Organizational Structure and Design

PGCBM14|Gloryson Chalil
OrganizationalStructure
andDesign
Session1:
Organization & Organizational Stakeholders
OrganizationalStructureandDesign 1 April21,2009
OrganizationalTheory Introduction
CourseObjectives
Tofamiliarizetheparticipantswithdifferentconcepts
andterminologyrelatedtomacrolevelanalysisof
organizationalbehaviour
Todevelopanunderstandingofthenature,functioning
anddesignoftheorganizations
Toexaminethereciprocalrelationshipbetween
organizationalcharacteristicsandmanagerial
behaviour
To help the participants to develop and apply the
theoretical and practical insights regarding
organizational structure for participating in / initiating
efforts to change and adapt organizations to new
challenges
Methodology
Amixof
Illustratedlectures
Casestudies,
Inclassactivities,
Individualreadings
Groupprojects
Recommendedtext:
Jones G R, Mary P (2009), Organizational Theory,
Design and Change, 5th Edition, Perason
Education
OrganizationalStructureandDesign
GradingComponents
Component Weight
Quiz, Class Participation & Attendance 20%
Group Project 35%
(15 + 13 + 7)
End Term Exam 45%
Organization&OrganizationalStakeholders
Levelsofanalysis
Organization
system Level
Individual Level
Group Level
LevelsofAnalysis
Orgn.
B
Orgn.
C
Orgn.
D
External
Environment
Organization A
Dept A
Dept B
Dept C
Organizational
Level
Individual
Level
Group
Level
Levelsofanalysis
Individual Group Organizational
Orgnl. stakeholders
Orgnl. structure
Orgnl. culture
Environment & strategy
Orgnl. technology
Group structure
Work teams
Communication
Leadership
Ability
Perception
Values
Motivation
Personality
Illustration: Student cheating
Levelsofanalysis
Examplesoforganizationallevelbehaviors:
1) HondaMotors,settingupa100percent
subsidiaryinIndia HondaMotorcycle&
ScootersIndia despitealreadyhavingaJV
withtheMunjals
2) DieselenginemanufacturingplanttoRs 2,500
crore,inwhichSuzukihasa70percentstake
3) Newlaunchesofmedicinesthroughwholly
ownedMNCsubsidiariesbyNovartis and
EMerk
Levelsofanalysis
Examplesoforganizationallevelbehaviors:
1) UKbasedbankHSBChasbought15percentstake
ofthetelecomtowerbusinessofIndiasReliance
TelecomInfrastructure,asubsidiaryofmobile
operatorReliancespending$100million
2) Nowthreemajorprivatemobilefirms Bharti
Airtel,Vodafone andIdeaCellular saytheywill
mergetheirwirelessinfrastructureoperationsby
poolingexisting70,000communicationstowers
3) Bajaj announcementhastwokeynegative
surprises:Firstly,thethreewaysplitinsteadofa
verticaldemerger wasnotexpected,hesays.
Moreimportantly,thecalloptiontoAllianz in
theinsurancebusiness,isabignegativesurprise.
Organizations: Toolusedbypeopletocoordinate
theiractionstoobtainsomethingtheydesireor
value
ForWhat?
ByWhom?
How?
Why
Where Environment
doorganizationshaveaboundary?
ValueCreationbyOrganizations
Atthreestages
CONVERSION
PROCESS
OUTPUT
INPUT
Sail & Chiria Mines
Reliance's performance in Shell Benchmarking was also at No.1 in
Operating Cost, Manpower Cost, Maintenance Cost and Plant Utilization...
How will you differentiate the outputlow cost, premium product
Difference between tata as the lowest cost steel producer
doesnt mean that their steel is the cheapest.
