9. Organizational Uses of Place Design
• Each department or division is in direct contact with customers in
its locale and can adapt more readily to their demands.
• Lower costs for materials, freight, and perhaps labor may result.
• Marketing strategies and tactics can be tailored to geographic
• Control and coordination problems increase.
• Employees may begin to emphasize their own unit’s goals and
needs rather than those of the entire organization.
11. Organizational Uses of Product Design
• Reduces the information overload that managers face in a purely
• More effective handling of the business is possible.
• Duplicating functions and resources, e.g a different sales team
for each division.
• Dispersing technical expertise across smaller units.
• Creating negative rivalries between divisions.
13. Organizational Uses of Multidivisional Design
• Eases problems of coordination by focusing functional expertise and
knowledge on specific goods or services
• A firm must have a large number of managerial personnel to oversee
all the product lines
• Higher costs result from the duplication of various functions
• Often reduces the environmental complexity facing any one team,
department, or division.
15. Organizational Uses of Multinational Design
A worldwide product-line division may not be as effective at
opening new territories as a geographically organized division,
since the division operating under a place design often:
• Can establish relations with host governments.
• Invest in distribution channels.
• Develop brand recognition.
• Build competencies that no single product-line division could
• Versatile, scalable, and adaptable.
• Allows companies to outsource business activities to free staff to focus
on higher-value strategic work.
• Allows companies with multiple satellite locations or far divisions to
work with external partners flexibly.
• Allows for a more effective resolution of complex tasks.
• Since teams are independent and small, network-centric organizations
may find it difficult to achieve large-scale tasks.
• The success of the teams depends on the knowledge, skills and
motivation of individuals on each team, so an unmotivated team may
impact the overall goal achievement.
Organizational Uses of Network Design
19. Organizational Uses of Virtual Design (cont.)
Virtual networks are flexible and promote learning by integrating
information and knowledge between the different organizations that
make them up.
Managers delegate authority and responsibility to employees while
providing a clear vision of the organization’s purpose and goals
Structure can be changed quickly to meet changing conditions and
Employees can respond fastly to changing customer demands with
customized products and services available at any time and place.