Summary - complete - cheat sheet

BB280 Business Models and Organisation Structure

Business Model How an organization creates, delivers, and captures value from customer
Business Plan A formal statement of a set of business goals, and how to reach those goals
- Business Model Canvas It is being used to describe, challenge, design, and invent
business models more systematically; separated into 9 building blocks;
- Customer Segments - The different groups of people or organizations an enterprise
aims to reach and serve; eg. Mass Market/Niche market(Car parts
manufactures)/Diversified(Amazon)/Multisided(Credit Card: Holders and
Merchants)/Segmented(Banking customer over $100,000)
- Value Proposition It describes the bundle of products and services that create value
for a specific Customer segment; eg. Newness (Phones), Performance (Faster PC),
Customization, Cost Reduction (CRM Application), Price
- Channels It describes how a company communicates with and reaches its Customer
Segments to deliver a Value Proposition; CH Phases: Awareness, Evaluation,
Purchase, Delivery, After Sales
- Customer Relationships The types of relationships a company establishes with
specific Customer Segments. Relationships can range from personal to automated; it
may be driven by Customer Acquisition, Customer Retention, Boosting Sales
(upselling)
- Revenue Streams The cash a company generates from each Customer Segment; it
has 2 different types of R$: Transaction Revenues and Recurring Revenues; ways to
generate $: Asset Sales/Renting/Leasing/Advertising
- Key Resources The most important assets required to make a business model work;
can be categorized as: Physical/Financial/HR/Intellectual
- Key Activities The most important things a company must do to make its business
model work; can be categorized as: Production(Manufacturer)/Problem
Solving(Hospital)/Platform/network(Visa)
- Key Partner Network of suppliers and partners that make the business model
works; creating partnerships for: Optimization and economy of scale/Reduction of
risk and uncertainty/Acquisition of particular resources and activities
- Cost Structure All costs incurred to operate a business model: Cost (Minimize cost
with low value proposition)/Value(Premium value proposition and high degree of
personalized service) Driven; Characteristics of C$: FC/VC/Economies of scale
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

(Larger companies benefit from lower bulk purchasing rates)/scope(same activity may
support multiple products)

Business Model Patterns

- Unbundling Business Models The concept of the unbundled operation holds that
there are three fundamentally different types of businesses but may co-exist within a
single corporation and ideally they are unbundled into separate and keys in order to
avoid conflicts or undesirable trade-offs; Business types: customer relationship
businesses, product innovation businesses, infrastructure businesses
- The Long Tail - Long Tail business models are about selling less of more; they focus
on offering a large number of niche products, each of which sells relatively
infrequently
- Multi-sided Platforms Multisided platforms bring together two or more distinct but
interdependent groups of customers; creates value by facilitating interactions between
the different groups and serve all groups simultaneously in order to create value.
- Free as a business model In the free business model at least one substantial
customer segment is able to continuously benefit from a free of charge offer; Non-
paying customers are financed by another part of the business model or by another
Customer Segment
- Open Business Model It can be used by companies to create and capture value by
systematically collaborating with outside partners. This may happen from the
outside-in by exploiting external ideas within the firm, or from the inside-out by
providing external parties with ideas or assets lying idle within the firm.
- Innovation - Radical Change: Change that results in a new product/service that
renders existing product/service uncompetitve; Disruptive Change: Create new
markets, New product/service cost less than existing products/service, Initial
performance metrics worse than existing but catches up and overtakes existing
product/service performance and meets mainstream customer value; Incremental
Change: Enhancing existing products/services to allow them to remain competitive;
Systemic Change: Change in systems as value is added along the value system by
coopetitive, usually drive by competitors; Dynamic Change: Technology life-cycle
mode: Innovation, Early Adopters, Early Majority, Late Majority, Laggards
 Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

