1. What are the differences in the design models? Compare and contrast the standard airline organizational functional structure model with the hybrid structure based on independent business units
• All functions report directly to a CEO (centralized authority)
• People with the same set of skills are group together (individual specialization)
• Characterized by horizontal differentiation
• Peers in the same function can supervise each other (as per Jones, chapter 15)
• Likely to develop norms to increase effectiveness and develop core competencies, and to use standards as a measure of productiveness.
• As business becomes more differentiated, the functional model can develop problems with effective communication, measurements, locations, new customer groups, and strategic problems.
Hybrid/Business Unit Structure:
• Each “unit” reports to a manager, who is then responsible to the corporate center and CEO (decentralized authority)
• People are grouped into “functions” according to market/customer demands, and work to achieve goals together (joint specialization)
• Characterized by an increase in both vertical AND horizontal differentiation from the functional model. (vertical is 3 levels instead of 2, horizontal is 12 functional groups instead of 9)
• Tasks are coordinated through mutual adjustment, with the different business units working together to increase efficiency between units.
• The greatest potential for problems lies in insufficient integration between units. There is the potential for an incorrect balance of power between corporate and the subunits, coordination problems, expensive overall costs of business, and communication problems.
Does the hybrid structure provide too much differentiation?
The idea of “too much differentiation” is all a function of how well the hybrid model offsets the potential problems of its complexity by using integration techniques. According to the readings this week, a complex...