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An element of organizational structure that refers to the degree to which decision making is concentrated at the top of the organization
centralization
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A former core competency that turned into a liability because the firm failed to hone, refine, and upgrade the competency
Core rigidity
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Applying current knowledge to enhance firm performance in the short term
Exploitation
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Searching for new knowledge that may enhance future performance
Exploration
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An element of organizational structure that captures the extent to which employee behavior is steered by explicit and codified rules and procedures
formalization
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A process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure
Founder imprinting
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Organizational structure that groups employees into distinct functional areas based on domain expertise
Recommended with limited diversification
Functional structure
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A situation in which opinions coalesce around a leader without individuals critically evaluating and challenging that leader's opinions and assumptions
Groupthink
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An element of organizational structure that determines the formal, position-based reporting lines and thus stipulates who reports to whom
hierarchy
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Mechanisms in a strategic control-and-reward system that seek to define and direct employee behavior through a set of explicit, codified rules and standard operating procedures that are considered prior to the value-creating activities
Input controls
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Organizational structure that combines the functional structure with the M-form, very versitile, each SBU receives support both horizontally and vertically
Matrix structure
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Organizational form characterized by a high degree of specialization and formalization, and a tall hierarchy that relies on centralized decision making
- Mechanistic organization
- Ex. McDonalds
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Organizational structure that consists of several distinct strategic business units (SBUs), each with its own profit-and-loss (P&L) responsibility
Uses various corporate strategies (Related/Unrelated Diversification)
Multidivisional structure (M-form)
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organizational form characterized by a low degree of sppecialization and formalization, a flat organizational structure, and decentralized decision making
- Organic organization
- Ex. Zappos and W.L. Gore
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The collectively sharing value and norms of an organization's members; a key building block of organizational design
Organizational culture
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The process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization
Organizational design
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A key building block of organizational design that determines how the work efforts of individuals and teams are orchestrated and how resources are distributed
Organizational structure
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Mechanisms in a strategic control-and-reward system that seek to guide employee behavior by defining expected results (outputs), but leave the means to those results open to individual employees, groups, or SBUs
Output controls
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Organizational structure in which the founders tend to make all the important strategic decision as well as run the day-to-day operations
Simple structure
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The number of employees who directly report to a manager
Span of control
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An element of organizational structure that describes the degree to which a task is divided into separate jobs (i.e. the division of labor)
Specialization
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A key building block of organizational design; internal governance mechanisms put in place to align the incentives of principals (shareholders) and agents (employees)
Strategic control-and-reward systems
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The part of the strategic management process that concerns the organization, coordination, and integration of how work gets done. It is key to gaining and sustaining competitive advantage
Strategy implementation
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Stucture follows strategies (Alfred Chandler) therefore strucutre must be...
Flexible
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What are the key building blocks of structure
- Specialization
- Formulation
- Centralization
- Hierarchy
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What are the 4 main Structures
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Functional structure is best for what kind of corporate strategy
Single business and dominant business
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Cooperative multidivisional (M-Form) is best for what kind of corporate strategy
Related diversification
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Competitive multi division (M-Form) is best for what kind of corporate strategy
Unrelated diversification
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Characterized by
-Centralized decision making
-High level of integration at HQ
-Co-opetition about SBU's
Cooperative multidivisional (M-Form)
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Characterized by
-Decentralized decision making
-Low level of integration at HQ
-Competition among SBUs for resources
Unrelated diversification
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What are some short comings of a matrix structure
- Difficult to implement
- Complexity increases when expanding
- unclear reporting structure causes confusion and delays
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What are key components of organizational design
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Can lead to failure of established firms when a tightly coupled system of strategy and structure experiences internal or external shifts
Organizational inertia
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Allow managers to specify goals, measure progress and provide performance feedback
Strategic control-and-reward systems
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