Organization Architecture
  
   Organization architecture:  The totality 
   of a firm’s organization, including formal 
   organization structure, control systems, 
   incentive systems, organizational culture, and 
   people.
  
   Organization structure:  The location of 
   decision-making responsibilities in the firm, 
   the formal division of the organization into 
   subunits, and the establishment of integrating 
   mechanisms to coordinate the activities of 
   subunits.
    Organization Architecture
  Controls:  Metrics used to measure the performance of 
   subunits and to judge how well managers are running those 
   subunits.
  Incentives:  Devices used to encourage desired employee 
   behavior.
  Organizational culture:  Values and assumptions that are 
   shared among the employees of an organization.
  People:  The employees of an organization, the strategy used 
   to recruit, compensate, motivate, and retain those individuals, 
   and the type of people they are in terms of their skills, values, 
   and orientation.
   Organization Architecture
              Structure
   Controls    People    Incentives
               Culture
      Designing Structure
  
   Vertical differentiation:  The location of 
   decision-making responsibilities within a 
   structure.
  
   Horizontal differentiation:  The formal 
   division of the organization into subunits.
  
   Integrating mechanisms:  Mechanisms 
   for coordinating subunits.
      Centralization Versus 
        Decentralization
  Centralization:  The concentration of 
   decision-making authority at a high level 
   in a management hierarchy.
  Decentralization:  Vesting decision-
   making authority in lower-level managers 
   or other employees.