Boundaryless Organizational Designs These are organizations in which the boundaries,
including vertical, horizontal, external, and geographic boundaries, are permeable. Firms with
boundary less Organizational Designs are more open.
Example: GE and UB G
Creating Ambidextrous Organizations - Most firms must be competent and adapt to changing
environment quickly. These firms have to focus on two dimensions simultaneously
Focus on the new adventures or business opportunities
Linking Strategic Reward and Evaluation Systems to: BusinessLevel, and CorporateLevel Strategies
1. Business-Level Strategy: Overall Cost Leadership, and Differentiation
2. Corporate-Level Strategy: Related and Unrelated Diversification
Definitions of other Structures:
1. International Division Structure An organizational form in which international
operations are in a separate, autonomous division. Most domestic operations are kept in
other parts of the organization.
For Senior Managers Salaries are lower than comparable companies, but a significant portion
of total compensation is based on return on stockholder equity. A portion of pretax earnings is
placed in a pool and divided among officers as bonuses that are par
Boundaryless Organizations: Making Them Work Within the framework of an appropriate
organizational design, managers must select a mix and balance of tools and techniques to
facilitate the effective coordination and integration of key activities.
Some of t
Virtual Organization A continually evolving network of independent companies that are
linked together to share skills, costs, and access to one anothers markets.
1. The Virtual Organization differs from the modular type by participating firms that give up
Rewards for Differentiation Professional experts are essential for devising, assessing,
implementing, and continually changing complex product designs.
1. Related to Innovation and Design
Hard to come up with reward for all employees (why?)
In a modular company, outsourcing the non-core functions offers 3 advantages:
1. A firm can decrease overall costs, stimulate new product development by hiring
suppliers with superior talent to that of in-house personnel, avoid idle capacity,
The Pros and Cons of Barrier-Free Structure
- Leverages the talents of all employees.
- Difficult to overcome political and authority
- Enhances cooperation, coordination, and
boundaries inside and outside the organization.
- Lacks strong leader
1. Regionalization Increasing international exchange of goods, services, money, people,
ideas, and information; and the increasing similarity of culture, laws, rules, and norms
within a region such as Europe, North America, or Asia.
It depends on the environment of the existing firm such as:
A. Market Dependence This is the degree of concentration of a firms business
in a particular industry. When an existing firm has more at stake, it reacts more
Competitive Dynamics Is the intense rivalry, involving actions and responses, among similar
competitors vying for the same customers in a marketplace.
1. New firms have a lot of competition from the existing firms that are threatened.
The following are th
o Why do both pioneers and imitative method of new business offer a different
Differentiation is often associated with strong brand identity, and
establishing a brand is usually considered to be expensive because of the
Consider the following elements of a Blue Ocean Strategy:
1. Create Uncontested Market Space By seeking opportunities where
they are not threatened by existing competitors, blue ocean firms can focus
on customers rather than on competition.
2. Make the Co
Imitated New Entry A firms entry into an industry with products or services that capitalize on
proven market successes and that usually has a strong marketing orientation.
o When a firm enters a new market that already has similar products & services but
Motivation and Capability Respond: The existing firms decide to respond in a certain way.
They examine why and how they should respond to the new competition in the market.
4. Types of Competitive Actions that are taken to compete with new firms:
There are several different organizational structures that firms can use. Below are a few
1. Simple Structure An organizational form in which the owner-manager makes most of the
decisions and controls activitie
Chapter 10 Creating Effective Organizational Design
Whether a firm is new or already exists, as it grows, the strategy needs to be changed.
After changing strategy, we need to change the organizational structure to match the new
2. Licensing and Franchising: It is used to enter into a new market when a company wants
more control over their own operation.
1. Licensing A contractual arrangement in which a company receives a royalty or fee in
exchange for the right to use its tradem
Home-Based Business Also referred to as SOHO (Small Office/Home Office) consists
of companies with 20 or fewer employees, including the self-employed, freelancers,
telecommuters, or other independent professionals working from a home-based setting.
Entrepreneurial Resources: Resources are important to create a new business. Most important
resource is money but there other resources needed as well.
Some of the needed resources are: Financial Resources, Human Capital, Social Capital, and
In this strategy:
a. Firms offer standardized product
b. Value chain is only in a few locations
c. Decisions are made in central or headquarters
a. Firms spread out the cost of their R&D
b. Product quality is the same
Chapter 8 Entrepreneurial Strategy & Competitive Dynamics
The business environment causes young new businesses to be created.
Entrepreneurship The creation of new value by an existing organization or new venture that
involves the assumption of risk.
In this strategy:
a. Country units are allowed to make minor decisions
b. Core competencies are in the central or headquarters
c. Firms have a lot of locations
a. Leverage and diffusion of a parent firms knowledge and co
Strategic Alliances and Joint Ventures This is used when a firm wants to take advantage of
other markets and technologies without spending a lot of capital. This strategy has been
becoming increasingly popular.
1. Firms share the cost
In this strategy:
a. Decisions are decentralized
b. Resources are everywhere
a. Ability to adapt products and services to local market conditions.
b. Ability to detect potential opportunities for attractive niches in a
Must be Achievable (or practical) The opportunity must be practical and physically
3. Must be Durable (can last long to make changes, develop it further, and make profit)
The opportunity must be attractive long enough fo
The following 4 different strategies are used to achieve competitive advantage in the global
competition The selection of one of these four types of strategies is largely dependent on a
firms relative pressure to address each of the two above forces.
Entering in a Entrepreneurial Strategy A strategy that enables a skilled and dedicated
entrepreneur, with a viable opportunity and access to sufficient resources, to successfully launch
a new venture.
1. To be successful, new ventures must evaluate indust