April21,2009 OrganizationalStructureandDesign
OrganizationalEffectiveness
ValueCreationbyOrganizations
12
Goals and
Strategy
Environment Size
Culture Technology
Structure
1. Formalization
2. Specialization
3. Hierarchy of Authority
4. Centralization
5. Professionalism
6. Personnel Ratios
ContingencyFactors
AffectingOrganizationDesign
S
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Organizational Structure and Design
The Right Mix of Design Characteristics Fits the Contingency Factors
MeasuringOrganizationalEffectiveness
(Control)
(Innovation)
(Efficiency)
MeasuringOrganizational
Effectiveness
Number of Students who came
from Abroad
Papers Published in International
J ournals
Placement Performance
Recruiter Satisfaction Score
Residential Facilities for Students
Residential Facility for Faculty
Revenue from Consultancy
Revenue from MDPs
Single Occupancy Room
Visitors from Industry
Wi-Fi Campus
% Student Placed
Accreditation by International body
Books published in 2006
Campus Area
Electronic Databases
Faculty Exchange Programmes
Infrastructure & Facilities
International Linkages
J oint Research Projects with
Industry
Laptop for every student
Maximum Salary
ORGANIZATION
B
ORGANIZATION
A
INTERNAL EXTERNAL
FLEXIBILITY
STABILITY
(E) Growth,
Resource acquisition
(E) Productivity,
Efficiency
(E) Stability
Control
(E) Human Resource
Development
(M) Flexibility, Readiness
(M) Planning, Evaluation
Goal setting
(M) Communication
Information Mgmt.
(M) Cohesion
Morale
Human Relations Model Open Systems Model
Internal Process Model
Rational Goal Model
17 April21,2009 OrganizationalStructureandDesign
Owners&Stakeholders
Peoplewhohaveaninterest,claimorstakeinan
organization,inwhatitdoes,andinhowwellit
performs
Interest fringestakeholders
Insidestakeholders: Closesttotheorganizationand
hasthestrongestorthemostdirectclaimon
organizationalresources
Outsidestakeholders: Peoplewhodonotownthe
organization,notemployedbyitandhavesome
interestinit
Inducements>Contributions
Owners&Stakeholders
OrganizationanditsStakeholders
Kolkata KnightRiders
Applyyourunderstandingabout
stakeholdertheorytothecontextofMultiple
captaintheoryproposedbyBuchanan
Insidestakeholders
Outsidestakeholders
Stakeholderconflicts
needforsuchaconflict
majorstakeholdersinvolved
Coalitionbuildingprocess
Howtomanageit
anyotherbetterway
Stakeholders Goals
An organization collapses, while major stakeholders withdraws it support
FringeStakeholders&RadicalTransactiveness
Pureit
Theworldsmostadvanced
inhomewaterpurifier
100%protectionfrom
waterbornediseases
Doesntneedelectricity,
gasorcontinuouswater
supply
94%marketuntapped
(Businessline,20/06/08)
FringeStakeholders&RadicalTransactiveness
Generating
Complex
Interactions
Reconciling
Contradictions
Putting the
last first
Putting the
last first
Networking from
the core to
the periphery
Fan Out
Extend the
Scope of the firm
Fan In
Integrate diverse and
Disconfirming information
Owners&Stakeholders
CompetingGoals
Formationofcoalitions
Primarygoaloftheorganization
Maximizingshareholderswealth?
Areaforconflict?
1. LongtermVsshorttermorientation
2. Whatisthegoal foranorganization?
CasesonAllocationofrewards
Relaince
Novartis (April10,2009)
Organizationalviabilityanddominantcoalitions
QuestionsforGroupProject
Discussthewayinwhichchosenorganizationcreatesthe
value.Focusonitsinputs,throughputs,outputand
environment.
Howwillyoumeasuretheeffectivenessofthechosen
organization?
Drawastakeholdermapthatidentifyyourorganizations
majorandfringestakeholdergroups.
Whatkindofconflictsbetweenitsstakeholdergroupswould
youexpecttooccurmost?
