Lecture 12 – ECON.S-1620Prof. Charles MoranCopyright 2015

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The Design and Dynamics of Organizations

Lecture 12

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)

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

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

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

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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