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13-8
Vertical differentiation
• Concerned with where decisions are made
– Where is decision making power concentrated?
• Two Approaches
– Centralization – Decentralization
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Organizational architecture
Fig 13.1
To maximize profitability a firm must achieve consistency between the various components of its architecture
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13-2
Organቤተ መጻሕፍቲ ባይዱzation architecture and profitability
• Totality of a firm’s organization, including structure, control systems, incentives, processes, culture and people. • Superior organization profitability requires three conditions:
Vertical differentiation
Concerned with where decisions are made.
• Centralization:
– Facilitates coordination. – Ensure decisions consistent with organization’s objectives. – Top-level managers have means to bring about