1. Politics and Processes
Week 3

2. Organizational Structure
2
Effective structures provide:
Stability
Flexibility
Structural stability provides:
The capacity required to consistently and predictably manage daily work routines
Structural flexibility provides for:
The opportunity to explore competitive possibilities
The allocation of resources to activities that shape needed competitive advantages
3. Functional organizational structure
Employees are grouped together according to their similar tasks, skills or activities. Functional structures are suitable for SMEs with high level of specialization.
The decision making is centralized at the top of the organization.
4. 5. Benefits of functional organizational structure
6. Disadvantages od functional design
7. Divisional organizational structure
It is suitable for medium sized to big companies,
Expanding geographically or on customer base.
A Divisional design means that all activities needed to produce a good or service are grouped into an anonymous unit.
8. Differences between functional and divisional design
Functional designs are based on groupings by input;
Each department is not an independent profit center;
Divisional design considers output such as product, customer or location.
Each division is independent profit center;
9. Forms of divisional responsible design
10. Strengths of divisional design:
11. Weaknesses of divisional design
12. Hybrid design
Hybrid design is one that has divisional units but also have functional departments specialized and centralized in the headquarter.
13. Matrix design
It implements functional and divisional structures simultaneously in each department.
The worker in each department is being supervised by two bosses at the same time.
14. 15. Strengths of matrix design
16. Weaknesses of Matrix Design
17. Group task
Give example of organizations having functional, divisional design.
For which industry is functional design more appropriate and when divisional is suitable?
18. 19. Nokia Structure
20. SUPPORTING ENTITIES
21. Hierarchical
Functional
Matrix
Product
Ringed- Fence (Virgin)
Keiretsu
Book
Additional
22. Zaibatsu
23. Rich Merchants in Edo Period (Gosho)
MITSUI
-17c From Matsuzaka
-Kimono trade & money exchange in Edo, Kyoto, Osaka huge success

Manager: Rizaemon Minomura
-Cope with bakufu policy
to protect Mitsui business
-Support and work with
new government
-Internal reform:from gosho to zaibatsu
-1876 Establish Mitsui Bank & Mitsui Trading Company
Sumitomo
-16c Adopt Western copper refining, copper trade (Kyoto)-17c Move to Osaka
-Besshi Copper Mine (under Bakufus commission)

