STEN 1000 Chapter Notes - Chapter 8: Value Chain, Organizational Conflict, Railways Act 1921
20 Jun 2018
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CHAPTER 8: DEVELOPING YOUR BUSINESS STRUCTURE AND
CULTURE
Business System Design [L1], (fig. 8.1)
1. Organizational structure, culture and management approach
- Formal framework around which business system is designed
- Influences on collaboration, exchange
of knowledge, communication, sharing
of ideas, work environment
2. Control systems to manage strategic intent
- Managerial evaluation and processes
uses to determine the success of the
organization in meeting its strategic
and operational goals/objectives
3. Mechanisms for effective talent management
- Decision-making hierarchy, delegated
span of control within organization,
allocation of position power
4. Operational processes and market support and
alignment
- Processes and initiatives needed to
support and direct product/service
transformation within organization
- Value chain – creation of value proposition + distribution, marketing , sales, and
service support
An organization’s business system needs to be designed and developed in a way that ensures the
organization functions on a day-to-day basis in a manner that maintains solid alignment between
the strategic intent of the organization and the activities taking place in support of this intent.
Developing Organizational Framework
3 key questions to be considered when developing organizational framework? :
1. What is the best structure that will develop, connect and maintain relationships with our
current and anticipated customer base and ensure the effective and efficient design,
development, and delivery of our products/services to the market place?
- Structure = the formal framework around which tasks are organized and responsibilities
allocated within an organization
- Customer “touch points” – how we interact with customers, best facilitating these
interactions
- Development of structure should not be static, but needs on-going monitoring as
organization evolves
- Assessment of structure against market changes (response to competitors, support
stakeholder/shareholder expectations, legal requirements etc.)
- Driving effectiveness and efficiency, being superior to competitors
Types of structures (fig. 8.3, 8.4)
- Simple Structure – owner makes all
decisions
- Flat and simple structures
- Functional structure – organizes around
departments (marketing, HR,
manufacturing, finance ...)
- Better control of efficiency and
effectiveness
- Customer structure – organizes around
customers (individuals, businesses, institutions, charities)
- Each customer category acts as a separate value cell or operational unit
- Enables the teams assigned to specific type of customer to more fully concentrate
and specialize on the products/services offered to this customer group
- Each customer group may be
subdivided into marketing, sales,
manufacturing etc.
- Divisional Structure – organizes
around divisions (health and medical,
small appliances, industrial products,
customer credit etc.)
- Similar product lines may
materialize, resulting in a desire to
restructure around product lines or
divisions
- Operations structured almost as
separate businesses, often referred to as strategic business units (SBU)
- Geographic Structure – organizes geographically (NA, Europe, Asia, Central America,
SA)
- Transition from regional to national or international player
- “Matrix-Style” structure (fig. 8.5)
- several managers in change of
certain projects – have assigned
employees from different areas
(engineering, marketing,
production, R&D etc.) working
under them
- “Virtual” organization – due to
increased mobile freedom technology
(fig. 8.6, 8.7)
- Individuals can conduct business form any location and can maintain collaborative
relationships through communication technologies and capabilities rather than
physical domain features
Document Summary
Culture: organizational structure, culture and management approach. Formal framework around which business system is designed. Influences on collaboration, exchange of knowledge, communication, sharing of ideas, work environment: control systems to manage strategic intent. Managerial evaluation and processes uses to determine the success of the organization in meeting its strategic and operational goals/objectives: mechanisms for effective talent management. Decision-making hierarchy, delegated span of control within organization, allocation of position power: operational processes and market support and alignment. Processes and initiatives needed to support and direct product/service transformation within organization. Value chain creation of value proposition + distribution, marketing , sales, and service support. Structure = the formal framework around which tasks are organized and responsibilities allocated within an organization. Customer touch points how we interact with customers, best facilitating these interactions. Development of structure should not be static, but needs on-going monitoring as organization evolves. Assessment of structure against market changes (response to competitors, support stakeholder/shareholder expectations, legal requirements etc. )
