Administration Business

VU UniversityAmsterdam Administration and Facultyof Economics Business

Exam

OrganizationDesign
Administration Business Administration Business International

Version A Dr. B.V. Tjemkes

Monday 15 December 2008 12.00- 14.00hrs

as The final grade( 100%) for the OD-courseis determined follows: (tutorials) - 40Yo:5written assignments and I oral presentation 60o: the written exam This written exam consistsof : SectionA: 20 points; questionsI and2 3 SectionB: 40 points; questions and 4 C: 40 points; question5 Section as the Readthe completeexam carefully beforeanswering questions, conditionaton your knowledge or lesstime to answer. questionsmay take more The durationof the written exam is 2 hours;no dictionariesallowed. on Gradeswill be announced Friday 9s of January. on The exammay be reviewedon Tuesdayl3thof January room 3a35between1230-1330. The studentis allowed to take the exam home. of This written exam is governedby the Rulesand Regulations the ExaminationBoard including the Code of Conductfor Examinations.

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SectionA (20 points) Question1: ContingencyTheory perspective beenadopted. distinctionwas made During the courselectures contingency a has A (l) Traditionalcontingency (2) Configurational theory, between: contingency theory,and (3) answer followingquestions. the Neo-contingency theory.Please la. Explain in your own wordsthe core-logicunderpinning thesethreecontingency your answerwith two arguments approaches. Substantiate and provide a real-life example lb. Discussone key differencebetweentraditional contingencytheory and configurational your answerwith one argumentand provide a real-life contingencytheory. Substantiate example. lc. Discuss one key difference between configurational contingency theoryand neoyour answerwith one argument contingency theory.Substantiate and providea real-life example. (e.g.,equifinality)is awarded. Note: correctusageof key contingency concepts ^X W-o '

Question2: The Bureaucracy During the first text discussion and session the lectures, bureaucracy viewedas organization the -has beenthe topic of interest. design Please answer following questions. the )Lrurrr' c) {ot "^'.itwJt". 2a. Provide a definition of a bureaucracy and discussthreecharacteristics this of {ta.*rt<^"fr*ll* organizational design.As an illustration provide and elaborateon real-life example..eJmtriVdre 2b. Discuss and explainwhy underwhat conditions bureaucracy an efficient the is i".".e-Jie your answerwith tu,o arguments. organizational design.Substantiate ecbp^sioe^oS 2c. Explain what would be requiredto transforman organizationcharacterized by (i.e. increasing learningand designinto a leamingorganization bureaucratic the your answerwith two concretechanges innovation capacity).Substantiate and, if provideillustrations. applicable

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SectionB (40 points) Question3: Corporate SocialResponsibility(CSR) Fueledby extemalpressures, organizations more and moreconfronted are with a needto build corporate socialresponsibility into their organizational design.For instance, Greenpeace's activismdealingwith the Brent Sparcaused shift in Shell'sCSR policies(discussed a during lecture3). Please answerthe following question.

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3. Four sourceshave beenidentified (Daft, 2007; lecture3) that affect the degreeto which a managerial decisionis ethicaland socialresponsible. Discuss threeorganizational design bl rqcJuur 4ltics (e.g., organizationstructureand processes) the relationshipwith the sources etwip(wxil and (fvl0\ t \^J3c',fd0\decisions your answerwith arguments. ro\ of ethical behavior. Substantiate
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Today,theorizingon organization designdemands understanding leamingwithin an of organizations, learning drives innovation.During the lecturesand in the textbook (Daft, 2007) as different ideas,concepts,organizationdesignsrelatedto learningand irulovationhave been the dissussed.P\easensrlrer fo\\ovring queshons4a and 4b below. innovations(Daft (2007) usesthe term technical A. Elaborateon (l) producVservice innovotion) and (2) administrativeinnovationsand explain why eachtype of innovation requiresa different organizationdesign.Discusstwo differenceswhich you may expectin your answerwith arguments an efficient organizationdesign.Substantiate and provide examples. B. PeterSenge(1990) introducedthe notion of the learningorganization.He defined 2 and that individual characteristics 3 group-levelcharacteristics must be presentwithin an organization orderfor it to leam.Giventhesecharacteristics, in which decision-making (l) leamingorganization: Camegiemodelor (2) Garbage modelwould fit bestin Senge's your answerwith two arguments. can model? Substantiate I I