Identifythestakeholderconflictsthatneedtobemanagedbya
managementgraduate(duringthefirsttwoyears)
OrganizationalStakeholders
CompetingGoals CaseReliancePetrolRetail
2002May24,Govt.permissiontoopenoutlets
Initialyearsofoperation(till2004July)
Received close to 50,000 applications (august)
Western parts of the country, and on highways
Computerized system for fuel delivery
Mother computer connecting tanks and fuel dispensing
units, Finnish Abloylocks worth Rs2,500
Essar'sdealer-owned petrol station mostly on the town outskirts
Diesel sold here is cheaper by almost Rs1.50 per liter , and
petrol by 30 paisa.
CompetingGoals CaseReliancePetrolRetail
March,2006
1300 outlets across country, 13% market share
Each retailer invested around 2 crores
No subsidy from the Government
Crude oil price hike resulted in Rs.9-10 loss/liter
Raised prices (than PSU outlets) by Rs. 2.50 3.50
Still making losses in each liter sold
Impact
Sale came down from 20,000 to 2,000 liter/day
Cant even pay salary to mandatory 17 staff
Cant close retail outlet (will result in takeover)
What will happen to expansion plans? (for 5500 outlets)
Exercise:
Identifystakeholdersandtheirexpectations
Identifyconflictingstakeholderinterestsincase
Do you agree with the decision to raise oil price?
(On both short term and long term)
What are the options available with the management?
What will you recommend?
StepstakenbyReliance
Startedtosellbrandedpetroleumwithpricehike
Financial package for dealers, loan at same rate to avoid
payment of EMI to banks
Additional margins on sales
For people prefer to stop sales: 12.5 return on investment
Reduced the price in two installments during Oct 2006.
Long term:
Use these outlets as warehouse for retail venture
Convert the refinery into an SEZ
Now
What to do with Rs.5000 croreinvestment
OrganizationalStructure,
DesignandChange
Basic Challenges of Organizational Design
Figure4.1:DesignChallenge
Figure4.1:DesignChallenge(cont.)
Differentiation
Theprocessbywhichanorganizationallocates
peopleandresourcestoorganizationaltasks
Establishesthetaskandauthorityrelationships
thatallowtheorganizationtoachieveitsgoals
Divisionoflabor:thedegreeofspecializationinthe
organization
Inasimpleorganization,differentiationislow
becausethedivisionoflaborislow
Individualstypicallyperformallorganizational
tasks
Inacomplexorganization,differentiationishigh
becausethedivisionoflaborishigh
OrganizationalChartoftheB.A.R.andGrille
VerticalandHorizontalDifferentiation
Verticaldifferentiation:thewayanorganization
designsitshierarchyofauthorityandcreates
reportingrelationshipstolinkorganizational
rolesandsubunits
Establishesthedistributionauthoritybetween
levels
Horizontaldifferentiation:thewayanorganization
groupsorganizationaltasksintorolesandroles
intosubunits(functionsanddivisions)
Rolesdifferentiatedaccordingtotheirmain
taskresponsibilities
BalancingDifferentiationandIntegration
Horizontaldifferentiationissupposedtoenable
peopletospecializeandbecomemoreproductive
Specializationoftenlimitscommunicationbetween
subunits
Peopledevelopsubunitorientation
Subunitorientation:atendencytoviewonesrolein
theorganizationstrictlyfromtheperspectiveofthe
timeframe,goals,andinterpersonalorientationsof
onessubunit
Integration:theprocessofcoordinatingvarioustasks,
functions,anddivisionssothattheywork
togetherandnotatcrosspurposes
OrganizationalStructure:Introduction
ConceptofIntegration
IntegratingMechanisms
Hierarchyofauthority
DirectContact
LiaisonRole
TaskForce
Team
IntegratingRole
IntegratingDepartment
Choosethebestintegrativemechanism
Conflict between Finance and HR department (pay roll processing)
Pollution control board certificate
Hiring a supervisor to handle conflict between cooks and waiters
IntegratingMechanisms&Complexity
Information Systems
Direct Contact
Task Forces
Full-time Integrators
Teams
HIGH LOW
Cost of Coordination in
Time and Human Resources
LOW
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R
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H IGH
Liaison Role
Integrating Dept.
