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Comm 292 Chapter 13 Notes

Disadvantages it reduces managements control over key

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Disadvantages: it reduces management’s control over key parts of its business, decreasing operational control. Virtual Organization – a continually evolving network of independent companies—suppliers, customers, even competitors—linked together to share skills, costs, and access to one another’s markets. Advantages: allow organizations to share costs and skills, provide access to global markets, and increase market responsiveness. Disadvantages: boundaries between companies become blurred due to interdependence. Companies must relinquish operational and strategic control to work together. Boundaryless Organization – an organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams. STRATEGY Innovation Strategy – a strategy that emphasizes the introduction of major new products and services.
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Cost-Minimization Strategy – a strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting. Imitation Strategy – a strategy of moving into new products or new markets only after their viability has already been proven. Innovators need the flexibility of the organic structure, while cost minimizers seek the efficiency and stability of the mechanistic structure. Imitators combine the two structures. ORGANIZATIONAL SIZE TECHNOLOGY – the way in which an organization transfers its inputs into outputs. Routine tasks are associated with taller and more departmentalized structures. Routine technologies are associated with a centralized structure, whereas nonroutine technologies, which rely more heavily on the knowledge of specialists, would be characterized by delegated decision authority. ENVIRONMENT – those institutions or forces outside the organization that potentially affect the organization’s performance. These typically include suppliers, customers, competitors, government regulatory agencies, public pressure groups etc. Capacity – refers to the degree to which it can support growth. Volatility – the degree of instability in an environment. Complexity – the degree of heterogeneity and concentration among environmental elements. The more abundant, stable, and simple the environment, the more mechanistic a structure should be, while the more scarce, dynamic, and complex the environment, the more organic it should be.
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