The document discusses organization architecture, which refers to an organization's formal structure, control systems, incentives, processes, culture, and people. It states that for a firm to be profitable, these elements must be internally consistent and match the firm's strategy. It then provides details on key aspects of organization architecture, including organization structure, control systems and incentives, and organizational culture. It emphasizes that all these elements should focus on enabling people to help the organization perform well.
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Organization Architecture
1.
2. Nukhba Jurri 13024854-098
Organization Architecture
MaryamNazir 13024854-073
Types of structures
Sonia Noreen 13024854-084
Control System And Incentive
MariumShabbir 13024854-083
Processes, organizational Culture & People
3. If we talk about the Organization of international business then we refers to
organization architecture
Now lets define organization architecture :
“The totality of a firm’s organization, including formal organization structure,
control systems and incentives, processes, organizational culture, and people”
To be the most profitable, firms need to be sure:
the different elements of the organizational architecture are internally consistent.
the organizational architecture matches or fits the strategy of the firm.
the strategy and architecture of the firm are consistent with each other, and
consistent with competitive conditions.
5. 1. Organization structure
o Department
o Division
o Region make organization
o The location of decision-making responsibilities
2. Control system & Incentives
o Measure performance of subunit
o Judgments about how well managers are running those subunits.
o Incentives are the devices used to reward appropriate managerial behavior
3.Process, Organization culture & People
o Processes are the manner in which decisions are made & work performed.
o Refers to the norms and value shared among the employees of
organization.
o Organization architecture also made by people.
7. “Department, division ,region make organization
the location of decision-making responsibilities”
Further Organization structure have 3 dimension
a) Integrating Mechanism
b) Vertical Differentiation
c) Horizontal Differentiation
8. a. Integrating Mechanism
It can be define as coordination between subunits of organization.
( lowest co-ordination localization strategy)
( Highest co-ordination Transnational
strategy)
9. Formal :
1. Direct contact.
2. Liasion Roles.
3. Teams
4. Matrix structures
Informal
1. Knowledge network
2. All information collected in one place.
10. (2) Vertical Differentiation
It enables the managers to locate the location of decision making.
It has two type:
Centralized Decision Making
“The decision making is done by only top management”
Advantages:
Facilitates coordination
Ensure decisions consistent with organization’s objectives
Gives top-level managers the means to bring about organizational
change
Avoids duplication of activities
11. Decentralized Decision Making
“Decision making power is distributed in different levels of management”
Advantages:
Relieves the burden of centralized decision-making
Motivate individuals
Permits greater flexibility
Can result in better decisions
can increase control
It can be worthwhile to centralize some decisions and decentralize others
12. (3) Horizontal Differentiation:
“Horizontal differentiation is concerned with how
the firm decides to divide itself into sub-units”
“It describes the division of organization”
The decision is usually based on:
function
type of business
geographical area
13. 1. Functional structure
2. Product divisional structure
3. International division structure
4. World Wide Product Division Structure
5. World Wide Area Structure
6. Global Matrix Structure
14. “A functional organization is a type of organizational structure in
which the organization is divided into smaller groups based on
specialize functional areas”
One product
One head quarter
One country
Small firm
15. The divisional structure is a type of organizational
structure that groups each organizational function into a
division.
More then one product .
One headquarter
Local country
Small & Large firm
16. When firms internationally expand production is known as
international divisional structure.
More then product ( local production)
Head quarter
(domestic and international)
Each product with own functional structure.
Sometimes conflicts raise .
17.
18. Highly diversified firm adapt this structure.
More then one products
Local and international production.
Every subunits has its own functional structure.
Advantages:
Value creation coordination with other units.
Realized cost economy and location economies.
Transfer core competencies.
Not locally responsive.
19.
20. Low diversification and a domestic structure based on
function
Divides geographic areas
Decentralizes operational authority
local responsiveness
Consistent with a localization strategy
22. A matrix organizational structure is a company structure in
which the reporting relationships are set up as a grid, or matrix,.
Employees have dual reporting relationships generally to both a
functional manager and a product manager.
23. Advantages:
Remove limitation of World wide area structure &
worlds wide product structure.
Differentiate product line and area vise
Disadvantages:
Result in conflict between areas and product divisions
Finger pointing.
