Understanding the Theory and Design of Organizations

TENTH EDITION

Richard L. Daft
VANDERBILT UNIVERSITY

?% SOUTH-WESTERN
to CENGAGE LearningAustralia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

Part 1 : Introduction to Organization Theory and Design Chapter 1: Introduction to Organizations

Organization Theory in Action Topics, 6 Current Challenges, 7 Purpose of This Chapter, 10 What Is an Organization? Definition, 11 From Multinationals to Nonprofits, 11 Importance of Organizations, 12 Dimensions of Organization Design Structural Dimensions, 15 Contextual Dimensions, 17 In Practice: Ternary Software Inc. .'
Performance and Effectiveness Outcomes, 19 In Practice: Federal Bureau of Investigation ,/ 21

2
6

10

14

18

Organizational Configuration Mintzberg's Organizational Types. 26 Contemporary Design Ideas, 29 Efficient Performance versus the Learning Organization From Vertical to Horizontal Structure, 32 From Routine Tasks to Empowered Roles, 32 From Formal Control Systems to Shared Information, 32 From Competitive to Collaborative Strategy, 33 From Rigid to Adaptive Culture, 33 In Practice: Cementos Mexicanos Framework for the Book Levels of Analysis, 35 Plan of the Book, 36 Plan of Each Chapter, 38 Design Essentials
Chapter 1 Workbook: Measuring Dimensions of Organizations* Case for Analysis: Perdue Farms Inc.: Respondingto 21st Century Challenges*

26

30

34 35

38
40 41

The Evolution of Organization Theory and Design Historical Perspectives, 22 How Do You Fit the Design? Evolution of Style Don't Forget the Environment, 25

22 23

Part 2: Organizational Strategy and Structure Chapter 2: The Arrangement of B Reporting Relationships
I Purpose of This Chapter, 56 < [ Organization Structure . 2 u Information-Sharing Perspective on Structure In Practice: Textron Inc.

53
Vertical Information Sharing, 59 Horizontal Information Sharing 60
How Do You Fit the Design? The Pleasure/Pain of Working on a Team

54
56 58 59

Organization Design Alternatives

65 66

Contents Required Work Activities, 66 Reporting Relationships, 67 Departmental Grouping Options, 67 Functional, Divisional, and Geographic Designs Functional Structure, 69 In Practice: Blue Bell Creameries, Inc. Functional Structure with Horizontal Linkages, 70 Divisional Structure, 71 Geographic Structure, 74 Matrix Structure Conditions for the Matrix, 75 Strengths and Weaknesses, 77 In Practice: Englander Steel Horizontal Structure Characteristics, 81 In Practice: GE Salisbury Strengths and Weaknesses, 83 Virtual Networks and Outsourcing How the Structure Works, 85 In Practice: TiVo Inc. Strengths and Weaknesses, 86 Hybrid Structure Applications of Structural Design Structural Alignment, 90 Symptoms of Structural Deficiency, 90 Design Essentials
Chapter 2 Workbook: You and Organization Structure* Case for Analysis: C & C Grocery Stores Inc.* Case for Analysis: Aquarius Advertising Agency*

69 70

Organizational Purpose Strategic Intent, 104 In Practice: Walgreens Operative Goals, 106 The Importance of Goals, 108 A Framework for Selecting Strategy and Design Porter's Competitive Forces and Strategies,
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104 105

109

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78 80

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85 87 88

How Do You Fit the Design? Your Strategy/ Performance Strength In Practice: Apple Miles and Snow's Strategy Typology, 114 How Strategies Affect Organization Design, 115 Other Factors Affecting Organization Design, 117 Assessing Organizational Effectiveness Traditional Effectiveness Approaches Goal Indicators, 119 Resource-based Indicators, 120 Internal Process Indicators, 120 The Balanced Scorecard Approach to Effectiveness Design Essentials
Chapter 3 Workbook: Identifying Company Strategies and Effectiveness Criteria* Case for Analysis: The University Art Museum* Case for Analysis: Airstar Inc.* Chapter 3 Workshop: The Balanced Scorecard and Organizational Effectiveness* 1.0 Rondell Data Corporation 2.0 It Isn't So Simple: Infrastructure Change at Royce Consulting
f

