Table 1: Mintzbergs Five Organizational Structures

Structure Configuration

Prime Coordinating
Mechanism

Key Part of
Organization

Type of Decentralization

Simple Structure

Direct Supervision

Strategic Apex

Vertical & Horizontal

Centralization

Machine

Standardization of Work
Process

Technostructure

Limited Horizontal
Decentralization

Professional

Standardization of Skills

Operating Core

Vertical and Horizontal

Decentralization

Divisional

Standardization of
Outputs

Middle Line

Limited Vertical
Decentralization

Adhocracy

Mutual Adjustment

Support Staff

Selective Decentralization

Missionary

Standardization of Norms

Ideology

Decentralization

Political

None

None

Varies

Mintzbergs Organizational Types

1. The Entrepreneurial organization (simple structure): Start-up Companies
The simple structure is characterized, above all, by what is not elaborated.
Typically, it has little or no technostructure, few support staffers, a loose division of labor,
minimal differentiation among its units, and a small managerial hierarchy. Little of its
behavior is formalized, and it makes minimal use of planning, training, and liaison
devices.
Coordination in the simple structure is affected largely by direct supervision.
Specifically, power over all important decisions tends to be centralized in the hands of the
chief executive officer. Thus, the strategic apex emerges as the key part of the structure;
indeed, the structure often consists of little more than a one-person strategic apex and an
organic operating core.
Most organizations pass through the simple structure in their formative years. The
environment of the simple structure tends to be at one and the same time simple and
dynamic. A simple environment can be comprehended by a single individual, and so
enables decision making to be controlled by that individual. A dynamic environment
means organic structure: Because its future state cannot be predicted, the organization
cannot affect coordination by standardization.

Another condition common to simple structures is a technical system that is both

non-sophisticated and non-regulating. Sophisticated ones require elaborate staff support
structures, to which power over technical decisions must be delegated, and regulating
one's call for bureaucratization of the operating core.

2. The Machine organization (bureaucracy): McDonalds and Swiss Railroads

A clear configuration of the design parameters is described consistently in the
research: highly specialized, routine operating tasks; very formalized procedures in the
operating core; a proliferation of rules, regulations, and formalized communication
throughout the organization; large-sized units at the operating level; reliance on the
functional basis for grouping tasks; relatively centralized power for decision-making; and
an elaborate administrative structure with sharp distinctions between line and staff.
The machine bureaucracy depends primarily on the standardization of its
operating work processes for coordination. Because of that the technostructure - which
houses the analysts who do the standardizing - emerges as the key part of the structure.
Machine bureaucratic work is found above all in environments that are simple and
stable. The work of complex environments cannot be rationalized into simple tasks, and
that of dynamic environments cannot be predicted, made repetitive, and so standardized.
The machine bureaucracy is typically found in the mature organization. The
mature organization is large enough to have the volume of operating work needed for
repetition and standardization. And it is old enough to have been able to settle on the
standards it wishes to use. Machine bureaucracies tend also to be identified with
regulating technical systems, since these enable routine work and so enable it to be
formalized.
The managers at the strategic apex of these organizations are concerned mainly
with the fine-tuning of their bureaucratic machines. These are "performance
organizations"; not "problem solving" organizations. They constantly search for more
efficient ways to produce given outputs. Thus, the entrepreneur function has a very
restricted form at the strategic apex.

3. The Professional organization: Universities

The professional bureaucracy relies for coordination on the standardization of
skills and its associated design parameter, training and indoctrination. It hires duly trained
and indoctrinated specialists ("Professionals") for the operating core, and then gives them
considerable control over their work. Control over their own work means that the
Professionals work relatively independently of their colleagues, but closely with the
clients that they serve. Most necessary coordination between the operating Professionals
is handled by the standardization of skills and knowledge - in effect, by what they have
learned to expect from their colleagues.

