Four types of boundaries —

“An ingenious device for obtaining individual profit without individual responsibility.” is a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party.

as activities that enrich the controlling shareholders at the expense of minority shareholders

A. The Barrier-Free Organization 1. Creating Permeable Internal Boundaries Teams are an important part of barrier free structures because they 1) substitute peer-based for hierarchical control; 2) often develop more creative solutions via brainstorming and other group problem solving techniques; and 3) absorb administrative tasks previously handled by specialists. 2. Developing Effective Relationships with External Constituencies 3. Risks, Challenges, and Potential Downsides

external control mechanism

the principals who are the owners of the firm

is a method of managing the execution of a strategic plan. It’s considered unique in the management process, as it can handle the unknown and ambiguous while tracking a strategy’s implementation and the subsequent results. In other words, strategic control is a way to find different methods of strategy implementation by adapting to changing external and internal factors to achieve strategic goals.

The firms organized their breakthrough projects into one of four primary ways:

(which serves to reduce employment risk but often results in lower shareholder value).

Behavioral control is an approach to implementing strategy that relies on three behavioral forces or “levers” –

Three key governance mechanisms

involves informational control and behavioral control

(the appropriate balance and alignment among a firms culture, rewards, and boundaries. Asks if the organization is ‘doing things right’ in the implementation of its strategy

TWO CENTRAL ASPECT OF STRATEGIC CONTROL

duties of the board of directors

Traditional Forms of Organizational Structure

involve removing internal boundaries to encourage teamwork and widespread sharing of information.

a combination of a divisional and functional structure. Most commonly, functional departments are combined with product groups on a project basis. As a result, personnel from functional departments work under a product group manager for the duration of a project. Multinational corporations combine product groups and geographical units — an alternative to the product/function matrix. In both cases, personnel become responsible to two managers.

is the “middlemen” or “middle women” who provide a balance between a small group of key managers in the firm and a vast group of shareholders.

An example of team failure by Challenger Electrical Distribution in Jackson, Mississippi identified 5 reasons for failure:

wherein the owners of the corporation become actively involved in the governance of the corporation.

agents who are the people paid by the board of directors to perform a job on their behalf ().

As firms grow, excessive demands may be placed on the owner-manager in order to process all the information necessary to run the business. Specialists are needed in various functional areas (such as accounting, marketing, and engineering). Thus, a ______ often develops in which functions are managed by specialists. Then, the chief executive’s job shifts to coordinating and managing the departments. - are generally found in organizations in which there are single or closely related products or services, high production volume, and some vertical integration.

any effort by shareholder to communicate a need for change in companies policy or management A practical matter, individual shareholders hold relatively little influence, they do —acting collectively — have power to bring about shareholder action suits and demand that key issues be brought up for proxy votes at annual board meetings.

are usually highly centralized because the founder or a top executive makes nearly all of the decisions. Emphasize that the simple structure is the oldest and most common. It also tends to be the most informal with little specialization. This may enhance creativity since employees are often not bound by many rules, but may lead to management problems if employees do notunderstand their responsibilities. ___ organizations often offer few chances for career advancement.

who have interest that are distinct from the minority shareholders

are another type of boundary or constraint because they provide specific, measurable frameworks for how a strategy is to be implemented.

three condition of pp

individual an organization that owns part of the corporation through shares of its stock

are used to make external relations more permeable and create seamless knowledge systems across organizations.

Contemporary approach:

Potential disadvantages of the modular form include

is organized around products, projects, or markets. Each ______ has its own functional specialists organized into departments. ______ are independent units managed by a central corporate office. ________executives manage divisional performance to achieve corporate financial objectives.

are often used to control commercial practices such as bribes, kickbacks, and other forms of payment that may be illegal.

two primary players —

The next fivesubsections address factors that must be considered in any transition from traditional to boundaryless organization forms.

1) strategies are formulated and top management sets goals. 2) strategies are implemented. 3) performance is measured against the predetermined goal set Adapting to and anticipating both internal and external environmental change is an integral part of strategic control

is actually a central hub surrounded by networks of outside suppliers and specialists that perform non-vital functions. Such outsourcing allows the firm to tap into the knowledge and expertise of “best in class” suppliers but retain full strategic control. - type of organization allows a company to leverage relatively small amounts of capital and a small management team.

goals and objectives are set, strategies are implemented, and performance is compared to the desired standards.

(failure to exert maximum effort),

ambidextrous organizational form was most effective on both dimensions:

(ability to respond effectively to environmental change).primarily concerned with whether or not the organization is ‘doing the right things’.

refers to the shared values, unspoken understandings, and sense of purpose within organizations. It provides unwritten standards of acceptable behavior.

is “a set of firms which, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action.”

enables a firm to bridge differences in culture, function, and goals to find common ground that facilitates information sharing and cooperation.

type of organization is an evolving network of independent companies – suppliers, customers, even competitors — linked together to share skills, costs, and access to one another’s markets By pooling and sharing resources and working together in a cooperative effort, each gain in the long run. are a type of strategic alliance in which complementary skills are used to pursue common objectives.

two classes of shareholders