Business Model Design

- Customer Insights - Good Business model design views the business model through
customers eyes, an approach that can lead to the discovery of completely new opportunities;
Successful innovation requires a deep understanding of customers, including environment,
daily routines, concerns, and aspirations. The Empathy Map What does the customer think
and feel/hear/see/say and do? What are the customers aspirations and what is the customer
worrying about?
- Ideation - Whats needed is a creative process for generating a large number of business
model ideas and successfully isolating the best ones; Perspective Shift - Customer-centric:
what are you doing for the customers, you must consider and think from the customers
perspective; 4 epicentres: Resource/Offer/Customer/Finance-Driven
- Visual Thinking By visual thinking we mean using visual tools such as pictures, sketches
and diagrams to construct and discuss meaning. A picture is worth a thousand words; Business
models are complex concepts, it is difficult to truly understand a model without sketching it
out. Visual Thinking Processes - Providing a basis for common
understanding/dialogue/exploration/communication
- Prototyping - Prototyping is a powerful tool for developing new, innovative business models.
It makes abstract concepts tangible and facilitates the exploration of new ideas. It comes from
the design and engineering disciplines, where it is widely used for product design, architecture,
and interaction design; Design Attitude - Napkin Sketch - Outline and pitch a rough idea;
Elaborated Canvas - Explore what it would take to make the idea work; Business Case -
Examine the viability of the idea; Field Test - Investigate customer acceptance and feasibility;
Beware: Time constraints - business as usual, Assumes that market research data is the most
important factor in design of strategic options
- Storytelling - It will help you effectively communicate what it is all about. Good stories
engage listeners, so the story is the ideal tool to prepare for an in-depth discussion of business
model and its underlying logic. Why story telling - Introducing the New, Pitching to investors,
Engaging Employees. Techniques - Talk and Image - large groups, low cost; Video clip -
large groups, medium/high cost (Minimum interactions with customers); Role play -
workshops, low cost (Best options for interactions)
 Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

Business Model Process (Mobilize, Understand, Design, Implement, Manage) Innovative new
business model objectives are to; Satisfy existing but unanswered market needs; Bring new
technology, products or services to market; Improve, disrupt or transform an existing market with a
better business model; Create an entirely new market
- Longstanding firms business model innovation typically reflects the existing model and
organizational structure. Motivation to re-design a business model in these firms results from:
A crisis with existing business model, Adjusting, improving or defending the existing business
model in response to the changing environment; Bringing new technologies, products or
services to market: Preparing for the future by exploring and testing completely new business
models that may eventually replace existing models
- Factors specific to new organization Satisfy the market - fulfill unanswered need; Bring
to Market - bring new technology, product, service to market and exploit existing Intellectual
Property; Improve market - improve or disrupt existing market; Create market - create
entirely new type of business
o Challenges Finding the right model; Testing the model before full scale launch,
Inducing the market to adopt the new model; Continuously adapting the model in
response to market feedback; Managing uncertainty.
- Factors specific to existing organization Reactive crisis with existing business model;
Adaptive Adapting, improving, defending existing business model; Expansive launching
new technology; Pro-active exploration Preparing for the future
o Challenges Developing an appetite for new models; Align old and new models;
Managing vested interest; Focusing on the long term interest
- Mobilize - Prepare for successful business design; Assembled all elements create awareness
of the need for a new business model, describe the motivation behind the project
- Understand Research and analyze elements for the business model design effort;
understanding relevant knowledge, customers, Technology, environment hence study potential
customers and identify needs and problems
- Design Generate and test viable business model options and select the best options;
Transform the information and ideas from Understand Phase into business model prototypes
that can be explored and tested
- Implement Implement the business model in the market place Manage Adapt and modify
the business model in response to market reaction; need to set up management structures to
monitor, evaluate, adapt the model
 Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