Manager: Saihei Hirose
-Avoiding govt confiscation-Introducing Western mining technology to renovate Besshi
-Business diversification
24. Yataro Iwasaki(1835-85)
Seisho () from Tosa, founder of Mitsubishi Zaibatsu
Shipping company--grew fast with government support (receiving govt ships, contract for military transport)
Established Nippon Yusen (NYK Line), fierce battle with Kyodo Unyu (anti-Mitsubushi company), 1883-85
Expanded to many areas: trade, banking, shipbuilding, coal, mining (later, more)
25. Keiretsu
26. DKB
Asahi Mutual Life Insurance (DKB)
The Dai-ichi Mutual Life Insurance Company (DKB)
Daiichi Sankyo
Dentsu (DKB)
Fujitsu (Furukawa)
Hitachi (Hitachi)
Ishikawajima-Harima Heavy Industries (IHI)
Isuzu (IHI)
ITOCHU (DKB)
JFE Holdings (Kawasaki)
Kawasaki Heavy Industries (Kawasaki)
Kao (DKB)
K Line (Kawasaki)
Kobe Steel (Suzuki)
Meiji Seika (DKB)
Mizuho (Mizuho Financial Group)
Seibu Department Stores (DKB)
Sojitz (Suzuki)
Sompo Japan Insurance (DKB)
Taiheiyo Cement (Asano)
Tokyo Dome (DKB)
The Tokyo Electric Power Company (DKB)
Tokyo FM (DKB)
Yokohama Rubber Company (Furukawa)
27. DKB
Asahi Mutual Life Insurance (DKB)
The Dai-ichi Mutual Life Insurance Company (DKB)
Daiichi Sankyo
Dentsu (DKB)
Fujitsu (Furukawa)
Hitachi (Hitachi)
Ishikawajima-Harima Heavy Industries (IHI)
Isuzu (IHI)
ITOCHU (DKB)
JFE Holdings (Kawasaki)
Kawasaki Heavy Industries (Kawasaki)
Kao (DKB)
K Line (Kawasaki)
Kobe Steel (Suzuki)
Meiji Seika (DKB)
Mizuho (Mizuho Financial Group)
Seibu Department Stores (DKB)
Sojitz (Suzuki)
Sompo Japan Insurance (DKB)
Taiheiyo Cement (Asano)
Tokyo Dome (DKB)
The Tokyo Electric Power Company (DKB)
Tokyo FM (DKB)
Yokohama Rubber Company (Furukawa)
28. Keiretsu Structure
29. Horizontal keiretsu (kiny keiretsu)
Affiliated `brother and sister` companies spanning different industries
30. Horizontal Keiretsus
Typical of a Japanese horizontal keiretsu is Mitsubishi where the Bank of Tokyo-Mitsubishi sits at the top of the keiretsu.
Also part of the core group is Mitsubishi Motors and Mitsubishi Trust and Banking followed by Meiji Mutual Life Insurance Company which provides insurance to all members of the keiretsu.
Mitsubishi Shoji is the trading company for the Mitsubishi keiretsu.
31. Vertical Keretsu
32. Vertical Keiretsu
Group of companies within the horizontal keiretsu such as Toyota.
Toyota's successis dependenton suppliers and manufacturers for parts, employees for production, real estate for dealerships, steel, plastics and electronics suppliers for cars as well as wholesalers.
All ancillary companies operate within the vertical keiretsu of Toyota but are members of the larger horizontal keiretsu, although much lower on the organizational chart.
33. Vertical Integration
34. Nokia
35. 1865 From the foundations to becoming a major industrial force
Nokia Ab. was created in 1865, when Fredrik Idestam established a paper mill at the Tammerkoski Rapids in south-western Finland. Nokia was named for the river, next to which the pulp mill was created.
1967- a merger with Rubber Works and Finnish Cable Works
Nokia Ab, Finnish Rubber Works (1882) and Finnish Cable (1912) Works (jointly owned since 1922) formally merge to create Nokia Corporation. At the time, Nokia Ab was the smallest of the three. Since then, the process of integration of five businesses (rubber, cable, forestry, electronics, power generation) started.
36. 1968-1991 for a pioneering role in the early evolution of
mobile communications
The newly formed Nokia Corporation was ideally positioned for a pioneering role in the early evolution of mobile communications. As European telecommunications markets were deregulated and mobile networks became global, Nokia led the way with some iconic products, like:
1987 - Nokia launches the MobiraCityman, the first handheld NMTphone (Nordic Mobile Telephone, the first mobile phone network ever)
1991 - Nokia equipment is used to make the worlds first GSM call.
37. 1992 essential strategic decisions
Nokia decided to focus on its telecommunications business. This was probably the most important strategic decision in its history.
1994 - first satellite call
The worlds first satellite call is made, using a Nokia GSM handset.
1997 - Nokias Snake Game
Nokia 6110 is the first phone to feature Nokias Snake Game. Snake and its successors are now available on an estimated 350 million mobile phones.
38. 1998 - NOKIA BECOMES THE WORLDS LEADER IN MOBILE PHONES.
1999 the first WAP handset
Nokia launches the Nokia 7110, the world's first WAP handset.
2002 the first 3G phoneNokia launches the Nokia 6650, its first 3G phone.
2005 -billionth phoneNokia sells its billionth phone a Nokia 1100 in Nigeria. Global mobile phone subscriptions pass 2 billion.
39. Ch 3 Organizational Culture
40. Henry Mintzberg on Culture
Culture is the soul of the organization the beliefs and values, and how they are manifested. I think of the structure as the skeleton, and as the flesh and blood. And culture is the soul that holds the thing together and gives it life force.
41. Organizational Culture
The pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization.
Culture is shared
Culture helps members solve problems
Culture is taught to newcomers
Culture strongly influences behaviour
42. Characteristics of Organizational Culture
43. Characteristics of Organizational Culture
44. Cultural Artifacts
Stories
Rituals
Material Symbols
Language
45. Revolutionary Change
Example: Nokia transformation from a cabling company into a (mobile) phone giant
46. Mary Jo Hatch: Cultural Dynamics
Source: Mary Jo Hatch (1993)
47. Cultural Dynamics
Culture as a continuous collection of concurrent processes
Developed from Edgar Scheins Iceberg model
Full description: Mary Jo Hatch (1993) The Dynamics of Organizational Culture The Academy of Management Review 18/4: 657-693. Available in J-Stor Database
48. Manifestation
Source: Mary Jo Hatch (1993)
49. Manifestation
Cultural assumptions are made visible in the perceptions, cognitions, and emotions of organizational members
The implementation of values maintains and shifts cultures assumptions.
Example: Assumption of peoples laziness leads to the culture valuing control (people need to be made to work).
50. Realization
Source: Mary Jo Hatch (1993)
51. Realization
Values are made real by transforming expectations into artifacts (social or material reality: rituals, stories, humour, physical objects).
Artifacts support or subvert cultural values
Example: Introduction of a computer network (change in artefacts) causing members to view communication positively (change in values)
52. Managing Culture
Symbolization
Source: Mary Jo Hatch (1993)
53. Symbols and Artifacts
Artifact is the physical form of an object, or a behavioural expression of a ritual
Symbol is an object (or a ritual) representing some value or meaning beyond its physical form. It is never completely fixed: It not only represents some existing value, but also allows its user to supply part of the meaning
54. Symbolization
Artifacts are imbued with meaning beyond their physical form. They become symbols
The literal form of an artifact affects its symbolic meaning
Example: If a large desk is seen as a status symbol, the manager might be expected to spend his/her time sitting behind the desk rather than walking around.
55. Interpretation
Source: Mary Jo Hatch (1997)
56. Interpretation
Symbols are contextualized in the broader cultural frame.
Different symbols are harmonized into a coherent framework (both the framework and the symbols are adjusted in the process)
Example: Internet has been adopted to represent Western democracys commitment to freedom of expression
57. What are the cultural Artifacts of
Virgin
Nokia
CESA