 Whereas the machine bureaucracy generates its own standards, the standards of
the professional bureaucracy originate largely outside its own structure: in the selfgoverning association, which its operators join with their colleagues from other
professional bureaucracies. The professional bureaucracy emphasizes authority of a
professional nature - the power of expertise.
The strategies of the professional bureaucracy are largely ones of the individual
professionals within the organization as well as of the professional associations on the
outside. The professional bureaucracy's own strategies represent the cumulative effect
over time of the projects, or strategic "initiatives," that its members are able to convince it
to undertake.
The technical system cannot be highly regulating, certainly not highly automated.
The professional resists the rationalization of his skills - their division into simply
executed steps - because that makes them programmable by the technostructure, destroys
his basis of autonomy, and drives the structure to the machine bureaucratic form.
Like the machine bureaucracy, the professional bureaucracy is an inflexible
structure, well suited to producing its standard outputs but ill-suited to adapting to the
production of new products or services.
Change in the professional bureaucracy does not sweep in from new
administrators taking office to announce major reforms. Rather, change seeps in by the
slow process of changing the Professionals: changing who can enter the profession, what
they learn in its professional schools (norms as well as skills and knowledge), and
thereafter how willing they are to upgrade their skills.

4. The Divisional (diversified) organization: Result of mergers, ABN Amro & ING
Coordination is achieved by specifying the results of different work. Through
standardization of outputs. Diversified markets (products and services). The middle line
is the key part of the organization. They coordinate the output, acting between the
strategic apex and the operating core.
5. The Innovative organization (adhocracy): Google
In an adhocracy, we have a highly organic structure, with little formalization of
behavior. Job specialization that is based on formal training. A tendency to group the
specialists in functional units for housekeeping purposes but to deploy them in small,
market-based project teams to do their work. A reliance on liaison devices to encourage
mutual adjustment. This is the key coordinating mechanism, within and between these
teams.

 To innovate, we must break away from established patterns. Therefore the

innovative organization cannot rely on any form of standardization for coordination. Of
all the configurations, adhocracy shows the least respect for the classical principles of
management, especially unity of command. The adhocracy must hire experts and give
power to them - Professionals whose knowledge and skills have been highly developed in
training programs.
Unlike the professional bureaucracy, the adhocracy cannot rely on the
standardized skills of these experts to achieve coordination, because that would cause
standardization instead of innovation. Rather, it must treat existing knowledge and skills
merely as bases on which to build new ones. Moreover, the building of new knowledge
and skills requires the combination of different bodies of existing knowledge. So rather
than allowing the specialization of the expert or the differentiation of the functional unit
to dominate its behavior, the adhocracy must instead break through the boundaries of
conventional specialization and differentiation. Whereas each professional in the
professional bureaucracy can work autonomous, in the adhocracy professionals must
amalgamate their efforts. In adhocracies the different specialists must join their forces in
multi-disciplinary teams, each formed around a specific project of innovation.
Managers abound in the adhocracy - functional managers, integrating managers,
project managers. The last named are particularly numerous, since the project teams must
be small to encourage mutual adjustment among their members, and each team needs a
designated leader, a "manager." Managers become functioning members of project teams,
with special responsibility to effect coordination between them. To the extent that direct
supervision and formal authority diminish in importance. The distinction between line
and staff is not clear.
The adhocracy can take two basic forms:
a. The Operating Adhocracy
The operating adhocracy innovates and solves problems directly on behalf of its
clients. Its multidisciplinary teams of experts often work under contract, as in the thinktank consulting firm, creative advertising agency, or manufacturer of engineering
prototypes.
A key feature of the operating adhocracy is that its administrative and operating
work tend to blend into a single effort. That is, in ad hoc project work it is difficult to
separate the planning and design of the work from its execution. Both require the same
specialized skills, on a project-by-project basis. Thus it can be difficult to distinguish the
middle levels of the organization from its operating core, since line managers and staff
specialists may take their place alongside operating specialists on project teams.
b. The Administrative Adhocracy
The second type of adhocracy also functions with project teams, but toward a
different purpose. Whereas the operating adhocracy undertakes projects to serve its
clients, the administrative adhocracy undertakes projects to serve itself, to bring new
facilities or activities on line, as in the administrative structure of a highly automated
company. And in sharp contrast to the operating adhocracy, the administrative adhocracy

