OB lecture 6 systems or network structure

Lecture 6
Unit 3 Organizations and Behaviour

Systems or Network Structure


Systems Structure = Network
Structure
Systems Structure– called by Drucker - as
a
relationship focused structure
(note the ‘s’ in Systems)

Network Structure – used by your text
book – page 73, 74,
75, 76, 77


Original of Network/Systems
• 1960s – NASA to put a man on the
moon before the decade end.
• Japanese companies have used this
system with their suppliers for a long
time.


Today, organizations are faced with a
Dynamic and turbulent environment.
If simple structure is no structure,
Then network Structure is non organization

(see text book
page 73)


Increasingly, companies focus on their
core competencies, and outsource
other functions to other companies
e.g. Apple focuses on product development and marketing - their
core competences
Network structure is studied as
‘outsourcing’ in international business

“


Distributor
2

Distributor
1

Core firm

Supplier 3
Supplier 1

Supplier 2

Network Structure

‘Economy’ of Network
Structure
Toyota

Division Producing
‘Windscreen’

Division (Assembly)

An internal division producing windscreen will sell only to in-house
It will be less motivated as business is guaranteed.


‘Economy’ of Network
Structure
If ‘outsource’ or Use
Network
Supplier
(Windscreen)

Toyota

Honda

Nissan
Supplier sell to Toyota, Honda, and Nissan.
Specialization and economy of scale
achieved. This leads to lower cost.

Why Systems or outsourcing
is feasible now
Advances in technologies:
1.Communication

2.Transport


Communication
Techonology
Internet
Optical fibre
Submarine cable
Skype

Steve Merkell used Skype to coordinates
production in Ningbo (China) and USA from
Singapore


Communication Technology

Mr. Aung Kyaw. Using a set of amplifier, he simply turns on Gtalk
for the whole duration of 8 to 10 hours when he is in the office to
communicate with his colleague, Mr Kyaw Win in Myanmar,
as if they were in the same office.


Transport Technology

- Aircraft 1911, Jet Engine 1945

- Containerization


While aircraft and jet engine are sophisticated technology,
a simply inventor – container drastically reduces sea-freight cost

Without Container
Loading 7 days
Unloading 7 days

Haiphong

With Container
1 day
1 day

3 days

Singapore


Containerization Reduces
Cost
1. Without containerization
7+7+3+7+7 = 31 days
2. With Containerization
1+1+3+1+1= 7 days
Throughput of a ship is increased by 31/7 =

4 times !


“Network” is Team Structure
Team is made up of individuals
Network is made up of organizations
As such, the elements of a team
apply:
1)Clear missions or objectives
2)Complementary roles, or skills
3)Performance standards


Network and Systems
Structure
Like team
Advantages
Flexible, dynamic
Disadvantages
Lack stability


To make Network Structure
Work
The crucial importance of face-to-face
personal, of constant meeting, and of
bringing people into decision making
Process.
NASA initially thought such system
would

be run by computer based system


Members must make efforts to know
what
Was happened throughout the whole
system


Network Structure
It is increasingly the structure for the
Modern organizations in fast moving
and
competitive environment.
It is also the design for multi-national
companies.