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SectionC (40 points) Readquestion5 and subsequently readthe casepresented Box l. While readingthe case,focus in only on key-issues extractrelevantinformation. and

Question5 Conductan analysis Acer's organization of design.This specificanalysis aims at providing insightson the effect of changes Acer madein her organization designto regainher competitive advantage. casetext offersdescriptions The ofdesignschanges, it doesnot offer a theoretical but The questionis, while usingtheorycan you ofler an explanation explanation. about: period in l99l;lcc-hrrotofr r enur?sftf^jf cl,l*r/ A. Acer's ineffectiveness the end of the start-up at 6.!tu'dtrQ B. Acer's effectiveness after the 1992reorganization. [66q-l RA;panbioe,r.oS]

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You may consider following issues developyour answer: the to environment, strategic intent, organization design,contextual conditions, organization effectiveness, organizational and change. Furthermoreto presentyour answeryou may usethe following structure: . Research question(makesurethe question delineated!!) is o Casedescription (summary/bullets key issues, of e.g. l99l organization design) o Discussrelevanttheory(definitionandexplanation) . Apply theoryto the case(discussion organizational of design) . Formulate (what insightsare gained) conclusions A Be brief and stayfocusedin your answers. goodansweris aboutquality,not necessarily quantity.

Box 1: Acer
AND STRUCTURE:Tnn Acnn Gnoup CovrpnrrNc rN THE CHnNcrNc Srnarrcv TECHNoLoGY lNousrny INroRmIrIoN Abstract This casefocuses the Acer Group,which was established a local Taiwanese on as companyin 1976 producingand sellingPCsto becominga multinational corporation manufacturing marketinga wide and products rangeof IT and Intemetenabling technologies, and services many differentcountries. in Competing in the fast-changinginformation technologyindustry, the Acer Group reformulatedits corporatestrategies and changedits organizationalstructure. 1976-1991: The Start-up Stage, Gradual Diversification and Globalisation Originally calledMultitech,Acer was foundedin 1976by StanShih,his wife and five otherpartners with During the initial years, a start-upcapitalof US$25,000. Acer operated a distributorof electronic as productsand a consultant microprocessor for technologies within Taiwan.Acer's first personal computer (PC) was introduced 1983.As the PC marketbeganto grow after 1983,Acer started manufacture in to IBM-compatiblePCs underits own brandnameand for othercompanies. While Acer beganits operation (OEM), makingPCs for saleunderleadingcompanies' as an Original EquipmentManufacturer brand namesin the United States, Japan, and Europe,Shihwas determined the start-upstageof the company at (OBM), producingand marketingAcer'sown brandproducts. to becomean Original BrandManufacturer

