978-1259278211 Chapter 10 Solution Manual Part 4

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3. What are the relative advantages and disadvantages of the types of organizational

structure—simple, functional, divisional, matrix—discussed in the chapter?

Response:

The simple structure has advantages of

Being very effective and efficient in the coordination of activities

The disadvantages of the simple structure include

Possible misunderstandings of tasks and responsibilities, because they are frequently not

Employees who may act out of self-interest due to the lack of clarity in boundaries and

The small size and flat structure that may limit potential upward mobility of employees,

The functional structure has the advantages of

Centralizing and coordinating activities within each functional area

Decision making that is centralized and clear

The disadvantages of the functional structure include

Difficult coordination due to the functional-specific perspectives in each department that

Short-term thinking based on what is best for the functional area and not the organization

Difficulties with establishing performance evaluation standards that are consistent across

The division structure has the advantages of

Enabling division managers to set strategies that are effective within the division’s business

Greater coordination and integration between all divisions and functional areas due to

The disadvantages of the division structure include

The expense of maintaining large numbers of general managers

Consistent manager evaluation that promotes distributive bargaining between divisions and

Inconsistent corporate image across various products and markets

The matrix structure has multiple lines of authority and some individuals report to at least two

managers. The advantages of the matrix structure include

Better use of specialized personnel, equipment, and facilities

Resource sharing enabling collaboration and more effective response to changes in the

Organizational flexibility that gives managers greater range of responsibility, which may

The disadvantages of the matrix structure include

Uncertainty of priorities due to dual-reporting structure

Possible power struggles and conflict over performance evaluations, resources, and

Complicated working relationships, with a possible over reliance on group processes

4. When a firm expands its operations into foreign markets, what are the three most

important factors to take into account in deciding what type of structure is most

appropriate? What are the types of international structures discussed in the text and what

are the relationships between strategy and structure?

Response:

The three factors to take into account are (1) the type of strategy that is driving the firm’s foreign

operations, (2) product diversity, and (3) the firm’s dependence on foreign sales. The text

discusses the following structures:

International division

Geographic-area division

Worldwide product division

Multidomestic strategies require firms to respond to unique conditions in each country, and are

consistent with the international division and geographic area division structures. These structures

Global strategies require firms to coordinate operations across countries, and are consistent with

the worldwide functional and the worldwide product division structures. Firms with low levels of

5. Briefly describe the three different types of boundaryless organizations: barrier-free,

modular, and virtual.

Response:

Boundaryless organizational designs have permeable boundaries, be they vertical, horizontal,

external, or geographic. Barrier–free organizations bridge real differences in culture, function, and

Modular organizations outsource non-vital functions, which benefits from the knowledge and

Virtual organizations are continually evolving networks of independent companies that are linked

6. What are some of the key attributes of effective groups? Ineffective groups?

Response:

Effective groups, or teams, are able to maximize the potential of organizational human capital.

Research indicates that effective teams have

Common culture and shared values

Horizontal organizational structures, which group similar and related business units under

Horizontal systems and processes, which break through barriers that often exist between

Communications and information technologies, which play an important role in bridging

Human resource practices, which upgrade human capital by providing training and skills to

Ineffective groups may respond to external pressures, resource scarcity, or declining performance

7. What are the advantages and disadvantages of the three types of boundaryless

organizations: barrier-free, modular, and virtual?

Response:

The advantages of barrier–free organizations include

Leverages talents of all employees

Bridging differences in culture, function, and goals to find common ground

Can lead to coordinated win–win initiatives with key suppliers, customers, and alliance

The disadvantages of barrier-free organizations include

Difficult to overcome political and authority boundaries inside and outside the

Lack of strong leadership and common vision, leading to coordination problems

Longer time to sort out responsibilities on projects

Lacks high levels of trust, which can impede performance

Possible high turnover of team members

The advantages of modular organizations include

Decrease in overall costs (stimulate new product development by incorporating talented

Focus scarce resources on the areas where firms hold competitive advantages (maintains

Tapping into the knowledge and expertise of specialized supply chain partners, which adds

The disadvantages of modular organizations include

Loss of critical skills and possible competitive advantage

Loss of flexibility to respond to market shifts by bringing back in to the firm specific

Loss of control over suppliers.

The advantages of virtual organizations include

Sharing of costs and skills

Increased market responsiveness

Encourages knowledge sharing and accelerates organizational learning

The disadvantages of virtual organizations include

Lack of boundaries between constituent firms, thus making it difficult to determine the

Loss of strategic control over emerging technologies

8. When are ambidextrous organizational designs necessary? What are some of their key

attributes?

