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Horizontal differentiation - formal division of the organization into sub-units. Integrating mechanisms - the mechanisms for coordinating sub-units.[r]
(1)International Business
9e
By Charles W.L Hill
(2)Chapter 14
(3)143
What Is Organizational Architecture?
Organizational architecture is the totality of a
firm’s organization including
1 Organizational structure
2 Control systems and incentives
3 Processes, organizational culture, and people
To be the most profitable
the elements of the organizational architecture must
be internally consistent
the organizational architecture must fit the strategy the strategy and architecture must be consistent with
(4)What Is Organizational Architecture?
(5)145
What Are The Dimensions Of Organizational Structure?
Organizational structure has three dimensions
1 Vertical differentiation - location of decision-making responsibilities within a structure
Centralized decision-making Decentralized decision-making
1 Horizontal differentiation - formal division of the organization into sub-units
(6)Why Is Horizontal
Differentiation Important?
Initially, most firms have no formal
structure, but as they grow, develop a
functional structure
Firms may switch to a product divisional
structure where each division is
responsible for a distinct product line
When firms expand internationally, they
(7)147
What Is A
Functional Structure?