24.
25. A firm’s leaders major task to ensure that the action of
subunits are consistent with the firm’s overall strategy
and financial objectives
This is achieved through control and incentive system
Evaluate the performance of Organization and how
effect on the control system
26. Definition:
“Control helps to check the errors and to take the
corrective action so that deviation from standards are
minimized and stated goals of the organization are
achieved in a desired manner.”
27. There are four main type of control system:
1. Personal Control:
Direct control the subordinates
Mostly use in the small firms
2. Bureaucratic Control:
This system through set the rules regulation that
directs the action of subunits
The most important bureaucratic control are budget
and capital sending rules
28. 3.Output Control:
Setting goals for subunits and achieve them.
Output more receive then control system more good
Control system is achieved by comparing actual
performance against targets and intervening
selectively to take corrective action
4.Cultural Controls:
Norms , values, custom play major role for increase the
performance
Firms with strong culture have less need for other forms of
control
29. Incentive are the devices used to reward behavior
Tie performance for output control => reward
Incentives depend on employer and nature of work
Co-operation and co-ordination increase between
manger and subordinates
Different nation and different culture use different
devices
30. The key of understanding the relationship between
international strategy, control systems and incentive
systems is performance ambiguity which exist that
subunits poor performance are not clear.
Performance ambiguity is mostly subunits
performance depend on the other subunits
performance
31. Processes:
“Processes can be define as the manner in which
decisions are made and work is performed”
Sometimes processes used across national boundaries as
well as organizational boundaries.
Can be develop anywhere within a firm’s global
operational network.
Integrating mechanisms can help firms leverage processes
Formal => Exchange Ideas Helps in Leverage processes.
Informal => Efficient working
32. Culture refers to a systems of values and norms that are
shared among people
Organizations have their own values and norms that
employees are encouraged to follow.
Organizational culture tends to change very slowly.
33. Organizational culture comes from:
Founders and important leaders of Organization.
National social culture.
The history of organization.
Decisions made in past.
34. Organizational culture can be maintained through:
Hiring on merit base
Promotional practices
Reward strategies
Socialization processes
Formal ways (training programs)
Informal ways(friendly Advices)
Communication strategies
35. When organization moves into international market it faces
hurdles like different language, norms and beliefs, tastes and
preferences etc.
If the organization does not align itself with the prevailing culture
then it cannot attain benefits of expansion.
“Strong” culture:
Not always good
May not lead to high performance
Could be beneficial at one point, but not at another
“Adaptive” cultures
Companies with adaptive cultures have the highest
performance.
Flexible to decision making.
36. The interrelationship between the four basic strategies
1. Localization
2. International
3. Global standardization +organization architecture
4. Transnational
37. Combination of Strategy, Structure, and Control Systems
Strategies Interdependency Performance
Ambiguity
Control
Localization
Strategy
(locally responsive
Pressure high)
Low
[local production & sale in
international]
Low
[easily identify factors of
error]
Low
[subunit manager understand
better then headquarter
management]
International
Strategy
(Both pressure low)
Medium
[ subunit management
tell the needs and
demand of that area]
Medium
[nor easy not difficult to
identify factors of error
cause of low pressures]
Medium
[headquarter mgt & subunit mgt
both take decisions]
Global Standard
Strategy
(cost reduction pressure
high)
High
[to achieve cost eco firm
need to coordinate with
subunits]
High
[difficult to identify factors
of error ]
High
[headquarter mgt control the
subunits]
Transnational
strategy
(Both pressure are high)
Very high
[-Value addition from one
country
-locally responsiveness from
Very high
[so difficult to identify
factors of error]
Very high
[mgt should control al subunits]
38. For a firm to succeed, two conditions must be met:
i. The firm’s strategy must be consistent with the
environment and place in which the firm operates.
ii. The firm’s organization architecture must be consistent
with its strategy.
39. INERTIA:
“Property by which a thing continues its existing
condition”
Organizations are difficult to change
Sources of inertia include:
The existing distribution of power and influence
The current culture
Senior managers’ preconceptions about the appropriate business
model.
40. Management should take necessary actions to chose
structure of organization to enhance its positive effects.
Alliance the strategies with organizational structure and
their requirement