makes a clear distinction between its administrative component and its operating core.
The core is truncated - cut off from the rest of the organization - so that the administrative
component that remains can be structured as an adhocracy.
This truncation may take place in a number of ways:
First, when the operations have to be machinelike and so could impede innovation
in the administration (because of the associated need for control), it may be established as
an independent organization.
Second, the operating core may be done away with altogether - in effect,
contracted out to other organizations.
A third form of truncation arises when the operating core becomes automated.
This enables it to run itself, largely independent of the need for direct controls from the
administrative component. The latter is left free to structure itself as an adhocracy to
bring new facilities on line or to modify old ones. With this change in the operating work
force comes a dramatic change in structure: the operating core transcends a state of
bureaucracy - in a sense it becomes totally bureaucratic, totally standardized, ... and the
administration shifts its orientation completely. The rules, regulations, and standards are
now built into machines, not workers. And machines never become alienated, no matter
how demeaning their work. So there is no need anymore for direct supervision and
technocratic standardization. The obsession with control ends as well. And in comes a
corps of technical specialists, to design the technical system and then maintain it.
6. Idealistic Organization (Missionary Organization): Toyota
The norms infusing the work are controlled, usually for the entire organization, so
that everyone functions according to the same set of beliefs. As in a religious order
7. Political Organization: Finding order & integration by power not structure
Any organization can be a political organization at a stage in its existence

Key Part of Organization

1. Strategic Apex. (Top management)

This element of the organisation is made up of directors and senior executives.

2. Middle Line. (Middle management)

The operating core carries out the activities necessary to deliver outputs.
3. Operating Core. (Operations, operational processes)
This element provides the link between the strategic apex and the operating core.
4. Technostructure. (Analysts that design systems, processes, etc)
The technostructure is made up of key individuals and teams working in functions
such as human resources, training, finance and planning.
5. Support Staff. (Support outside of operating workflow)
Support staff work in functions such as research and development, public
relations and legal services.
6. Ideology. (Halo of beliefs and traditions; norms, values, culture)

Prime Coordinating Mechanism

1. Direct supervision. (Typical for entrepreneurial organizations)
One individual is responsible of the work of others. This concept refers to the
unity of command and scalar principles.
2. Standardization of work. (Typical for machine organizations)
exists when the content of work is specified or programmed. In school districts,
this refers to job descriptions that govern the work performance of educators.
3. Standardization of skills. (Typical for professional organizations)
exists when the kind of training necessary to do the work is specified. In school
systems, this refers to state certificates required for the various occupants of a school
districts hierarchy.
4. Standardization of outputs. (Typical for diversified organizations)
exists when the results of the work are specified. Because the raw material that
is processed by the operative core (teachers) consists of people (students), not things,
standardization of output is more difficult to measure in schools than in other non service
organizations.
5. Mutual Adjustment. (Typical for innovative organizations)
exists when work is coordinated through informal communication.
6. Standardization of norms. (Typical for missionary organizations)

 in which it is the norms infusing the work that are controlled, usually for the
entire organization, so that everyone functions according to the same set of beliefs

Decentralization
Vertical decentralization
the distribution of power down the chain of command, or shared authority
between superordinates and subordinates in any organization.
Horizontal decentralization
the extent to which non administrators (including staff) make decisions, or shared
authority between line and staff.

Selective decentralization
the extent to which decision-making power is delegated to different units within
the organization. In school districts, these units might include instruction, business,
personnel, public relations, and research and development divisions.
Centralized
As top-level managers and owners are the only people setting guideline.
Parallel Decentralization
The power over various kinds of decisions is delegated to the same place.

