• Chapter 10
180
g. Virtual Network Approach
• The biggest advantages are flexibility and competitiveness on a global scale,
drawing on resources and expertise worldwide. The virtual network structure
h. Lack of hands-on control is a significant disadvantage. Each partner in the
network acts in its own self-interest. Weak and ambiguous boundaries create
III. ORGANIZING FOR HORIZONTAL COORDINATION
A. The Need for Coordination Exhibit 10.10
1. As organizations grow and evolve, new positions and departments are added, and
senior managers have to find a way to tie all of these departments together.
2. Collaboration is a joint effort between people from two or more departments to
produce outcomes that meet a common goal or shared purpose and that are typically
greater than what any of the individuals or departments could achieve working alone.
Designing Adaptive Organizations •
181
B. Task Forces, Teams, and Project Management Exhibit 10.11
1. A task force is a temporary team or committee designed to solve a problem involving
several departments. Task force members represent their departments and share
2. A project manager is responsible for coordinating the activities of several
departments for the completion of a specific project. A distinctive feature of a project
C. Relational Coordination
1. Relational coordination refers to frequent, timely, problem-solving communication
carried out through employee relationships of shared goals, knowledge, and mutual
respect. It is not based on formal coordination roles or mechanisms.
IV. FACTORS SHAPING STRUCTURE
A. Structure Follows Strategy Exhibit 10.12, Exhibit 10.13
1. Porter’s strategies of differentiation and cost leadership typically require different
structural approaches. A simplified continuum illustrates how structural approaches
2. The pure functional structure is appropriate for achieving internal efficiency goals,
3. Other forms of structure represent intermediate steps on the firm’s path to efficiency
or innovation. The functional structure with cross-functional teams and project teams
B. Structure Fits the Technology
• Chapter 10
182
Technology includes the knowledge, tools, techniques, and activities used to transform
organizational inputs into outputs.
1. Woodward’s Manufacturing Technology Exhibit 10.14
a. Small-batch and unit production. Small-batch production firms produce goods
in batches of one or a few products designed to customer specification. Examples
include custom clothing, special-order machine tools, space capsules, satellites,
2. Service Technology
a. Service organizations include consulting companies, law firms, brokerage houses,
airlines, hotels, advertising companies, amusement parks, and educational
organizations. Service technology also characterizes departments such as legal,
Answers to End-of-Chapter Discussion Questions
1. Sandra Holt, manager of Electronics Assembly, asked Hector Cruz, her senior technician, to
handle things in the department while Sandra worked on the budget. She needed peace and
Designing Adaptive Organizations •
183
quiet for at least a week to complete her figures. After ten days, Sandra discovered that
Hector had hired a senior secretary, not realizing that Sandra had promised interviews to
two other people. Evaluate Sandra’s approach to delegation.
An evaluation of Sandra’s approach to delegation can be made by using the manager’s Shoptalk
box entitled “How to Delegate.” The guidelines provided there include delegating the whole
2. How does relational coordination differ from teams and task forces? Do you think relational
coordination seems more valuable for a service technology or a manufacturing technology?
Explain your answer.
Relational coordination refers to frequent, timely, problem-solving communication carried out
through employee relationships of shared goals, knowledge, and mutual respect.
to a need for coordination among these departments.
Relational coordination, which is the highest level of horizontal coordination, seems more
valuable for a service technology than for a manufacturing technology. Service technology
characterizes departments such as legal, human resources, finance, and market research in large
3. An organizational consultant was heard to say, “Some aspect of functional structure appears
• Chapter 10
184
in every organization.” Do you agree? Explain.
The consultant is probably correct. In all organizations, people who do similar jobs are grouped
4. Some people argue that the matrix structure should be adopted only as a last resort because
the dual chains of command can create more problems than they solve. Discuss. Do you
agree or disagree? Why?
Many experts would agree that the matrix structure should be adopted only after other structures
have been tried. If the organization is in a functional structure and that doesn’t work, and then
5. What is the virtual network approach to structure? Is the use of authority and responsibility
different compared with other forms of departmentalization? Explain.
In the virtual network approach, the organization becomes a small central broker, electronically
connected to other organizations that perform vital functions. Each department is an independent
6. The Hay Group published a report that some managers have personalities suited to
horizontal relationships such as project management that achieve results with little formal
authority. Other managers are more suited to operating roles with much formal authority in
a vertical structure. What type of structure—functional, matrix, team, or virtual network—do
you believe your personality would best fit? Which structure would be the most challenging
for you? Give your reasons.
