Chapter 1

Chapter 9Structuring the Company for EntrepreneurshipE1Question 1: What is organizational structure and why are they created?EIntroductionStructure refers to the formal pattern of how people and jobs are grouped and how the activities of different people or functions are connected

Structures are created to bring order and logic to company operations

Once formalized, the structure is not staticE3Question 2: What are the two (2) core issues firms face when designing their structure?EThe Components of StructureTwo (2) components (or issues) of structure

Differentiation is about the ways decision-making authority is distributed, tasks are grouped, and people are assigned to tasks.

Integration refers to the ways in which people and functions are coordinated.E5How many levels should there be in the organization?What should be the targeted span of control?How centralized or decentralized should operations be?How formal or informal should structural relations be?Should the interaction emphasize functional specialization or cross-functional interaction?The Components of StructureE6Question 3: When considering key design questions, what four (4) major policy areas determine the final structure?EAnswering these questions comes down to four (4) major policy areas:Specializationthe number and types of specialties to be used or performed in the organizationShapethe number of people forming departments at each levelDistribution of powerpower distribution within and between levelsDepartmentalizationthe forming of people into departments, groups, or areasThe Components of StructureE8Question 4: How does Greiner (1972) suggest that organizational structures evolve over the life cycle of the business? In other words, what are the steps of structural evolution?EHow Structures EvolveGreiner (1972) Structural EvolutionE10Question 5: How do firms know when to change their structure?EQuestion 6: Why is it important to link strategy with structure?EQuestion 7: What are the different types of structure? Briefly describe.ETypes of Structures:Simple structurehighly informal with top-down coordination

Machine bureaucracyridged structure with standardized work roles

Organiclimited hierarchy with highly-flexible structure

Divisionalself-contained business unites with separate production and marketing functions for each

E14Elements of Mechanistic vs. Organic Organizational StructuresMechanistic StructureOperating Styles must be uniform and restrictedReluctant adaptation with insistence on holding fast to tried-and-true management principles despite changes in business conditionsTight control through sophisticated control systemsE15MechanisticMore benign or controllable external environment

Conservative management style is more appropriate

Mechanistic/bureaucratic structure is effectiveE16Organic StructureOperating styles allowed to vary freelyFree adaptation by the organization to changing circumstancesLoose, informal control with emphasis on norm of cooperationElements of Mechanistic vs. Organic Organizational StructuresE17OrganicMore hostile external environment

Management style must be more entrepreneurial

Organic structure is needed to facilitate entrepreneurshipE18Question 8: Under what structural conditions does the book suggest entrepreneurship take place?EAn Entrepreneurial Structure and the Concept of CyclingAn entrepreneurial structure is subject to continual experimentation and change

Organizational designs that facilitate variety, change, and speed are sources of competitive advantage. These designs are difficult to execute and copy because they are intricate blends of many different design policies.-Galbraith, 1995E20An Entrepreneurial StructureCovin and Slevin (1990) propose some additional elements:Managers allowed to freely vary their operating stylesAuthority that is assigned based on the expertise of the individualFree adaptation of the organization to changing circumstancesAn emphasis on results rather than processes or proceduresE21Covin and Slevin (cont.)Loose, informal controls with an emphasis on a norm of cooperationFlexible on-the-job behavior, shaped by requirements of the situation and personality of the employeeFrequent use of group participation and group consensusOpen channels of communication with free flow of informationE22Question 9: What is the process of entrepreneurial structure cycling? Why does it occur?EPseudo-entrepreneurialfirmsEffectiveentrepreneurialfirmsUnstructuredunadventurousfirmsEfficientbureaucraticfirmsOrganicMechanisticEntrepreneurialConservativeMANAGEMENT1234E24Structures to Support New Product/Service Development ProjectsWhen deciding which type of organizational structure will be most effective, management must decide to what extent the structure is more:

Simple versus ComplexCentralized versus DecentralizedFormal versus InformalAutonomous versus IntegratedHighly Specialized versus More GeneralistFull-time versus Part-timeE25Question 10: What are the three (3) different entrepreneurial project approaches? Briefly describe.EThe Entrepreneurial Project Development Framework Table 9-5Ray of Light projectsNo budgetNot approvedEarly conceptualizing

E27The Entrepreneurial Project Development Framework (Table 9.5)Emerging Potential ProjectsSeed capitalApproved by Opportunity Review BoardConcept refinement/prototype testing

E28The Entrepreneurial Project Development Framework (Table 9.5)Mainstream Development ProjectsFormal budgetApproved by senior mgt/directorsFormal NPD processE29Question 11: Why is considering project structural designs based on these three (3) approaches beneficial?EThe Entrepreneurial Project Development Framework (Table 9.5)More innovation because matching characteristics

Innovation clearly corporate-wide task

Likelihood of interfunctional coordination higher

Ray of light and emerging potential projects bring more flexibility and speed to innovation processE31