Bundling Tasks Into Jobs and Subunits

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Chapter 13 - Decision Rights: Bundling Tasks Into Jobs And Subunits

CHAPTER 13 DECISION RIGHTS: BUNDLING TASKS INTO JOBS AND SUBUNITS CHAPTER SUMMARY This chapter is the second of two on the assignment of decision rights. It analyzes the bundling of tasks into jobs and jobs into the basic subunits of the firm, and discusses recent trends in the assignment of decision rights. The appendix presents a gametheoretic example of some of the issues that arise in coordinating functional managers. CHAPTER OUTLINE BUNDLING TASKS INTO JOBS Specialized versus Broad Task Assignment Benefits of Specialized Task Assignment Exploiting Comparative Advantage Lower Cross-Training Expenses Historical Application: Adam Smith on the Economies of Specialization Costs of Specialized Task Assignment Forgone Complementarities across Tasks Coordination Costs Functional Myopia Reduced Flexibility Incentive Issues Productive Bundling of Tasks Managerial Application: Regulation Limits Bundling of Tasks BUNDLING OF JOBS INTO SUBUNITS Grouping Jobs by Function Managerial Application: Concentrating on Functions at Cadillac Grouping Jobs by Product or Geography Managerial Application: H-P Combines Two Operating Divisions Trade-offs between Functional and Product or Geographic Subunits Benefits of Functional Subunits Problems with Functional Subunits Benefits of Product or Geographic Subunits Problems with Product or Geographic Subunits Managerial Application: Citigroup Reorganizes to Control Conflicts Where Functional Subunits Work Best Environment, Strategy, and Architecture Matrix Organizations Managerial Application: Intel Corporation—A Matrix Organization Mixed Designs Network Organization Organizing within Subunits 13-1

Chapter 13 - Decision Rights: Bundling Tasks Into Jobs And Subunits

RECENT TRENDS IN ASSIGNMENTS OF DECISION RIGHTS Managerial Application: An Executive Perspective on Increased Foreign Competition Historical Application: F.W. Taylor on Iron Workers Managerial Application: The Importance of Informal Communications SUMMARY APPENDIX: BATTLE OF THE FUNCTIONAL MANAGERS TEACHING THE CHAPTER A key point in the chapter is that jobs can either be grouped by function, by product, or matrixed. It is important for students to recognize that there is a trade-off with any grouping. Grouping jobs into a subunit enhances coordination and learning among people within the subunit but comes at the cost of reduced coordination and learning among people within the group and other subunits of the firm. The material in the chapter is not particularly technical in nature, but it is important that students clearly understand the differences between the groupings that can be used. Rather than relying on extensive lecturing in this chapter, the Review Questions at the end of the chapter, which cover both definitions and application of the concepts in the chapter, can be used to generate class discussion to cover the material. Lecture can then be used to clarify any remaining questions. There are several interesting Managerial Applications in the chapter that can also be used to motivate class discussion. In particular, the Citigroup reorganization emphasizes some considerations that are not raised as prominently elsewhere in the chapter. Why are some tasks acceptable to bundle and yet others should be separate? It is important that students understand that this chapter is not a ―how-to‖ description that will tell them which type of structure is appropriate in every situation, but rather is designed to give them the tools to look at a situation and assess what the impact would be if different organizational structures were chosen. The Managerial Applications should be used to illustrate the pros and cons of the different structures. It would be useful to review Chapters 12 and 13 once they have both been completed in class and to refer back to the importance of decision-right assignment in organizational architecture. One way to review these concepts...
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