Students should demonstrate a clear understanding of the structures they select, and how those
Designing Adaptive Organizations •
185
7. Describe the primary differences between manufacturing and service technology. How do
these differences influence the type of structure that will be most effective?
Joan Woodward described the following three types of manufacturing technology:
• Small-batch and unit production.
• Large-batch and mass production.
Service organizations include consulting companies, law firms, brokerage houses, airlines,
hotels, advertising companies, amusement parks, and educational organizations. Service
technology also characterizes departments such as legal, human resources, finance, and market
8. Experts say that organizations are becoming increasingly decentralized, with authority,
decision-making responsibility, and accountability being pushed farther down into the
organization. How will this trend affect what will be asked of you as a new manager?
The trend toward increased decentralization, with authority, decision-making responsibility, and
9. The chapter suggested that structure should be designed to fit strategy. Some theorists argue
that strategy should be designed to fit the organization’s structure. With which theory do you
agree? Explain.
• Chapter 10
186
stronger simply because the structure may be very difficult to change. It does not make much
10. Would you expect the structure of a company such as Facebook that operates almost entirely
online to differ from the structure of a bricks-and-mortar company such as AT&T that uses
the Internet for some things, such as customer service and business-to-business transactions?
Why or why not?
Both companies are service organizations, but because AT&T provides Internet, television, and
require. As a result, the structures of the two companies will be quite different.
Apply Your Skills: Experiential Exercise
Organic Versus Mechanistic Organization Structure
The exercise reflects on the pros and cons of an organic structure against a mechanistic structure.
An organic organization reflects a loose, flexible structure that is often associated with uncertain
Apply Your Skills: Small Group Breakout
Family Business
In this exercise, students assume the role of consultant to a family business and rank the priority
of departmental functions in order of importance for assigning additional resources to improve
business in the future. Students rank functions individually first, then discuss their individual
rankings in groups and develop a group ranking. Finally, they analyze what they learned about
organizational structure and design from the exercise.
Apply Your Skills: Ethical Dilemma
A Matter of Delegation
Designing Adaptive Organizations •
187
1. Prepare a memo to Golopolus, summarizing the new safety guidelines that affect the
Rockingham product line and requesting his authorization for implementation.
2. Mind your own business. Golopolus hasn’t said anything about the new guidelines and you
don’t want to overstep your authority. You’ve been unemployed and need this job.
Tom Harrington is in a tough position. He feels loyalty to his boss, but he is also concerned
3. Send copies of the reports anonymously to the operations manager, who is Golopolus’s boss.
The operations manager is ultimately responsible for whether Rockingham’s toys meet federal
Apply Your Skills: Case for Critical Analysis
Abraham’s Grocery
1. Based on the information available in the case, sketch a picture of the original structure
within an Abraham’s store and the store managers’ relationship with district specialist
managers. What type of structure is this? Explain.
The original structure within the store was a functional structure which can be represented as
below:
PRESIDENT
• Chapter 10
188
2. Based on the information available in the case, sketch a picture of the consultant’s
recommended structure within the store and the relationship of store department managers
with district specialist managers. What type of structure is this? Explain.
The consultant’s recommended structure within the store is a divisional structure. Divisional
structure occurs when departments are grouped together based on similar organizational outputs.
3. What are some of the advantages and disadvantages you see for the two types of structures?
Which structure do you think will work best for Abraham’s? Why?
Advantages of functional structure:
Designing Adaptive Organizations •
189
• Grouping employees by common task permits economies of scale and efficient resource
Disadvantages of functional structure:
• Barriers exist across departments.
Advantages of divisional structure:
• Organization will be more flexible and responsive to change.
On the Job Video Case Answers
Modern Shed
1. Which of the five approaches to structural design is used at Modern Shed, and how are the
company’s departments organized and coordinated?
Modern Shed uses the virtual network approach to departmentalization. The Seattle shed builder
has a core hub of just 12 to 14 employees (mostly designers and managers). These top managers
2. What are the advantages and disadvantages of Modern Shed’s organizational structure?
• Chapter 10
190
The advantages of operating as a virtual network include fast response to market needs; access to
3. How did Ryan Smith determine whether his company needed a mechanistic structure with a
formal vertical hierarchy or an organic one involving free-flowing partnerships?
A firm’s organizational structure is determined largely by the company’s business strategy.