BalancingDifferentiationandIntegration
Managersfacingthechallengeofdecidinghowandhow
muchtodifferentiateandintegratemust:
Carefullyguidetheprocessofdifferentiationsothatit
developsthecorecompetencesthatgivethe
organizationacompetitiveadvantage
Carefullyintegratetheorganizationbychoosing
appropriateintegratingmechanismsthatallow
subunitstocooperateandthatbuildupthe
organizationscorecompetences
BalancingCentralizationandDecentralization
Centralized organization: theauthoritytomakeimportant
decisionsisretainedbytoplevelmanagers
Topmanagersabletocoordinateactivitiestokeepthe
organizationfocusedonitsgoals
Decentralizedorganization: theauthoritytomakeimportant
decisionsisdelegatedtomanagersatalllevelsinthe
hierarchy
Promotesflexibilityandresponsiveness
Idealbalanceentails:
Enablingmiddleandlowermanagerswhoareatthescene
oftheactiontomakeimportantdecisions
Allowingtopmanagerstofocusonlongtermstrategy
making
HRimplications
BalancingStandardizationand
MutualAdjustment
Standardization:conformitytospecificmodelsor
examplesthatareconsideredproperinagiven
situation
Definedbyrulesandnorms
Mutualadjustment:theprocessthroughwhich
peopleusetheirjudgmentratherthanstandardized
rulestoaddressproblems,guidedecisionmaking,and
promotecoordination
Formalization:theuseofrulesandproceduresto
standardizeoperations
HRimplications
IdentifyjobswhereStandardization/Adjustment
arepreferable?
OrganizationalStructure:Introduction
OrganizationalDesignChallenges
1) ExtentofDifferentiation
2) BalancingDifferentiation&Integration
3) BalancingCentralization&Decentralization
4) BalancingStandardization&Mutual
Adjustment
MechanisticandOrganicStructures
TaskandRoleRelationships
FunctionalDifferentiationin
UncertainEnvironment
EnvironmentalUncertaintyandStructure
Burns and Stalker
Kolkata KnightRiders
Vs
RajasthanRoyals
Applyyourunderstandingregardingdesign
choices/challengestobothclubs
Whichoneisorganic/mechanistic
ExtentofDifferentiation
BalancingDifferentiation&Integration
BalancingCentralization&Decentralization
BalancingStandardization&MutualAdjustment
Relativeadvantage/disadvantageofboth
Whichonesuitthepressuresofa20:20game
DesignandChange
Organizational Design: Authority and Control
OrganizationalDesign:AuthorityandControl
Authority:OriginofVerticalDifferentiation
Structureinlaymenslanguage
Interlockingrolesandorganizationalstructure:
Thehierarchybeginstoemergewhenthe
organizationexperiencesproblemsin
coordinatingandmotivatingemployees
Divisionoflaborandspecializationmakesithard
todeterminehowwellanindividualperforms
Almostimpossibletoassessindividual
contributionstoperformancewhenemployees
cooperate
OrganizationalDesign:AuthorityandControl
Authority:OriginofVerticalDifferentiation
Todealwithcoordinationandmotivationproblems,theorganization
can:
Increasethenumberofmanagersitusesto
monitor,evaluate,andrewardemployees
Increasethenumberoflevelsinitsmanagerial
hierarchy
Sizeandheightlimitations
Tallorganization:anorganizationinwhichthehierarchy
hasmanylevelsrelativetothesizeoftheorganization
Flatorganization:anorganizationthathasfewlevelsinits
hierarchyrelativetoitssize
Qn:Howwillyoudecidewhetheranorganizationistall/flat?