Business Model Innovation - Business model innovation refers to the search for new logics of the
firm and new ways to create and capture value for its stakeholders; it focuses primarily on finding
new ways to generate revenues and define value propositions for customers, suppliers, and
partners.
- In longstanding firms, business model innovation efforts typically reflect the existing model
and organisational structure. Motivation to re-design a business model in these firms results
from: A crisis with existing business model; Adjusting, improving or defending the existing
business model in response to the changing environment; Bringing new technologies, products
or services to market; Preparing for the future by exploring and testing completely new
business models that may eventually replace existing models
- Business model innovation requires: An understanding of customers and how competitors
are not satisfying those needs; Technological & organisational possibilities for improvement;
Considerable trial & error (in a particular business environment or context)
- BMI has to identify: Segment the market > Create a value proposition for each segment
> Design and implement mechanisms to capture value from each segment > Hinder or
block imitations by competitors and disintermediation by customers and suppliers; A
competitively sustainable business model requires a strategic analysis filter
- Avoiding copycat innovative business models: Implementation of Systems & Processes that
are hard to imitate; Level of opacity lack of understanding of how the business model is
implemented; Concern with cannibalisation of sales and/or disrupting important business
relationships.
- Barriers to Business Model Innovation: The business model used/needed for existing Products
and that needed to exploit emerging, disruptive technology; dominant managerial logic
confusion or obstruction
- BMI has 3 important elements: Experimentation - Organise for rapid experimentation;
Fail early and often but avoid mistakes; Anticipate and exploit early information; Combine
new and traditional technologies.
- Effectuation; A term that is the opposite of causation; In the process, new businesses do not
analyse their environment as much as taking actions that create new information that reveals
latent possibilities in that environment; They do not study the market as much as enacting it,
such action is particularly critical for the cognitive act of reframing the dominant logic of
ones business model
 Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

- Organisational Leadership Who is responsible for business model experimentation? What

skill does management needs? Strategic Agility - Thoughtful and purposive interplay on the
part of top management between three meta-capabilities and includes: Strategic sensitivity
The sharpness of perception of and intensity awareness to strategic developments; Leadership
unity The ability of the top team to make bold, fast decisions, without being bogged down in
top-level win-lose politics; Resource fluidity (Utilisation) The internal capability to
reconfigure capabilities and redeploy resources rapidly
o Firms should also consider the future competitiveness before revealing a business
model
- Strategic revelation It refers to a situation where the entrant prefers to compete through the
new business model when it would choose not to do so if the incumbent was expected to
continue competing through the traditional model; Strategic concealment It refers to a
situation where the entrant prefers to not compete through the new business model when it
would choose to do so if the incumbent was expected to continue competing through the
traditional model
- Incumbents will react to innovations in two main ways: Keep their business model intact
while adjust tactical variables; Adopt new business model so as to change their value creation
and capture logic.
- The new business model may be a replica of the innovators, or alternatively a new hybrid that
combines some of its elements with others from the incumbents original model in a mixed
business model.
 Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

4 Components of Organisation Structure

- Complexity Refers to the degree of differentiation that exist within an organisation
The various specialised subsystems of organisations require communication, coordination and
control if they are to be effective; The larger the organisation, the more complex it gets. Hence
increased demands on management is required in order to achieve organisations goal and
management must give more attention to communication, coordination and control.
- Horizontal differentiation considers the number of different occupational, task and
administrative groupings within organization; The differences in terms of occupations
within an organisation that require specialised knowledge and skills, which would
show how complex the organisation is
- Vertical differentiation refers to the number of layers of management in the
organization and also the depth of the structure of an organisation, and is often
referred to the number of layers of management from the lowest to the highest; The
more levels that exist between top management and lower level workers, the greater
the potential for communication breakdown; It is more likely that political power
plays will slow decision making and create administrative bottlenecks
- Spatial differentiation describes the extent to which the organisations facilities and
personnel are spread over a wide geographical area; the degree to which the location
of an organisations office, plant and personnel is dispersed; Geographical driven
- Formalisation - Refers to the degree to which jobs and procedures within the organisation are
standardized; If a job is highly formalised, those doing the job have minimum amount of
discretion over what, when and how it should be done; Employees are expected to undertake
tasks in exactly the same way; When formalisation is high, there is a clear job descriptions,
many organisational rules to follow and clearly defined procedures covering work processes in
the organisation
- Range of Formalisation - It is important to recognise the degree of formalization;
The narrowest of unskilled jobs are those simple and most repetitive; The greater
professionalisation of a job, the less likely to be formalized; Formalisation is different
with different levels of employees; Production engages in repetitive task, sales
engages innovation and creativity
- Why formalisation important? Regulating employees behaviour (and customers);
Standardisation reduces variation and inconsistency. Hence economical benefits. Hire
cheaper employees. Professionals are generally more expensive; Reducing business
 Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

