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Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015
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The Design and Dynamics of Organizations
Lecture 12
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Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015
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Considerations For Evaluating Structure
• Consider alternatives (i.e. technology, location) to initial firm model
• Consider economics – Scale, location, engineering, organization, strategic alliances…
• Consider outsourcing (strategic)
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Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015
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Considerations For Evaluating Structure (cont’d)Testing the resulting firm• Fluid/flexible/fun? – satisfaction• Built around loyalty/commitment to core values
• With: – portfolio of expertise– Learning
• Individual Organizational
– Customization (ultimate customer service)– Special contracts
• Outsourcing• Supplier/distributor efficiency maximization• Employee – opportunity if you add value or facilitate learning
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Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015
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Organizations and Size
• As an objective – Incentive and compensation systems have historically rewarded size. Why?
• Size v. Efficiency• Strategy to outsource
Commodity of non-strategic functions– Franchising– Becoming a marketing company
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Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015
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Organizations and Size (cont’d)
• Wal-Mart.com• BarnesandNobel.com• ProctorandGamble.com• Dell model of customization and IT production• Eliminate all manufacturing and distribution –
download music and video
Sears and catalog- What went wrong?
Amazon.com and distributionCenter issue!
Efficient download from publisher
Ultimate efficiency is to eliminateEx. Source reduction v. recycle
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Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015
Group 3 – They’re Not Employees, They’re People – Drucker
• Knowledge Worker
• Independent Contractor
• A life uncoupled from the corporate model of work, compensation and benefits
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