110 112

118 118

121 123
124 125 127 128 131 139

92 93 94 97

Chapter 3: Strategy and Effectiveness

Purpose of This Chapter, 101 The Role of Strategic Direction in Organization Design

100
102

Part 3: External Factors and Design

145 146
148
In Practice: Sony Corporation and Samsung Electronics Company

Chapter 4: Relationships Between Organizations

Purpose of This Chapter, 148 Organizational Ecosystems Is Competition Dead?, 149

149

The Changing Role of Management, 151 Interorganizational Framework, 152

Contents
In Practice: IBM

xi

Resource Dependence Supply Chain Relationships, 153 Power Implications, 154 In Practice: Amazon.com Collaborative Networks Why Collaboration?, 155 How Do You Fit the Design? Personal
Networking

153

197

Global Coordination Mechanisms, 199 155 Cultural Differences in Coordination and Control National Value Systems, 202
How Do You Fit the Design? Are You Ready to Fill an International Role?

202

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203

156 159

From Adversaries to Partners, 157 Population Ecology Organizational Form and Niche, 160 Process of Ecological Change, 161 In Practice: Axiom Global Inc. Strategies for Survival, 163 Institutionalism The Institutional View and Organization Design, 165 Institutional Similarity, 165 Design Essentials
Chapter 4 Workbook: Management Fads* Case for Analysis: Oxford Plastics Company* Case for Analysis: Hugh Russel, Inc.* Chapter 4 Workshop: Ugli Orange

Three National Approaches to Coordination and Control, 204 The Transnational Model of Organization Design Essentials 206 209
211 211 212 215

162 164

Chapter 5 Workbook: Made in the U.S.A.? Case for Analysis: TopDog Software* Case for Analysis: Rhodes Industries Chapter 5 Workshop: Comparing Cultures*

168
170 170 172

Chapter 6: The Impact of Environment

Purpose of This Chapter, 220 The Organization's Environment Task Environment, 220 General Environment, 222 International Environment, 223 In Practice: Univision The Changing Environment Simple-Complex Dimension, 225 StableUnstable Dimension, 226 Framework, 226 Adapting to a Changing Environment Adding Positions and Departments, 228
In Practice: Wal-Mart

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220

Case*

174

Chapter 5: Global Organization

224 224

Design
Purpose of This Chapter, 180 Entering the Global Arena Motivations for Global Expansion, 181 9, Stages of International Development, 183 Global Expansion through International Strategic Alliances, 185 Designing Structure to Fit Global Strategy Model for Global versus Local Opportunities, 186 International Division, 188 Global Product Division Structure, 188 Global Geographic Division Structure, 190
In Practice: Colgate-Palmolive Company

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180

228
229

185

Building Relationships, 229 Differentiation and Integration, 231 Organic versus Mechanistic Management Processes, 233
How Do You Fit the Design? Mind and Environment 234

Planning, Forecasting, and Responsiveness, 235 Framework for Responses to Environmental Change
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236 237 238 239

Global Matrix Structure, 193 In Practice: Asea Brown Boveri Ltd. (ABB) Building Global Capabilities

Dependence on External Resources Influencing External Resources Establishing Formal Relationships, 238 In Practice: AT&T

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193 194

The Global Organizational Challenge, 195

Contents
Case for Analysis: The Paradoxical Twins: Acme and Omega Electronics* 3.0 4.0 The Donor Services Department Empire Plastics

Influencing Key Sectors 241 In Practice: eBay Organization-Environment Integrative Framework, 243 Design Essentials
Chapter 6 Workbook: Organizations You Rely On*

242

247 250 254

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Part 4: Managing Organizational Processes Chapter 7: Organizational Conflict and Politics

Purpose of This Chapter, 260 Intergroup Conflict in Organizations Sources of Conflict, 261
In Practice: The Purpose-Driven Church 263 In Practice: Saskatchewan Consulting

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302 Bounded Rationality Perspective, 303 How Do You Fit the Design? Making Important Decisions Organizational Decision Making Management Science Approach, 307 In Practice: United Airlines

