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The process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully
Organizational design
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Assigns employees to specific value creation tasks and roles and specifics how these tasks and roles are to be linked together in a way that increases efficiency, quality, innovation, and responsiveness to customers
Organizational structure
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Provides managers with a set of incentives to motivate employees to create competitive advantage and specific feedback on how well an organization and its members are performing and building competitive advantage so that action can be continuously taken to strengthen the company's business model
Control system
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Specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization
Organizational culture
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A collection of people who work together and perform the same types of tasks or hold similar postions in an organization
Function
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The work exchanges or transfers among people, functions, and subunits
Handoffs
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A way of grouping functions to allow an organization to better produce and transfer its goods and services to customers
Division
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Chain of command that defines each manager's relative authority
Hierarch of authority
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The number of subordinates who report directly to a manager
Span of control
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Many levels of authority relative to company size
Tall structure
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Fewer levels relative to the company size
Flat structure
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A company should choose the hierarchy with the fewest levels of authority necessary to use organizational resources efficiently and effectively
Principle of the minimum chain of command
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Vest authority in managers at lower levels in the hierarchy as well as at the top
Decentralize authority
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When managers at the upper levels of a company's hierarchy retain the authority to make the most important decisions
Centralized authority
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Formal target-setting, measurements, and feedback systems that allow strategic managers to evaluate whether a company is achieving superior efficiency, quality, innovation, and customer responsiveness and implementing its strategy successfully
Strategic control systems
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The desire to share and influence the behavior of a person in a face to face interaction in the pursuit of a company's goals
Personal control
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A system in which strategic managers estimate or forecast appropriate performance goals for each division, department, and employee and then measure actual performance relative to these goals
Output control
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Control through the establishment of a comprehensive system of rules and procedures to direct the actions or behavior of divisions, functions, and individuals
Behavior control
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A blueprint that states how managers intend to use organizational resources to most efficiently achieve organizational goals
Operating budget
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The degree to which a company specifies how decisions are to be made so that employees behavior become predictable
Standardization
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One that is innovative and that encourages and rewards middle- and lower-level managers for taking the initiatives
Adaptive culture
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Group people on the basis of their common expertise and experience or because they use the same resources
Functional structures
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A system in which employees are encouraged to help set their own goals so that managers intervene only when they sense something is not right
Management by objectives
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Geographic regions become the basis for the grouping of organizational activities
Geographic structure
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Focus on customer groups becomes basis of company strategy
Market structure
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Value chain activities are grouped in two ways, vertically by function and horizontally by product or project
Matrix structure
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All employees who work on a project team and are responsible for managing coordination and communication among the functions and projects
Two-boss employees
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Tasks are divided along product or project line and functional specialists become part of a permanent cross-functional team that focuses on the development of one particular range of products
Product-team structure
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Any activity that is vital to delivering goods and services to customers quickly or that promotes high quality or low costs
Business process
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