Types of organizations a.Functional b.Product, business unit c.Matrix, network, virtual proximity...
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Transcript of Types of organizations a.Functional b.Product, business unit c.Matrix, network, virtual proximity...
Types of organizations
a. Functionalb. Product, business unitc. Matrix, network, virtual proximityd. Program/project/
Nature of Responsibility Center
• Mission• Support
ExpenseCost Profit
(1) contribution margin, (2) direct business unit profit, (3) controllable business unit profit, (4) income before taxes, (5) net income
InvestmentERA (residual income) vs. ROI
Strategy DRIVES Structure
1. Key questions (depends on organizational level)
2. Product-market strategy (single mission, related missions, unrelated missions)
3. Mission portfolio evaluation (build, hold, harvest, divest?)
4. Competitive strategy (low price/cost; high-value, rapid product development)
effective execution of different product-market strategies require different task
priorities
a. intensity of competitive rivalryb. bargaining power of buyersc. bargaining power of suppliersd. threat from substitutese. threat from new entry
Transfer Pricesa. balanced prices
(1) market or opportunity cost, (2) fully-distributed average cost, (3) average variable cost or direct cost, (4) marginal/incremental cost, (5) negotiated or bargained, 6) multipart tariffs
b. unbalanced pricesc. arbitration, public-utility type regulation,
reassignment of assets
Incentives• 1. Financial rewards• 2. Psychological and social rewards• 3. Design considerations
– a. size of bonus relative to salary– b. bonus based on?– c. performance criteria– d. time period– e. weights given nonfinancial criteria– f. benchmarks– g. degree of subjectivity– h. form of bonus payment
• 4. High-powered vs. low-powered incentives
Think Again.