impact and less individual dependency; Managing Quality Control hence managing
Risk
- Formalisation Techniques - Internal formalisation techniques - Selection -
Organisation do not choose employees at random, rounds of interviews
- Role requirements - Repetitive roles and professional roles; Rules - Usually means
there will be explicit statements that tell employees what s/he ought to and not to do;
Procedures - usually means work processes. A work process may be pre-determined
by an industry framework; Policies - usually are guidelines that set constraints on
decisions that employees make; Trainings - OTJ training, 2 weeks per year training
allocation
- External Formalisation techniques Formal education training, professional
membership
- Centralisation - It refers to the degree to which the formal authority to make choices is
centralised by an individual, a unit or a level; Centralisation is concerned only with the formal
structure and only applies to formal authority; The centralisation looks at decision discretion,
however a HQ decision may heavily impact local performances; Information processing can
extend top management control, but the decision of choice may still lie with the low-level
member.
- Organization Design Option (Henry Mintzbergs Five) consists of 5 elements with its own
characteristics
- Strategic Apex - The part of an organisation encompassing top-level managers who
are charged with the overall responsibility for the organization; Middle Line - That
connect the operating core to the strategic apex;
- Operating Core - The part of an organisation encompassing employees who perform
the basic work related to the production of products and services; Technostructure -
analysts who have the responsibility for effecting forms of standardisation in the
organization; Support Staff - people who fill the staff units that provide indirect
support services for the organization
- There are 5 distinct design configurations and each one is associated with the
domination by one of the five basic parts:
- Simple Structure When the strategic apex is dominant, control is centralised and
the organisation is a simple structure; Low complexity, little formalisation and typical
small business; Strength - Fast decision making, operations are flexible and require
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

little cost to maintain; Weakness Only applicable to small organisations,

concentration of power in one person
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

- Machine Bureaucracy - Standardisation is the key concept that underlines all

bureaucracies; Rely on standardised work processes for coordination and control;
Large size, stable environment and technology that permits standard; Strength
Ability to perform standardised activities in highly efficient manner; Economies of
scale and minimise duplication of plant and personnel; Weakness - Dominance of
rules obviates management discretion; Poor to Adopt change; Efficient can only be
achieved when there are rules to follow
- Divisional A set of autonomous self-contained units, each typically configured as
machine bureaucracy; The dominant part of the divisional structure lies with middle
management; Strength Clear accountability and responsibility for performance in
each division; Reduces risks and great for training managers; Divisional managers
focuses more on outcome instead of process; Weakness Cooperation between
divisions can be difficult; Conflict over shared support services; Duplication of
activities and staffs
- Professional Bureaucracy The past quarter of a century has seen the emergence of
a new structural configuration called the professional bureaucracy; Decentralised
configuration in which highly trained specialists from the operating core but where
benefits of standardisation and decentralisation are still achieved; All key staffs have
professional expertise; Good for complex and stable environment - legal and medical;
Strengths (eg hospital) - Perform specialised tasks and require the skills of highly
trained personnel with high efficiency; High level of expertise applied to a continuous
series of unique problems; Weakness Conflict in subunits - place self interest
before organisations goal; constrained by rule of profession - cannot be managed like
other organisation structure; Difficult to adopt change
- Adhocracy - Professionalisation and formalisation are inversely related - This is a
decentralised from which is characterised by high horizontal differentiation, low
vertical differentiation, low formalisation, intensive coordination and great flexibility
and responsiveness; Horizontal differentiation is significant because adhocracies are
staffed predominantly by professionals with a high level of expertise; Vertical
differentiation is low because the manage levels of administration would restrict the
organisations ability to adapt; Strength Rapid response, innovation and
coordination of specialists; Weakness Conflict - no boss/subordinate relationships;
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

Activities cannot be compartmentalized; Create social stress and physiological

tensions - not easy to set up and dismantle work relations on a perpetual basis.