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260

305 307

Rational versus Political Model, 264 Power and Organizations Individual versus Organizational Power, 266 Power versus Authority, 267 Vertical Sources of Power, 267 The Power of Empowerment, 271
In Practice: Semco > 272

308

266

Horizontal Sources of Power, 272 In Practice: University of Illinois In Practice: Carilion Health System Political Processes in Organizations Definition, 278 When Is Political Activity Used?, 279 Using Power, Politics, and Collaboration How Do You Fit the Design? Political Skills Tactics for Increasing Power, 282 Political Tactics for Using Power, 283 In Practice: World Bank Tactics for Enhancing Collaboration, 285 Design Essentials /

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275 277 278

Carnegie Model, 309 Incremental Decision Model, 311 In Practice: Gillette Company Organizational Decisions and Change Combining the Incremental and Carnegie Models, 315 Garbage Can Model, 316 In Practice: I V Huckabees Contingency Decision-Making Framework Problem Consensus, 320 Technical Knowledge about Solutions, 321 Contingency Framework, 321 Special Decision Circumstances High-Velocity Environments, 324 Decision Mistakes and Learning, 325 Cognitive Biases, 326 Overcoming Personal Biases, 327 Design Essentials
Chapter 8 Workbook: Decision Styles* Case for Analysis: Cracking the Whip* Case for Analysis: The Dilemma of Aliesha State College: Competence versus Need*

314 315

319 320

280 281

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285 288
290 291 292

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330 331
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Chapter 7 Workbook: How Do You Handle Conflict?* Case for Analysis: The Daily Tribune* Case for Analysis: Pierre Dux*

Chapter 8: Organizational Decision-Making

Purpose of This Chapter, 298 Definitions Individual Decision Making Rational Approach, 300

Chapter 9: Corporate Culture and Values

Purpose of This Chapter, 336 Organizational Culture

334
336

296
298 300

What Is Culture?, 336 Emergence and Purpose of Culture, 338 Interpreting Culture, 338

Contents Organization Design and Culture The Adaptability Culture, 344 In Practice: Google The Mission Culture, 345 The Clan Culture, 345 The Bureaucratic Culture, 345
How Do You Fit the Design? Corporate Culture Preference 346

342 344

Elements for Successful Change Technology Change .

How Do You Fit the Design? Are You Innovative?

373 375
376

The Ambidextrous Approach, 376 Techniques for Encouraging Technology Change, 377 New Products and Services 380 New Product Success Rate, 380 Reasons for New Product Success, 381 Horizontal Coordination Model, 382 In Practice: Threadless Achieving Competitive Advantage: The Need for Speed, 384 Strategy and Structure Change The Dual-Core Approach, 385 Organization Design for Implementing Management Change, 386 385

Culture Strength and Organizational Subcultures, 347 In Practice: Pitney Bowes Credit Corporation Organizational Culture, Learning, and Performance In Practice: Genentech Ethical Values and Social Responsibility Sources of Individual Ethical Principles, 351 Managerial Ethics, 352 Corporate Social Responsibility, 353 Does It Pay to Be Good?, 354 How Leaders Shape Culture and Ethics Values-Based Leadership, 355 Formal Structure and Systems, 357 Corporate Culture and Ethics in a Global Environment
Design Essentials Chapter 9 Workbook: Shop 'til You Drop: Corporate Culture in the Retail World* Case for Analysis: Implementing Change at National Industrial Products* Case for Analysis:Does This Milkshake Taste Funny?* Chapter 9 Workshop: The Power of Ethics*

347 348 350 350

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In Practice: Hewlett-Packard Culture Change

387 388

359
360 362 363 365 367

Forces for Culture Change, 388 Organization Development Culture Change Interventions, 389 Strategies for Implementing Change
Leadership for Change, 391 In Practice: Memorial Hospital 391

391

Barriers to Change, 392 Techniques for Implementation, 393 Design Essentials

Chapter 10 Workbook: Innovation Climate* Case for Analysis: Shoe Corporation of Illinois* Case for Analysis: Southern Discomfort* 5.0 Dick Spencer "Ramrod" Stockwell 6.0

