DISCUSSION QUESTIONS
1. How do you think your career path might differ in a hierarchical versus a flat organization?
In a hierarchical organization with formal authority, chain of command, and rules, an employee’s
2. Why do you think companies are moving toward flatter, more organic structures? Do you
think this is appropriate?
As shown in Figure 14-2, companies are moving toward flatter, more organic structures because
wider spans of control give subordinates greater autonomy and responsibility for self-management.
3. What areas of an organization (e.g., what functions) do you think are the best to centralize?
Which are the best to decentralize?
Centralization creates clear lines of communication and responsibility, and the implementation of
Decentralization is best when the organization performs nonroutine tasks in complex environments
4. What keeps you from delegating more? How can you overcome these obstacles?
Students can use the Improve Your Skills Feature: Delegation Skills feature for reference. I do not
5. If you started your own company selling iPhone applications, what organizational structure
would you create? Why?
I would adopt a pre-bureaucratic structure that is characterized by total centralization and one-on-one
6. If you wanted employees to work collaboratively and minimize conflict, what organizational
structures would you consider adopting? Why? Which structures would you avoid? Why?
I would consider adopting communities of practice because they can integrate employees and create
the informal structure that nearly every business needs, regardless of its formal structure.
Successful managers cultivate communities of practice by identifying and bringing the right people
7. What type of person would be a good fit with Nordstrom’s extremely organic and informal
structure? Why?
Employees at Nordstrom’s receive material summarizing specific rules and legal regulations, but
8. What would you do during a corporate restructuring to ensure that your best employees did not
leave?
I would “overcommunicate” to employees, pointing out that restructuring is an opportunity to
GROUP EXERCISE – To Matrix or Not to Matrix, that is the Question
Learning Objective:
Summary: Platinum Resorts is a chain of all-inclusive luxury resorts, with locations in Playa Del
Carmen, Mexico; Negril, Jamaica; Freeport, Bahamas; and Key West, Florida. Some customers return to
the same location year after year, and others enjoy trying out different locations in the group. However,
recent reports indicate that sales are down and customer complaints are up. Resort managers are pointing
fingers and insisting that the middle managers at each location are not upholding company standards.
Currently, the company has adopted a divisional structure, with a vice-president for each of the four
resorts.
Frustrated by inconsistent service and weak sales, Platinum Resorts has enlisted the services of a
consultant. After visiting each of the resorts and speaking with employees and guests, the consultant is
recommending that the company move from its current divisional structure to a matrix organization. The
consultant explains that a matrix organization is used by many innovative organizations, such as NASA,
to achieve functional and divisional control. Although some managers think that this is a great idea, others
are concerned that their authority and control may be undermined by this new organizational structure.
Platinum Resorts knows that something has to change, but you are unsure if this is the right solution.
Task: Form a group of four students and assign each group member to one of the following
roles:
President of Platinum Resorts
Sales manager for the Playa Del Carmen, Mexico resort
Housekeeper at the Key West, Florida resort
Guest at the Negril, Jamaica resort
Have the groups complete the following questions.
1. Without consulting other members of the team, and from the perspective of your assigned role,
do you think that Platinum Resorts should adopt a matrix structure?
2. Assemble your group and have each member present the potential pros and cons of organizing
as a matrix organization.
3. As a group, develop an organizational chart for the company in its current divisional structure
and the proposed matrix structure.
4. Develop a list of alternatives to converting to a matrix structure.
5. Considering all perspectives, what is the best decision of Platinum Resorts?
VIDEO EXERCISE
Honest Tea: Organizational Structure
Summary: Honest Tea (U.S.) is a bottled organic tea company based in Bethesda, Maryland. The
company is a wholly owned subsidiary of the Coca-Cola Company. Honest Tea is known for its organic
and fair trade products and is one of the fastest growing private companies. Honest Tea started off with a
handful of employees bringing out five products, three of which are still in the market. Today the
company has over 35 package varieties of not only tea but other beverages as well. Honest Tea caters to a
group of customers that prefer organic or low calorie beverages over other types of beverages. Honest
Tea finds that it must continually adapt to changing circumstances and environments. Initially organic or
low calorie tea was the only product, but the firm has expanded to various other beverages. Honest Tea
believes that growth is continuous; the firm should never consider that they have finished achieving what
they set out to accomplish.
1. Describe the role of division of labor and hierarchy at Honest Tea.
Honest Tea is a very flat structure with a ‘TEO’ and divisions. The co-founder acts as Chairman and
2. In what ways has business strategy and organizational size impacted Honest Tea? How might
this change in the future?
When the company started, it was more of a vision than a viable beverage provider. The original
business plan was full of vision and goals but there was nothing about distribution, a main ingredient
3. Does Honest Tea have more of an organic or mechanistic structure? How can you tell?
Honest Tea appears to embody the very definition of organic organizations provided in the text:
flexible, decentralized structures with less clear lines of authority, decentralized power, open
communication channels, and a focus on adaptability in helping employees accomplish goals. The
Now What?
Imagine being part of a group with the boss and another coworker in which you are discussing how you
were recently beat to market by a competitor’s new toy line. The boss asks the group what the company
could do to prevent something similar from happening again. What do you say or do? Go to this chapter’s
“Now What?” video, watch the challenge video, and choose a response. Be sure to also view the
outcomes of the two responses you didn’t choose.
OB Concepts Applied: organizational structure, the matrix structure, influence of external environment
on organizational design
Discussion Questions
1. Which organizational structures are illustrated in these videos and how do they influence
strategic execution? Explain.
Organizational structure is the formal system of task, power, and reporting relationships.
Types of organizational structures:
Bureaucratic structure: An organizational structure with formal division of labor, hierarchy,
and standardization of work procedures. To become more competitive Alex suggests that the
Divisional structure: A division is a collection of functions organized around a geographic area
Matrix structure: Employees report to both a project or product team and to a functional
manager. A matrix structure brings all of the relevant expertise and departments into projects
2. How do these videos illustrate the influence of the external environment on organizational
design?
Organizational design is the process of selecting and managing aspects of organizational structure
and culture to enable the organization to achieve its goals.
Happy Time Toys faced a rapidly changing external environment characterized by intense
A rapidly changing, uncertain environment requires a more flexible structure than a more stable
environment. By changing its organizational design to a matrix structure, the company was able to
3. Based on this chapter, what other ideas do you have to help Happy Time Toys to develop and
manufacture new toys more rapidly and to be faster in responding to the environment?
Happy Time Toys should try virtual teams linked by technology, although employees may still meet