With a hollow structure, the organization
Multiple Choice
groups activities around similar products or services.
has a central core of key functions and outsources others to vendors who are less expensive or faster.
has a rigid nonadaptive structure.
assembles product chunks, or modules, provided by outside contractors.
The Correct Answer and Explanation is :
The correct answer is D: assembles product chunks, or modules, provided by outside contractors.
Explanation:
A hollow structure is a type of organizational structure that involves outsourcing non-core processes and activities to external vendors or contractors. This structure is also known as a network structure or modular organization. Companies using this model focus on maintaining only the core functions that provide strategic value while outsourcing other processes to specialized external partners. This approach enables the organization to remain lean, flexible, and cost-efficient.
In this model, the organization does not handle all aspects of production or service delivery in-house. Instead, it acts as a coordinator or integrator of different “modules” or “chunks” of work, which are outsourced to third-party providers. These modules are then assembled into a final product or service that the organization offers to its customers.
Key Features of a Hollow Structure:
- Outsourcing: Non-core functions like manufacturing, logistics, IT, and customer service are outsourced to external providers that specialize in those areas.
- Flexibility: By outsourcing non-core processes, the organization can quickly adapt to changes in the market or shifts in demand.
- Cost Efficiency: Organizations save costs by outsourcing to vendors who can perform the tasks more efficiently or at a lower cost due to economies of scale.
- Focus on Core Competencies: This structure allows companies to concentrate on activities that provide competitive advantages, such as product design, marketing, or innovation.
For example, a technology company might design a product in-house but outsource its manufacturing, distribution, and customer support. This way, the organization can stay agile and competitive in a rapidly changing environment.
In summary, a hollow structure involves assembling product chunks or modules provided by outside contractors, making it an effective strategy for leveraging external expertise while maintaining a streamlined internal operation.