OrganizationalStructure:AuthorityandControl
No.ofHierarchicalLevels
Idealnumberofhierarchicallevelsdeterminedby:
Principleofminimumchainofcommand:anorganization
shouldchoosetheminimumnumberofhierarchicallevels
consistentwithisgoalsandtheenvironmentinwhichit
operates
Spanofcontrol:thenumberofsubordinatesamanager
directlymanages
HIERARCHY
1 EG 1
2 EG 2
3 EG 3
4 EG 4
5 M1
6 M2
7 M3
8 M4
9 M5
10 S1
11 S2
12 S3
13 S4
14 W1
15 W2
16 W3
17 W4
TEAM2
EG 3
M1
M5
S1
S4
W3
W4
TEAM1
EG 2
M1
M3
S2
W1
W4
TEAM3
M3
S3
W2
W3
No.ofHierarchicalLevels
Factorsthatdeterminetheappropriatespanofcontrol
Managersabilityforadequatesupervisionofincreasing
numberofsubordinates
Complexityandinterrelatednessofthesubordinates tasks
Complexanddissimilartasks smallspanofcontrol
Routineandsimilartasks largespanofcontrol
FactorsAffectingtheShapeoftheHierarchy
FactorsAffectingtheShapeofthe
Hierarchy
Horizontal
differentiation:
Principalwayan
organizationretains
controlover
employeeswithout
increasingthenumber
ofhierarchicallevels.
Eachfunctionor
divisionhasitsown
hierarchy
FactorsAffectingtheShapeofthe
Hierarchy
Standardization:reduces
theneedforlevelsof
managementbecause
rulessubstitutefordirect
supervision
Gaincontrolover
employeesbymaking
theirbehaviorand
actionsmorepredictable
Organizational
formalization
Professional
formalization
Centralization:with
decentralization,lessdirect
managerialsupervisionis
needed
Authorityisdelegatedto
thelowerlevels
Decentralizationdoesnot
eliminatetheneedformany
hierarchicallevelsinlarge,
complexorganizations
Assistsrelativelytall
structurestobemore
flexible
E.g:IndianRailways
QuestionsforGroupProject
Howhasyourorganizationrespondedtofourdesignchallenges
ExtentofDifferentiation(Entireorganization)
Integratingmechanismsusedinyourorganization
Isitcentralizedordecentralized?
Isbehaviorinyourorganizationisverymuchstandardized?
Whethermutualadjustmentplayanimportantrolein
coordinatingtheactivities?
Howmanylevelsarethereinyourorganizationshierarchy?Isit
tallorflat?Areyoufacinganyproblemassociatedwithtall
hierarchies?
Howdothecentralization,standardizationandhorizontal
differentiationaffecttheshapeofyourorganization?