Response:

Ambidextrous organizations achieve both alignment, involving short-term coordination of

activities and modest incremental innovations, and adaptability, involving long-term proactive

Ambidextrous organizations have established traditional structures that maintain alignment, and

breakthrough efforts organized within structurally independent units that were integrated into the

existing senior management structure. Effective ambidextrous structures are related to:

A clear and compelling vision that is consistently communicated by senior management

Cross-fertilization among business units without cross-contamination

Tight coordination and integration of management that enabled sharing of resources such

Reward systems that pertain to overall company goals

Autonomy of the breakthrough effort

Experiential Exercise

Many firms have recently moved toward a modular structure. For example, they have

increasingly outsourced many of their information technology (IT) activities. Identify three

such organizations. Using secondary sources, evaluate (1) the firm’s rationale for IT

outsourcing and (2) the implications for performance.

Response:

You may get students responding with the following pattern. Note that these are just hypothetical

cases not similar to any real firm. These examples are merely illustrative.

Firm Rationale Implication(s) for

Performance

Firm A: outsourced

statistical process

Reduce costs Cost savings, but lower

quality, and some

Firm B: outsourced e-

Get better IT quality Got better IT, but had

Firm C: outsourced its IT

Focus on marketing, and

Improvement in

(Note to instructor) For each example, ask students to identify the activity(ies) that have been

outsourced, the firm’s rationale, and the implications for performance. It is interesting to also

Application Questions and Exercises

1. Select an organization that competes in an industry in which you are particularly

interested. Go on the Internet and determine what type of organizational structure this

organization has. In your view, is it consistent with the strategy that it has chosen to

implement? Why? Why not?

Response:

There are 2 challenges. First, firms do not advertise their strategies. So students will have to look

at the evidence and argue for one strategy or another. Use one of the 3 generic strategies or, for

After determining the strategy and structure, assess the fit. Is there another structure that should

go with this strategy? What if the firm adopted another structure? Would performance worsen?

Why?

(Note to instructors) Understanding the need to fit strategy and structure is a central concept that

is very important for the students to understand. We suggest that you first ask students to describe

The end result is to help students to understand that organizational structure determines what type

2. Choose an article from BusinessWeek, Fortune, Forbes, Fast Company, or any other well-

known publication that deals with a corporation that has undergone a significant change in

its strategic direction. What are the implications for the structure of this organization?

Response:

(Note to instructor) To guide classroom discussion, first ask students to identify the original

strategic direction and the reason for the change. Then ask students to identify the original

A possible extension of this exercise is to have students research firms that have strategies similar

3. Go on the Internet and look up some of the public statements or speeches of an executive

in a major corporation about a significant initiative such as entering into a joint venture or

launching a new product line. What do you feel are the implications for making the internal

and external barriers of the firm more flexible and permeable? Does the executive discuss

processes, procedures, integrating mechanisms, or cultural issues that should serve this

purpose? Or are other issues discussed that enable a firm to become more boundaryless?

Response:

(Note to instructors) The purpose of this exercise is to get students to identify the trend toward

boundaryless organizations. If students do not identify any tendency or methods for

4. Look up a recent article in the publications listed in question 2 above that addresses a

firm’s involvement in outsourcing (modular organization) or in strategic alliance or

network organizations (virtual organization). Was the firm successful or unsuccessful in this

endeavor? Why? Why not?

Response:

(Note to instructor) The exercise enables students to analyze a move toward boundaryless

organization. All such moves are characterized by potential costs and benefits. The first step is to

Ethics Questions

1. If a firm has a divisional structure and places extreme pressures on its divisional

executives to meet short-term profitability goals (e.g., quarterly income), could this raise

some ethical considerations? Why? Why not?

Response:

Any time there are such extreme pressures to meet profitability goals, there is a potential for

unethical behavior. In the divisional structure, the divisions are interdependent, which means that

the performance of each division depends in part on cooperating with other divisions. Self-

interested managers might try to be unethical by

Bargaining with other divisions for access to his or her division’s resources

Cutting costs by reducing headcount

Disagreeing with other divisions regarding allocation of resources or executive

These actions are unethical to the extent they are done in the self-interest of managers at the

2. If a firm enters into a strategic alliance but does not exercise appropriate behavioral

control of its employees (in terms of culture, rewards and incentives, and boundaries—as

discussed in Chapter 9) that are involved in the alliance, what ethical issues could arise?

What could be the potential long-term and short-term downside for the firm?

Response:

Without effective behavioral control, employees will tend not to have (a) shared values, (b) a

commitment to organizational success, (c) a clear understanding of the organizational mission,

and (d) an understanding of investments and activities that the organization will avoid. For the

In addition to the direct costs of employee misbehavior, additional problems occur because the

alliance partner will observe the behavior. The firm’s reputation in the industry could be affected,