Chapter 10: Creating Effective Organizational Designs

Strategic

What is organizational structure?

Formalized patterns of interactions linking tasks, technologies, and people.

What does organizational structure balance?

Division of labor and integration of activities.

What typically happens to organizational structure as a company grows?

It becomes more complex.

What is a simple organizational structure?

The oldest and simplest form where the owner-manager makes most decisions.

What are the main advantages of a simple structure?

Flexibility, direct supervision, and quick decisions.

What are the main disadvantages of a simple structure?

Role confusion and limited advancement opportunities.

What is a functional organizational structure?

A structure that groups employees by business functions.

Name four common functional departments.

Marketing, Finance, Operations, and Human Resources.

What is a major advantage of a functional structure?

Efficient use of specialists.

What is a major disadvantage of a functional structure?

Silos.

What are silos?

Communication barriers between departments.

What is a divisional organizational structure?

A structure organized around products, projects, or markets.

What is another name for a divisional structure?

M-Form.

What is a key advantage of divisional structure?

Faster response to market changes.

What is a key disadvantage of divisional structure?

Duplication of resources.

What company is used as an example of divisional structure?

Disney.

What does SBU stand for?

Strategic Business Unit.

What is an SBU structure?

A structure that groups related divisions together.

What type of diversification is associated with SBUs?

Related diversification.

Why are SBUs created?

To achieve synergies.

What is a holding company structure?

A structure composed of unrelated businesses.

What diversification strategy uses a holding company structure?

Unrelated diversification.

What is an advantage of a holding company structure?

High divisional autonomy.

What is a disadvantage of a holding company structure?

Limited corporate control.

What is a matrix organizational structure?

A structure that combines functional and product/geographic groupings.

How many managers does an employee typically have in a matrix structure?

Two.

What is a major advantage of a matrix structure?

Greater collaboration.

What is a major disadvantage of a matrix structure?

Dual-authority conflicts.

What follows strategy?

Structure.

What structure best fits related diversification?

SBU structure.

What structure best fits unrelated diversification

Holding company structure.

What is a boundaryless organization?

An organization that reduces barriers to communication and cooperation.

What four boundaries are reduced?

Vertical, horizontal, external, and geographic.

What are the three types of boundaryless organizations?

Barrier-free, modular, and virtual.

What is a barrier-free organization?

An organization with permeable internal and external boundaries.

What characteristics are needed for a barrier-free organization?

Trust, teamwork, communication, and flexibility.

What is a major benefit of a barrier-free organization?

Better information sharing.

What phrase summarizes Netflix's management philosophy?

Context, Not Control.

What type of transparency does Netflix encourage?

Radical transparency.

What kind of teams does Netflix emphasize?

Self-governing teams.

What culture does Netflix promote?

Freedom and Responsibility.

What are ambidextrous organizational designs?

Designs that balance exploration and exploitation.

What is exploration?

Innovation, experimentation, and adaptability.

What is exploitation?

Efficiency, coordination, and continuous improvement.

What is the goal of ambidextrous organizations?

To innovate while remaining efficient.