DesignandChange
Session 7:
Organizational Design: Specialization & Coordination
OrganizationalStructure:Specialization&Coordination
PossibleStructuresforXLRI
MAR OB ECO FIN PGD CERT DOCT
J AM SING DUB
FT PT
PGD GMP DEF EXD SAT MDP
Formsofstructures
FunctionalStructure
DivisionalStructure
BasedonProducts
Product Division Structure
MultiDivisionalStructure
ProductTeamStructure
BasedonGeography
BasedonMarketStructure
MatrixStructure
NetworkStructure
FunctionalStructure
Grouppeopleonthebasis
oftheircommonskills,
expertiseandresource
Functionalstructureisthe
bedrockofhorizontal
differentiation
Anorganizationgroupstasks
intofunctionstoincreasethe
effectivenesswithwhichit
achievesitsgoals
CEO
Materials
Finance
Manufacturing
Sales & Marketing
R & D
FunctionalStructure
Advantages
Providespeoplewiththeopportunitytolearnfrom
oneanotherandbecomemorespecializedand
productive
Peoplewhoaregroupedtogetherbycommonskills
cansuperviseoneanotherandcontroleachothers
behavior
Peopledevelopnormsandvaluesthatallowthemto
becomemoreeffectiveatwhattheydo
FunctionalStructure
Controlproblems
Communicationproblems
Supervisionproblems
Difficultyintraining
Measurementproblems
Strategicproblems
Customerproblems
Locationproblems
Difficultyinpeercontrol
Difficultyindevelopingnormsandvalues
Exercise: Identify the wrong problems associated with FS
FunctionalStructure
Functionalstructureisappropriateiftheorganization:
Limitsitselftoproducingasmallnumberofsimilar
products
Producesthoseproductsinoneorafewlocations
Sellsthemtoonlyonegeneraltypeofclientorcustomer
Managerscansolvecontrolproblemsbyredesigningthe
functionalstructuretoincreaseintegrationbetween
functions
Increasingverticaldifferentiation
Increasinghorizontaldifferentiation
Increasingintegration
MovingTowardsDivisionalStructure
ProductStructure
Productdivisionstructure:
Structureinwhichacentralizedsetofsupportfunctions
servicetheneedsofanumberofdifferentproductlines
ProductStructure(Multidivisional)
Multidivisionalstructure:Astructureinwhichsupport
functionsareplacedinselfcontaineddivisions
Eachdivisionhasitsownsetofsupportfunctionsand
controlsitsownvalue
Corporateheadquartersstaff: responsiblefor
overseeingtheactivitiesofthemanagersheadingeach
division
Allowsacompanytooperateinmanydifferent
businesses
CEO
SVP
Fin.
SVP
HR
SVP
R&D
SVP
Mktg.
Div A Div B Div C Div D
Support Functions
Each divisional manager can decide the divisional structure
MultidivisionalStructure:Advantages&Disadvantages
Disadvantages
Managingthe
corporatedivisional
relationship
Coordination
problemsbetween
divisions
Transferpricing
Bureaucraticcosts
Communication
problems
Advantages
Increased
organizational
effectiveness
Increasedcontrol
Profitablegrowth
Internallabor
market
ProductStructure(ProductTeamStructure)
Needtomovetowardsaproductteamstructure:
Supportfunctionscannotrespondtocustomerrequirement
Customersarevalueconscious
Specialistsfromthesupportfunctionsarecreatedthat
specializeintheneedsofparticularkindofproduct
Focusontheneedsofoneproduct(orclient)orafewrelated
products
Moredecentralizedthanafunctionalstructureora
productdivisionstructure
specialistsinthevariousproductteamsare
permittedtomakeonthespotdecisions
ProductStructure(ProductTeamStructure)
GeographicStructure
Whenthecontrolproblemsthatcompaniesexperience
areafunctionofgeography,ageographicdivisional
structureisappropriate
Allowssomefunctionstobecentralizedandothers
decentralized
Needtohaveplantsatmultiplelocations
Economiesofscalebecomeexhaustedinone
location
Indianrailway,cola(onebottlingplantfortheentirecountry),
apparelunit servingnorthernandsouthernhemisphere,Red
Labeltea
GeographicStructure
Discuss: Increase in vertical and horizontal differentiation
MultiunitEnterprise
Geographicallydispersed,standardunits
StoreManager,Districtmanager,RegionalVP,Division
Heads/Sr.VPs
Thechallenges:
Difficultytomaintainconsistency
Needforcustomizationwhilepursuingstandardization
SharpdivisionofresponsibilitiesHQandfieldorganization
