Complex Structures u6p19

As an organisation grows and expands, its structural complexity increases.
Chandler 1962 was the first to note this. He said that the more an organisation grows in size and complexity, the more it struggles to operate as a connected business. Increasing diversity leads to increasing separation of the individual parts of the business.

Williamson 1975 and Chandler 1962 proposed two structural types for complex structures

1. Multidivisional structures
2. Holding structures

Multidivisional Structures
Also known as M-form. A structure with multiple divisions and a head office organised by function. There is disagreement over whether strategy is decided by head office or the subsidiaries and divisions. In that case, strategy follows structure.

Advantages of an M-form

• Focuses on growth areas
• Eases conflicts between functional areas
• Increases accountability towards strategic performance
• Encourages leadership at lower levels

Disadvantages of an M-form

• Duplication of functional resources
• Internal competition between divisions
• Discourages cross-sharing functional experts
• Conflicts over relationships with head office

Holding Structures
This groups together a number of diverse businesses that have grouped together by mergers and acquisitions or by joint ventures under a central head office. Example is Daimler Benz

Advantages
Allows for multiple ownership and greater spread of risks
Accesses knowledge through collaboration in different areas of expertise
Flexibility to tap into new market opportunities

Disadvantages
Minimal parental control and intervention over strategic issues
Possibility of isolation, increased for under-performing SBUs
Conflicts and competition within collaborations


Both these types of structures can become bureaucratic as the organisations grow and become more complex. Formal programmes and rigid procedures and systems can take priority over strategic thinking and operational effectiveness.

Therefore matrix structures and network structures are considered more suitable alternatives for large and complex organisations. They give closer horizontal and vertical linkages and collaborations. They integrate the product, functioinal and geographical dimensions of such organisations in one structure.

Matrix Structure
Already covered by Mintzberg as a liaison device. Characterised by a high degree of dependency between two or more (depending on the number of dimensions of the matrix) types of groupings, such as functional with market (or one kind of market with another, eg regional and product). It is a combination of functional and holding structures.

Haberberg and Rieple's definition, p21-22 u6

Advantages
Encourages collaboration in overlapping businesses or opportunities
Enables flexibility to adapt to changing strategic conditions
Provides for dual responsibility or more in strategic decision-making and accountability

Disadvantages
May be confusing and slow in strategic decisions that involve several participants
Mix-up over roles and repsonsibilities
Possibilities for tensions and conflicts, particularly in teams where individuals are not seen to cooperate equally

Integrating strategy under a matrix structure is complex and highly challenging (should probably go under disadvantages). Example given of matrix structures at Christian Aid p22 u6


Network Structures
This is a flexible, non-hierarchical organisational form that groups together a series of independent organisations or SBUs to design, produce and market a given product or service. It can be composed of numerous individuals, project groups or collaborations linked together by continuously changing formal or informal relationships, resembling an octopus or spider's web.

Its centre (the head) forms a small headquarters and acts like a broker or agent. The various parts are usually linked by some information system as divisions or independent partnerships to the head. The distinguishing feature of networks is that the organisational boundaries are less distinct, and are permeable. Grant calls this "boundaryless" (2002).
Normally, the majority of productive activities are outsourced to suppliers and distrubutors. Use of temporary staff is common. Typical in dynamic and complex environments where creativity, innovation, and speed of response are key sources of advantage.

Example: Cisco u6p25

As organisations grown larger & more diverse, so their structures become more complex. This complexity multiplies as organisationis grow internationally diverse. In those situations, country and regional issues have to be considered alongside product and functional areas.