Impact of Size
- Complexity increases as size increases, but at a decreasing rate; Size generates
differentiation, and differentiation may also contribute to size; As an organisation
increases in size, some activities, i.e. day to day decision making, are centralised
- Large size - Large size magnifies management challenges; Problems experienced
are: Growth of bureaucracy; Turning information into knowledge; Adapting to
changing technologies; Extended timeframes for action; Structural contribution to
these problems may include: Dividionalisation; Outsourcing; Balancing
centralization/decentralization; structuring to facilitate change
- Small size Tends to have a boarder scope; Fewer layers of management; Decision
making is centralized with lower formalization; There is less geographical dispersion
- Downsizing is the planned reduction of job positions within an organsation;
Reasons for downsizing may includes: Declining profitability; Increased competition;
Changes in Strategy; Changing structures. Downsizing may have benefits: Less
bureaucracy; Faster decision-making; Smoother communication; Increased
productivity. However it may cause long lasting negative effects: Lowered morale;
skills shortage; productivity loss; survivor syndrome where staff display decreased
levels of trust, commitment and morale towards the organization.
o Lessening the negative impact is also crucial: 'Many good employers
(Employers of Choice) have realised that separation should be handled in a
multi-faceted manner. It helps the organisation by counteracting the potential
loss of good faith.''; Look for alternatives to retrenchment (e.g. redeployment,
granting leave, job sharing, part-time work, opportunities for staff reduction
due to natural attrition, early retirement schemes, voluntary redundancy,
contract work, and so on); Commence consultations with stakeholders as soon
as practicable after a firm decision has been made to restructure; Be
sympathetic and humane in the treatment of workers during redeployment
and/or retrenchment processes.
- Outsourcing/Offshoring Minimizing cost through labor arbitrage remains a
significant driver of offshoring; Sourcing qualified personnel has become the next
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

major drive of offshoring; Gaining access to qualified personnel is the fastest growing
driver of offshoring; A high percentage of companies are using offshoring to improve
the efficiency of business processes and accelerate speed to market
o Driver of Outsourcing Cost Competitiveness Savings may result from
lower costs; Specialisation Focus free up resources internally to concentrate
on where organization has distinctive capability and advantage to gain
economic benefits. Market Discipline Separation of purchasers and
providers can assist with transparency and accountability to identify true costs
and benefits of certain activities. This enable transactions under market based
contracts where the focus is on output not input and competition among
suppliers allows choices by purchasers and innovative work practices;
Flexibility Using an outside supplier can sometimes add flexibility to an
organisation such that they can adjust the scale and scope of production
rapidly at low cost; Technology Some suppliers may have access to
technology or other IP advantages that the organization alone cannot access.
This technology may improve operational reliability, productivity, efficiency
and long-term costs and production.

Technology refers as the information, equipment, techniques and processes required to

transform inputs into outputs; it identifies that a form of technology is applicable in all
production processes.
- Woodwards Study First major study into how technology influenced structure and
relationship between technological complexity and structure; 3 types of technologies
Unit production where units are custom made and work is non-routine; Mass
Production which consisted of large batch of mass produced technology; Process
production which was highly controlled, standardized and continuous technology;
Woodwards study showed that organizations using unit and small technologies are
more successful when they have smaller spans of control, fewer levels of management
and when they practice decentralized decision making; and that organizations that use
larger batch and mass production technologies are more successful when their
managers have larger spans of control and when they practice centralized decision
making; The successful continuous processing organizations are similar to those for
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