Getbestoutoffieldmanagers(NeedtomanageP&Lwithout
autonomyanddecisionmakingauthority)
DesignprinciplesfromMultiunitOrganizations
Overlappingrolesandresponsibilities
Useintegratorsateverylevel
Setupinformationfunnelandfilters
Translatorstoconvertstrategiesintoaction
Shareresponsibilityoftalentdevelopment(30to50%time)
MarketStructure
Amarketstructurealignsfunctionalskillsandactivities
withtheneedsofdifferentcustomergroups
Eachcustomergrouphasadifferentmarketingfocus,and
thejobofeachgroup istodevelopproductstosuittheneeds
ofitsspecificcustomers
Eachcustomergroupbaseddivisionsmakesuseof
centralizedsupportfunction
AligningwiththeMarket
Functional
Product
Focused SBU
Segment
Task Forces
Customer
Teams
Key Account
Mangers
Matrix with
Segment
Champions
Segment
Managers/
Advocates
Customer based
Front-End Units
Customer
Focused SBUs
RealignmentatFidelityInvestments:
Tomeetcompetitivechallenges
Repositioning
Segmentation
OrganizeFrontEndbySegments
MatrixStructure
Anorganizationaldesignthatgroupspeopleand
resourcesintwowayssimultaneously,byfunctionand
product
Amatrixisarectangulargridthatshowsavertical
flowoffunctionalresponsibilityandahorizontalflow
ofproductresponsibility
Themembersoftheteamarecalledtwoboss
employees becausetheyreporttotwosuperiors:the
productteammanagerandthefunctionalmanager
Theteamisthebuildingblockandprincipal
coordinationandintegrationmechanism
MatrixStructure
Project C Project C
Manager Manager
Project B Project B
Manager Manager
Project A Project A
Manager Manager
Engineering Engineering Marketing Marketing Design Design
CEO CEO
Employees ( )are temporarily assigned to a specific
project team and have a permanent functional unit
AHorizontalStructure
Team
3
Team
2
Team
1
Top
Management
Team
Team
3
Team
2
Team
1
Customer
Customer
Process
Owner
Process
Owner
Testing
Product
Planning
Research
Market
Analysis
New Product Development Process
Distrib.
Material
Flow
Purchasing Analysis
Procurement and Logistics Process
NetworkStructure
Aclusterofdifferentorganizationswhoseactionsare
coordinatedbycontractsandagreementsratherthan
throughaformalhierarchyofauthority
Verycomplexascompaniesformagreementswith
manysuppliers,manufacturers,anddistributors
Suchagreementsarenecessaryasmanyofthevalue
creationactivitiesareoutsourced.(productionand
marketinggoodsandservices)
NetworkStructure:HollowOrganization
What? Outsourcing internal organization process
When? Price competition to cut costs & enough market outside the
organization to perform required process
NetworkStructure:ModularOrganization
Firm A assembles product modules produced by firms B& C (also A)
What? Assembling decomposable product chunks (modules)
provided by internal and external subcontractors
When? Possible to specify the nature of product modules and
to design required interfaces to assemble them effectively
NetworkStructure:VirtualOrganization
Firms A & B collaborate (ab) to supply Firm A and/or B,
and other firms(E.g: mjunction.in)
What? Creating a company-outside-acompany to respond
to an exceptional (often temporary) opportunity
Use technology to link people, assets and ideas
When? Possibility to explore a fleeting market opportunity by
partnering with other organizations
QuestionforGroupProject
1) Whatkindofstructure(forexample,functional,
productdivision,multidivisional)doesyour
organizationhave?Drawadiagramshowingits
structureandidentifythemajorsubunitsordivisions
intheorganization.
2) Whydoesthecompanyusesthiskindofstructure?
Provideabriefaccountoftheadvantagesand
disadvantagesassociatedwiththestructureofyour
organization.
QuestionforGroupProject
1) Whatkindofstructure(forexample,functional,
productdivision,multidivisional)doesyour
organizationhave?Drawadiagramshowingits
structureandidentifythemajorsubunitsordivisions
intheorganization.
2) Whydoesthecompanyusesthiskindofstructure?
Provideabriefaccountoftheadvantagesand
disadvantagesassociatedwiththestructureofyour
organization.

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