Strategic Performance Measure Course Notes

Organisational structure is reflected in: formal structure defines relationships between people, teams and divisions. The organization of work practices and work flows-how individuals and subunits communicate and coordinate their work.

(work flow, accountability and decision right, reflect strategy, performance measure and incentive)

Organisational structure is reflected in: formal structure defines relationships between people, teams and divisions. The organization of work practices and work flows-how individuals and subunits communicate and coordinate their work.

Organisational structure achieves two main objectives: firstly organization facilitates particular work flows- makes it easier to do what needs to be done.

And it also focuses attention- ensures people are concentrating on the organization’s strategy.

• Explain alternative organisational structures and the advantages and limitations of each

Work units:

Function oriented unit: cluster of activities focused on work-process to attain economies of scale and scope. (efficiency)

Market oriented unit: cluster of activities focused on market segment to enhance the organization’s ability to response quickly and effectively to opportunities and threats in the market. (market responsiveness)

Common forms of organizational structure

1. functional-activities grouped by function or processes

优点

encourages specialization, good for developing expertise, depth of knowledge and economies of scale and scope.

Clear accountability and chain of command.

CEO has good visibility of all organisational functions.

All functions co-ordinated at one point- the CEO

   缺点

   Overload at the top

Regional or product category differences are not well managed

Work units managers focus on their work unit efficiencies only. (silo effect)

Information flows problematic, particularly upwards

Measuring performance problematic

1. divisional-activities grouped around particular products, geographic areas or customers.

优点

Direct attention to market place results rather than process results

Great responsiveness to demands of specific product/reginal markets or clients

Good model to developing future leaders and managers

Can hold divisional managers accountable for end to end results in their reg

缺点

   Duplication of functions within divisions

Loss of economies of scale within functions

Horizontal information flows are problematic

Foster competition rather than collaboration (results in loss of learning within functions, if interdependencies between divisions are high these problems will be exacerbated and division structure will break down)