Advice to Managers

• Evaluate how your organization’s structure and culture are helping or hurting organizational performance, and implement any organizational design changes that will help to increase your competitive advantage.

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1616. CHAPTER 16 Determinants of Organization Structure and Culture Copyright © 1999 Addison Wesley Longman 2 Organizational Environment The set of resources