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To havebetter control of the supply of PC components manufactureits own brand nameproducts,Acer to started investin manufacturing to integrated circuits(lCs) and DynamicRandomAccessMemories (DRAMs) in the late 1980s. diversification A strategy was adopted developAcer'sproductlines further to to coverboth components peripherals. 1987,Acer Laboratories was established designand and In Inc. to manufacture ApplicationSpecificICs and chipsets. process verticalbackwardintegration A of ensued, leadingthe Acer from marketingproducts, throughassembling systems, designing PC to and manufacturing variousIT components. Group'sdiversification The strategJ went hand-in-hand with its move towardsglobalisation, throughthe acquisition and relocation part of its manufacturing of process offshore.To acquire new technologiesand further penetrate U.S. and Europeanmarkets,Acer the AmericaCorporation took over two Americancompanies 1988and 1990respectively. 1989,the first in In overseas factoryof the Groupwas built in Penang, Malaysia,to lower the costsof producingcolor monitorsand keyboards. Declining Corporate Performance, Organizational Restructu ring in I 992 The 1980sbroughtsignificantchanges the IT industry.With more advanced to producing technologies powerful microprocessors, increasingly manyof the tasksthat could only be doneby minicomputers before could now be carried out by PCs. Acer America Corporation'sacquisitionof Counterpoint Computersand Alto Computer Systemsin the late 1980sproved somewhata failed move and it lost aroundUS$20million annuallyfor a coupleof yearsafter 1991.For the Groupas a whole, its first lossof US $22.7million after taxeswas recorded 1991and over 400jobs in Taiwan werecut. Moreover,many in of Acer's customersreducedthe OEM ordersbeforethey could regainthe lost market share. IBM decidedto enter into the PC market by putting togetheroff the- shelf componentsratherthan making finishedPCsusing its own hardware and softwareproducts, closedframeworkthat characterized the the productionof mainframecomputers was replaced an opensystemin the manufacture PCs.The by of adoptionof opensystemproductionmadePCsmoreor lessstandardized commodities, which could be manufactured according published to standards. operate an environment which high speed To in in and low costsACER adopteda new corporate strategy buttressed threeimportantpillars:the "fast-food" by business model, the client-serverorganizationalstructure,and the global brand,local touch forms of international ization. The fast food business model was implemented l99l to achieve prime objectiveof maintaininglow in the overall cost and delivering finished productsto the marketsfaster.Sincemid 1992, Acer had decentralized the processof assemblingfinal PC products,moving that process what were called uniload (assembly) to sites locatedaroundthe world. Insteadof manufagturing whole PC systems, Group's manufacturing the sitesin Taiwan producedstandardized components subassemblies PC and similar to the "ingredients"in the fast food. These"ingredients" were then put togetherinto final productsin Acer's 39 uniload sites (four of which were for OEM customers)scattered various parts of the world where the marketswere in located.Innovativetechnologiesinventedby Acer facilitated sucha disintegratedform of production.The contributed the easyupgrading computersandthe "screwless to of "chip-up" technology housing" technoloryallowedvariouscomponents sub-assemblies be put togetherwithin only 30 seconds and to into finishedPC systems. The client-server organizational structure encompassed strategic businesses units(SBU) organized along productlines and RegionalBusiness Units (RBUs) aroundgeographical markets.Strategic Business Units were profit centresof the Group with their own profit objectives,marketing,and product strategies. They were functionally oriented to engagein R&D, manufacturing,product management, OEM salesof PC and ts.SixSBUs took of variousmanufacturing sitesin Taiwan the Philippines, and

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monitors,and PC housings. suchasmotherboards, Malaysiato producedifferentcomponents of distribution, services, and marketing Altematively,the RBUs were formedto take charge the assembly, They alsooperated independently, focusingon meetingthe territories. of productsin their respective independently, business the units in the Group's needsof differentregionalmarkets. Although operating networkof firms. The RBUs actuallyconstituted loosely-coupled a clientserver organizational structure to werenot obligedto buy from the SBUswithin theGroup;but if theydid, they needed pay marketprices for the goodsand services. the the organizational structure, Groupadopted "Global Brand,Local Touch" Building on the client-server its competitiveness an Original Brand as and approach help further intemationalize improve to (OBM). The meaningof "Local touch" was to fosterlocal ownershipand management of Manufacturer local peoplewereencouraged hold the majority to business units.At its extreme, the Group'soverseas By shares Acer's overseas of business units,which couldbe listedon local stockmarkets. enteringinto joint ventureswith local partnersin overseas marketsto assemble, market,sell, and promote Acer brand work more effectively products,local shareholders were expectedto perform the day-to-daymanagement partners business could address unique the closelywith the Group.Theseindependent and cooperate model,creatinga strongand positiveimage in of domesticneeds local customers the fast food business for the Acer brandsoverseas. from US$986million in 1991to US$ 3.22 billion in 1994,only three The revenue the Group increased of years after implementingthe reformulatedcorporatestrategies and restructuredorganization.Net profits 34.20 in grew from US$26million to US$205million overthe sameperiod.Retum on equity increased figure in I 991. I 994, compared with a negative The Acer goup competingin the information and structure: Poon.TS (2002).Changingstrategy Source: CaseStudvJournal2(2\ o 82-97. technologyindustry.?"he

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