unit and small batch processing technologies, they have smaller spans of control and
decentralized decision making.
- 4 structural characteristics include: Number of vertical levels; Supervisors span of
control; Manager/Total employee ratio; Proportion of skilled workers
- However they have more levels of management than either of the earlier discussed
technologies. However this study did not focus on non-manufacturing firms and only
focuses on small and medium sized organisations because structure and performances
is less significant in large organizations.
- Perrows Typology Perrow proposed a technology classification based upon the
way that knowledge is used; he argued that control and coordination methods should
vary with technology type the more routine the technology, the more highly
structured the organization and non-routine technologies require greater structural
flexibility; 4 aspects of structure that could be modified by technology
Discretion Amount that can be exercised for completing tasks; Power Of groups
to control the units goals and strategies; Interdependence Extent of
interdependence between groups; Coordination Extent to which groups coordinate
their work; 2 dimensions: Task variability number of exceptions encountered in
performing a task; Problem analyzability type of search procedures followed to
find successful method for responding adequately to task exceptions
- 4 classifications: Routine (TV low/PA high)- The job of a clerk generally has low
variation on the kind of activity that (s)he performs and almost always has a known
method of solving the problem at hand; Craft (TV low/PA low) - The job could be
that of a construction worker. The number of exceptions to the standard procedures
could be minimal, but when such exceptions occur there is almost always a new case
at hand to handle which a new method needs to be involved; Engineering (TV
high/PA low) - Consider the case of aerospace engineering, every challenge at hand
would different exceptions to face and handle every time each requiring a special
method to solve. There is a high task variability and high task analyzability in such a
scenario; Non-routine (TV high/PA low) - A case could be in an R&D lab, when
high task variability could be found but there are standard ways to handle the
exceptions that come in the means of achieving the objective.
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

Thompsons Typology It demonstrated that technology influenced the selection of

a strategy for reducing uncertainty; 2 Dimensions Transformation Process and
Input/Output
o 3 types of technology that reduce uncertainty - Long-linked technology (TP
S/ I/O S) covers Woodward's mass production or continuous processing
categories. Essentially, this technology indicates linear transformation process
that can be thought of as having inputs entering at one end of a long line of
steps from which products emerge at the far end; Mediating technologies (TP
S/ I/O NS)bring clients and customers together in an exchange or transaction.
Mediating technologies are called so because firms using these technologies
act as go-between (i.e. mediators) in bringing together the interest of two or
more different parties to a transaction; An example of Intensive technologies
(TP NS/ I/O NS) is hospital emergency rooms, research laboratories etc. This
technology requires coordinating the specialized abilities of two or more
experts in the transformation of a usually unique input into a customized
output.
- Galbraiths Contribution considered that as task uncertainty increased, so did the
need to process information to achieve desired level of organizational performance;
led to an hierarchy of organization design strategies each aimed at improving the
capacity to process information. Galbraiths Organization Design Strategies 1)
Rules and programs 2) Hierarchical referral 3) Goal setting [4) Creation of slack
resources 5) Creation of self-contained tasks = Reduce the need for information
processing] [6) Investment in vertical information systems 7) Creation of lateral
relations = Increase the capacity to process information]
o Cataloguing Technologies - Contributor (Woodward, Perrow, Thompson,
Galbraith) Routine (Low information-process needs) Mass, process;
Routine, engineering; Long-linked, mediating; Low uncertainty. Non-routine
(High information-process needs) Unit; Craft, non-routine; Intensive; High
uncertainty.
- Service Industry Structure In service industries, members of the operating core
consistently interact with customers leading to them having higher levels of customer
service skills; they are also more geographically dispersed as the service must be
taken to the customer. Service industries are also often smaller than manufacturing; In
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

service industries, decision making is more decentralized; Manufacturing firms have

boundary spanners who role is to protect the operating core from interruptions to
processes
- Technology and Information Processing Information technology maybe grouped
into the following categories: Assisting day to day operations; Promoting
communication; Providing control systems; Acting as decision support systems
- Impact of IT upon structure IT usage is most intensive where operations are
dynamic and non-routine; More complex work can be undertaken, and at a faster
pace, because of ITs ability to process information; IT has led to a reduction in the
number of middle managers; IT tends to support lower level and operational decision
making rather than higher level conceptual decision making; IT has permitted the
dispersal of organizational activities and the formation of networks and clusters; The
structure of IT departments tends to follow that of the structure of the organization.