395
397 398 403 405 411

Chapter 10: Organizational Innovation

Purpose of This Chapter, 369 The Strategic Role of Change Innovate or Perish, 370 Strategic Types of Change, 371

368
370

Part 5: Internal Factors and Design Chapter 11: Information and Control Processes 416
Purpose of This Chapter, 418 Information Technology Evolution 418 Information for Decision Making and Control Organizational Decision-Making Systems, 420 o Feedback Control Model, 421 Management Control Systems, 422

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Contents
How Do You Fit the Design? Is Goal-Setting Your Style? In Practice: eBay In Practice: United Parcel Service (UPS) 423 424 464

Size and Structural Control, 465 Bureaucracy in a Changing World Organizing Temporary Systems, 468 In Practice: Salvation Army Other Approaches to Busting Bureaucracy, 469 Bureaucracy versus Other Forms of Control Bureaucratic Control, 470 Market Control, 471 Clan Control, 472 In Practice: Southwest Airlines Organizational Decline and Downsizing Definition and Causes, 474 A Model of Decline Stages, 475 In Practice: Herman Miller Downsizing Implementation, 477 479 481 481 483 Design Essentials Chapter 12 Workbook: Control Mechanisms* Case for Analysis: Sunflower Incorporated* Chapter 12 Workshop: Windsock Inc.* 472 473 468 467

The Level and Focus of Control Systems Organization Level: The Balanced Scorecard, 427 Department Level: Behavior versus Outcome Control, 429 In Practice: Best Buy Adding Strategic Value: Strengthening Internal Coordination Intranets, 432 Web 2.0 Tools, 433 Knowledge Management, 433 In Practice: ExactTarget Inc. Enterprise Resource Planning, 435 Adding Strategic Value: Strengthening External Coordination The Integrated Enterprise, 436 In Practice: Corrugated Supplies Customer Relationships, 439 , E-Business Organization Design In-House Division, 441 Spin-Off, 441 Strategic Partnership, 441 IT Impact on Organization Design Design Essentials
Chapter 1 1 Workbook: Balanced Scorecard Exercise Case for Analysis: Century Medical* Case for Analysis: Product X*

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431 432

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436 438 440

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442 444 446 448 449

Chapter 13: Workplace Technology and Design

Purpose of This Chapter, 489 Core Organization Manufacturing Technology Manufacturing Firms, 490 Strategy, Technology, and Performance, 492 In Practice: Printronix Contemporary Applications Flexible Manufacturing Systems, 494 Lean Manufacturing, 496

486
490

Chapter 12: Organization Size and Life Cycle

Purpose of This Chapter, 452 Organization Size: Is Bigger Better? Pressures for Growth, 452 Dilemmas of Large Size, 453
How Do You Fit the Design? What Size Organization for You?

450
452

493 494

455

In Practice: Matsushita Electric Industrial Company

496

Organizational Life Cycle Stages of Life Cycle Development, In Practice: Amazon 457

457 461

Performance and Structural 498 Service Firms, 500

Implications, 500

Core Organization Service Technology

How Do You Fit the Design? Manufacturing vs. Service

Organizational Characteristics during the Life Cycle, 461 Organizational Size, Bureaucracy, and Control What Is Bureaucracy?, 463 463

502

Designing the Service Organization, 503 In Practice: Home Depot Inc. Non-Core Departmental Technology

504 505

Contents

Variety, 505 Analyzability, 506 0 Framework, 506 Department Design Workflow Interdependence among Departments Types, 510
In Practice: Great Ormond Street Hospital for Children

Design Essentials 508 510

Chapter 13 Workbook: Bistro Technology* Case for Analysis: Acetate Department* 7.0 8.0 Custom Chip, Inc. Dowling Flexible Metals

518 520 521 532 525

512

Notes Glossary Name Index

537 573 583 595 601

Structural Priority, 513 Structural Implications, 514 In Practice: Athletic Teams Impact of Technology on Job Design Job Design, 516 Sociotechnical Systems, 517

515 516

Corporate Name Index Subject Index