Read the following information about The STAR Model for organizational design and then answer the questions.

What Is the Star Model"? The organization design framework portrayed in Figure 1 is called the \"Star ModelTM." In the Star ModelT\Strategy Strategy is the company's formula for winning. The company's strategy species the goals and objectives to be achieved as well as the values and missions to be pursued,- it sets out the basic direction of the company. The strategy specically delineates the products or services to be provided, the markets to be served, and the value to be offered to the customer. It also species sources of competitive advantage. Traditionally, strategy is the first component of the Star ModelTM to be addressed. It is important in the organization design process because it establishes the criteria for choosing among alternative organizational forms. (See the book, Designing Dynamic Organizations by Galbraith, Downey and Kates, published by JosseyBass in 2002, for tools to help translate strategy into criteria.) Each organizational form enables some activities to be performed well, often at the expense of other activities. Choosing organizational alternatives inevitably involves making tradeaoffs. Strategy dictates which activities are most necessary, thereby providing the basis for making the best tradeoffs in the organization design. Matrix organizations result when two or more activities must be accomplished without hindering the other. Rather than choosing the "or," matrix requires an embracing of the \"and.\" Companies want to be global m local. Structure The structure of the organization determines the placement of power and authority in the organization. Structure policies fall into four areas: ' Specialization Structure The structure of the organization determines the placement of power and authority in the organization. Structure policies fall into four areas: Specialization ' Shape 0 Distribution of power * Departmentalization Specialization refers to the type and numbers of job specialties used in performing the work. Shape refers to the number of people constituting the departments (that is, the span of control) at each level of the structure. Large numbers of people in each department create at organization structures with few levels. Distribution of power, in its vertical dimension, refers to the classic issues of centralization or decentralization. In its lateral dimension, it refers to the movement of power to the department dealing directly with the issues critical to its mission. Departmentaiization is the basis for forming departments at each level of the structure. The standard dimensions on which departments are formed are functions, products, workow processes, markets, customers Processes lnformaon and decision processes cut across the organizaiion's structure; if structure is thought of as the anatomy of the organizaiion, processes are its physiology or funciioning. Management processes are both veriical and horizontal. Figure 2 Vertical processes Vertical processes, as shown in Figure 2 allocate the scarce resources of funds and talent. Vertical processes are usually business planning and budgeiing processes. The needs of different departments are centrally collected, and priorities are decided for the budgeting and allocaiion of the resources to capital, research and development, training, and so on. These management processes are central to the effective functioning of matrix organizations. They need to be supported by dual or multidimensional information systems. A Rewards The purpose of the reward system is to align the goals of the employee with the goals of the organization. It provides motivation and incentive for the completion of the strategic direction. The organization's reward system defines policies regulating salaries, promotions, bonuses, prot sharing, stock options, and so forth. A great deal of change is taking place in this area, particularly as it supports the lateral processes. Companies are now implementing payforskill salary practices, along with team bonuses or gain sharing systems. There is also the burgeoning practice of offering non monetary rewards such as recognition or challenging assignments. The Star ModelTM suggests that the reward system must be congruent with the structure and processes to influence the strategic direction. Reward systems are effective only when they form a consistent package in combination with the other design choices. People This area governs the human resource policies of recruiting, selection, rotation, training, and development. Human resource policies in the appropriate combinations produce the talent required by the strategy and structure of the organization, generating the skills and mindsets necessary to implement the chosen direction. Like the policy choices in the other areas, these policies work best when they are consistent with the other connecting design areas. Human resource policies also build the organizational capabilities to execute the strategic directions. Flexible organizations require flexible people. Crossfunctional teams require people who are generalists and who can Implications of the Star model" As the layout of the Star ModelTM illustrates, structure is only one facet of an organization's design. This is important. Most design efforts invest far too much time drawing the organization chart and far too little on processes and rewards. Structure is usually overemphasized because it affects status and power, and a change to it is most likely to be reported in the business press and announced throughout the company. However, in a fashchanging business environment, and in matrix organizations, structure is becoming less important, while processes, rewards, and people are becoming more important. uvercomlng negatlves Inrougn unlgn One of the uses of the Star ModelTM is to use it to overcome the negatives of any structural design. That is, every organizational structure option has positives and negatives associated with it. If management can identify the negatives of its preferred option, the other policies around the Star ModelTM can be designed to counter the negatives while achieving the positives. Centralization can be used as an example. When the internet became popular, many units in some organizations began their own initiatives to respond to it. These organizations experienced the positives of decentralization. They achieved speed of action, involvement of people closest to the work and tailoring of the application to the work of the unit. They also experienced the negatives of decentralization. The many initiatives duplicated efforts and fragmented the company's response. There were multiple interfaces for customers and suppliers. They ran into difficulty in attracting talent and sometimes had to settle for less than top people. Most companies have responded by centralizing the activities surrounding the internet into a single unit. In so doing, they have reduced duplication, achieved scale economies and presented one face to the customer. They have combined many small internet units into one large one which is attractive for professional internet managers. But at the same time, decision making moves farther from the work, the central unit becomes an internal monopoly and the result can be lack of responsiveness to other organizational departments who are using the internet. To minimize the negatives of the central unit, the management of the