Appropriate Structure
- Organization environment Specific Environment everything directly relevant in
achieving its goal; General Environment potentially having an impact in achieving
its goal
- 2 Structures Mechanic structures were appropriate in stable environments;
Organic structures were appropriate in fast changing environments
o Functions of Structures are Implement strategy; Define areas of
responsibility; Provide control mechanisms; Facilitate the flow of production;
Monitor and respond to environmental change
o Origins of Change Deregulation and privatization; Promotion of
competition; Growth of globalization; Demands for profitability; Changes in
expectations and society values
o Downside of Bureaucracy - Goals displacement; Overstaffing; Concentration
of Power; Employee Alienation; Tendency towards large size and low
productivity
o Emerging trends in organizational design Focusing management effort on
key responsibilities; Greater use of market controls; Improving
communication flows; Working back from the customers
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

- Structural Compromises All structures are compromises in that there are often
competing demands which must be addressed; The first is responding to two
environmental sectors at the same time; Attempts to use a matrix structure to solve
this problem led to conflict, slow decision making and absence of anyone who would
take responsibility; Organisational designers now try to determine which is the most
important sector and respond to it, while covering the less important sector as well as
they can; Another problem is that of silos. Silos occur when an organisation is
comprised of departments which make communication and cooperation between
department difficult; Often coordinators and boundary spanners are appointed to
promote cooperation; Management techniques to facilitate cooperative behaviour are
often used, i.e. appropriate rewards and team building
- What to centralise and decentralize Top managers would prefer to centralise most
decision making but this would soon lead to organisational ineffectiveness; What
decisions to decentralise, and on what conditions, becomes an ongoing problem
within organisations

Managing Growth and Decline

- Five phases of growth 1) Crisis of Leadership: Growth through creativity; 2) Crisis
of Autonomy: Growth through direction; 3) Crisis of Control: Growth through
delegation; 4) Crisis of Red Tape: Growth through coordination; 5) Crisis of ?:
Growth through collaboration
- Hanks growth model concentrates upon the experience of high-tech organisations; he
identified 4 stages of growth: Start up stage; Expansion stage; Late expansion/early
maturity stage; Maturity/diversification stage. Also noted that growth was not a
continuous trajectory. Often firms went through periods of stagnation and decline
between growth spurts
- Organizational Decline Environmental causes such as: Markets may mature and
growth decline; Products may become technologically obsolescent; Competitors may
be better managed; Mergers and Acquisition; Behaviour of management also
contribute to organizational decline: Decline may be a self fulfilling prophecy;
Groupthink amongst managers may limit perception of a problem; The quality of
management may not be up to the challenges; Organisations may move between
growth and decline during their existence: 1) Blinded: Good information; 2)
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure

Inaction: Prompt Action; 3) Faulty Action: Correct Action; 4) Crisis: Effective

reorganisation; 5) Dissolution
- Dysfunctional consequences of organizational decline: Centralisation Decision-
making is passed upward, participation decreases and control is emphasized; No long-
term planning Crises and short-term needs drive out strategic planning;
Innovation curtailed No experimentation, risk-aversion and skepticism about non-
core activities; Conflict Competition and infighting for control predominate when
resources are scarce.
- There are a number of management problems which emerge during decline:
Conflict often increases; there may be increased resistance to change; top
management may lose credibility; the workforce may change composition.
Summary - complete - cheat sheet
BB280 Business Models and Organisation Structure