Management: Science, Theory and Practice

A Global and Entrepreneurial Perspective

MANAGEMENT

PRINCIPLES OF MANAGEMENT

Sr. No.Chapter No.Chapter Heading11Management: Science, Theory and Practice (27th September 2010)24Essentials of Planning and Managing by Objectives (4th Oct)35Strategies, Policies and Planning Premises (11th Oct)46Decision Making (18th Oct)57The Nature of Organizing, Entrepreneuring, and Reengineering (25th Oct)68Organization Structure: Departmentation (1st Nov)79Line/ Staff Authority, Empowerment and Decentralization810Effective Organizing and Organization Culture914Human Factors and Motivation1015Leadership1116Committees, Teams and Group Decision Making1218The System and Process of ControllingSessional EvaluationExternal Evaluation1515205050Quiz per ClassAssignment & PresentationMid-termTotal SessionalExternal Exam

Planning

Organizing

Leading

Controlling

Organization Structure: Departmentation

Chapter 6

TABLE OF CONTENTS

DEPARTMENTATION BY ENTERPRISE FUNCTION

DEPARTMENTATION BY TERRITORY OR GEOGRAPHY

DEPARTMENTATION BY CUSTOMER GROUP

DEPARTMENTATION BY PRODUCT

MATRIX ORGANIZATION

STRATEGIC BUSINESS UNITS

xORGANIZATION STRUCTURES FOR THE GLOBAL ENVIRONMENT

THE VIRTUAL ORGANIZATION

xTHE BOUNDARYLESS ORGANIZATION

CHOOSING THE PATTERN OF DEPARTMENTATION

QUIZ

WHAT DEPARTMENTS WOULD YOU LIKE TO HAVE IN YOUR FUTURE IT ORGANIZATION?

NAME ANY

DEPARTMENTATION BY ENTERPRISE FUNCTION

Departmentation: Grouping of activities according to the functions of an enterprise, such as production, sales and financing. Functions may be production, sales, finance, Human Resources, IT, Technology, Marketing, engineering etc

Functional departmentFound in Not found inProductionManufacturing companyMadrisahs, schools, transportSalesDistribution, Telecommunication, FMCGsNGOsAdvantagesDisadvantagesFunctional departmentation is a logical reflection of functionsDe-emphasizes overall company objectivesMaintains power and prestige of major functionsOverspecializes and narrows view points of key personnelFollows principle of occupational specializationReduces coordination between functionsSimplifies trainingResponsibility for profits is at the top onlyFurnishes means of tight control at topSlow adaptation to changes in the environmentLimits development of general managers

A functional

Organization

President

Production

Finance

Assistant to president

Personnel

Engineering

Marketing

Market Research

Marketing Planning

Advertising and promotion

Sales Administration

Sales

Engg Administration

Preliminary design

Electrical engg

Mechanical engg

Hydraulic engg

Packaging

Quality control

Production Planning

Industrial engineering

Production engineering

Purchasing

Tooling

General Production

Financial Planning

Budgets

General Accounting

Cost Accounting

Statistics and data processing

DEPARTMENTATION BY TERRITORY OR GEOGRAPHY

Grouping of activities by area or territory is common in enterprises operating over wide geographic areas for example automobile assembling, chain retailing, wholesaling, oil refining, postal service, courts etc

AdvantagesDisadvantagesPlaces responsibility at lower levelRequires more persons with general manager abilitiesPlaces emphasis on local markets and problemsTends to make maintenance of economical central services difficult and may require services such as personnel or purchasing at the regional levelTakes advantage of economies of local operationsIncreases problem of top management controlBetter face to face communication with local interestsFurnishes measurable training ground for general managers

A territorial or geographical Organization

Finance

Purchasing

Personnel

Eastern Region

Marketing

Southeast region

Central Region

Southwest region

Western region

President

Personnel

Accounting

Production

Engg

Sales

DEPARTMENTATION BY CUSTOMER GROUP

Grouping of activities that reflects a primary interest in customers for example consumer banking, corporate banking, wholesale super stores (macro), Glow, Djuice etc

AdvantagesDisadvantagesEncourages concentration on customer needsMay be difficult to coordinate operations between competing customer demandsGives customer feeling that they have an understanding supplier (banker for instance)Requires managers and staff expert in customer problemsDevelops expertise in customer areasCustomer groups may not always be clearly defined

President

Community-city banking

Real Estate & Mortgage Loans

Corporate Banking

Institutional Banking

Agricultural Banking

DEPARTMENTATION BY PRODUCT

Grouping of activities according to products or product lines especially in multiline, large enterprises

AdvantagesDisadvantagesPlaces attention and effort on the product lineRequires more persons with GM abilitiesFacilitates use of specialized capital, facilities, skills and knowledgeTends to make maintenance of economical central services difficultPermits growth and diversity of products and servicesPresents increased problem of top management controlImproves coordination of functional activitiesPlaces responsibility for profits at the divisional levelFurnishes measurable training ground for general managers

A Product Organization grouping

President

Marketing

Instrument division

Indicator lights division

Industrial tools division

Electronic meter division

Personnel

Purchasing

Finance

Engg

Production

Accounting

Sales

Engg

Production

Accounting

Sales

Engg

Production

Accounting

Sales

Engg

Production

Accounting

Sales

MATRIX ORGANIZATION

the combining of functional and project or product patterns of departmentation in the same organization for example installation of a data processing system, construction, engineering etc

AdvantagesDisadvantagesOriented towards end resultsConflict in organization authority existsProfessional identification is maintainedPossibility of disunity of command existsPinpoints product-profit responsibilityRequires manager effective in human relations

Project A Manager

Project B Manager

Project C Manager

Project D Manager

Matrix organization:

in engineering

Director of Engg

Chief of Preliminary Design

Chief Mechanical Engineer

Chief Electrical Engineer

Chief Hydraulic Engineer

Chief Metallurgical engineer

STRATEGIC BUSINESS UNITS

Distinct businesses set up as units in a larger company to ensure that certain products or product lines are promoted and handles as through each was an independent business

To be an SBU, the unit must:

have its own mission, distinct from others

Have definable group of competitors

be able to prepare its own integrative parts

manage its own resources in key areas

be of appropriate size

Potential problems

The allocation of resources to individual SBUs can result in underinvestment in core competencies (such as in engines in automobiles) that benefit the total organization

The SBU managers may tend to hide talented people rather than lend them to another SBU

THE VIRTUAL ORGANIZATION

A rather loose concept of a group of independent firms or people that are connected through, usually information technology

Benefits:

These operate with minimal HR expense

the competencies of remotely operating parts or people or other organizations are accessible

Organizations are flexible

Reduced risks involved

These can respond rapidly to market needs

Disadvantage:

The other competitors have the room to take advantage of the same competencies as well

The virtual library, or virtual university or people working from home for organizations are few examples

CHOOSING THE PATTERN OF DEPARTMENTATION

Keeping in mind the following helps the managers to decide on the type of department they choose

The situation the organization is facing

What kind of jobs are to be done

Who are people and what are their personalities

What is the technology employed in the department

What kind of customers they have

What are the internal and external factors of the organization

What are the goals and objectives of the organization

What are the advantages and disadvantages of each type of departmentation

The types may be modified depending upon the situation

A mixed type of departmentation may also be adopted