6 Types of Decentralization
1. Vertical & horizontal centralization:
all power rests at strategic apex.
2. Limited horizontal decentralization (selective):
strategic apex shares some power with technostructure that standardized
everybody elses work.
3. Limited vertical decentralization (parallel):
managers of market-based units are delegated the power to control most of the
decisions concerning their line units.
4. Vertical & horizontal decentralization:
most of the power rests at the operating core.
5. Selective vertical and horizontal decentralization:
the power over different decisions is dispersed to various places in the
organization, among managers, staff experts, and operators who work in teams at various
levels in the hierarchy.
6. Pure decentralization:
power is shared more or less equally by all members of the organization.

Societal Environment
Simple:
Static: Small number of external elements. Elements remain the same or change
slowly.
Dynamic: Small number of external elements. Elements are in continuous change.
Complex:
Static: Large number of external elements. Elements remain the same or change
slowly.
Dynamic: Large number of external elements. Elements are in continuous change
Dynamic: capable of action
Static: stationary or fixed

Uncertainty in the Environment

Simple Static: Least uncertainty: Ex: Beer Distributors
Simple Complex: Moderate Uncertainty: Ex: Fashion Clothing
Complex Static: Moderate Uncertainty: Ex: Universities
Complex Dynamic: Most Uncertainty: Ex: American Airlines

General Environment
Economy: The totality of economic factors, such as employment, income,
inflation, interest rates, productivity, and wealth, that influence the buying behavior of
consumers and institutions.
Political: Government actions which affects the operations of a company or
business. These actions may be on local, regional, national or international level.
Business owners and managers pay close attention to the political environment to gauge
how government actions will affect their company.
Biotech: the application of biotechnology to the environmental arena.
Societal: socio cultural context or milieu refers to the immediate physical and
social
Demographic: a set of demographic factors such as gender or ethnicity.
Technology: External factors in technology that impact business operations.
Changes in technology affect how a company will do business. A business may have to
dramatically change their operating strategy as a result of changes in the technological
environment.
Environmental: the environment dealing with the actual environment.

Industrial Economics
Micro-firm
Macro-societal

Switching Costs: the costs that a consumer incurs as a result of changing brands, suppliers or
products.
1.
2.
3.
4.
5.
-

Entry Barriers
Supplier Power
Honda SEARS
Threat of Substitution
Wendy's McDonald's
Customer Power
Rivalry Determinants
Exit Barrier

3 Generic Strategies (Porters)

1. Cost Leadership:
Increasing profits by reducing costs, while charging industry-average prices.
Increasing market share through charging lower prices, while still making a
reasonable profit on each sale because you've reduced costs.
2. Differentiation: creating uniquely desirable products and services.
Good research, development and innovation.
The ability to deliver high-quality products or services.
Effective sales and marketing, so that the market understands the benefits offered
by the differentiated offerings.
3. Focus: offering a specialized service in a niche market.
concentrate on particular niche markets and, by understanding the dynamics of
that market and the unique needs of customers within it, develop uniquely low-cost or
well-specified products for the market.

Structure of the Company

1. One best way - Mayweber
2. It all depends - contingent
3. Putting the puzzle together

3 Stage Product life

1. The product to be a fad
2. Industry survive and does not grow (select group of people)
3. Fast growth stage

Employer - Employee relationship

Natural:
Selected:
Evoked:
Calculated:

Fast Growth Stage

Demand > Supply
Either they create more supply, equal supply, or supply is more than demand.

Transition of maturity

Customer become more experienced.

Competition moves toward services, quality, and costs.
International competition begins with similar products but at a cheaper price.
Profits begins to fall.

Strategic Changes (dont lose market share)

Choose a generic strategy and achieve it.

Market Share gain but dont lose.
Cost analysis
Buy assets
Compete internationally