Organization Structure and Management Systems - …degravel/MGT693/Pwpt C… · PPT file · Web...
Transcript of Organization Structure and Management Systems - …degravel/MGT693/Pwpt C… · PPT file · Web...
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Organization Structure and Management Systems
• Evolution of the corporation• Principles of organizational design• The role of hierarchy: bureaucratic
control vs. modular integration• Alternative structural forms• Management systems
OUTLINE
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Evolution of the Modern Corporation
The businessenvironment
Organizationalconsequences
Strategic changes
Late 19thcentury
Early19thcentury
Early20thcentury
Local markets Firms specialized & Small firms.Transport slow focused on local Simple manage- Limited mechanization markets ment structures
Introduction of Geographical and Functional struct-railroads, telegraph vertical expansion ures. Line/staffindustrialization separation. Accou-
nting systems
Excess capacity in Product & Development of distribution. Growth multinational multidivisionalof financial institut- diversification corporationions & world trade
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Board of Directors
President Executive Committee
Financial Staff
Legal Department
General Advisory Staff
GM Acceptance Corporation
Chevrolet Division
SheridanDivision
Canadian Division
Oldsmobile Division
GM Truck Division
GM Export Company
Cadillac Division
Buick Division
Inter-company
Parts Division
Oakland Division
Samson Tractor Division
Scripps Booth Corp.
Source: A.P. Sloan, My Years with General Motors, Orbit Publishing, 1972, p. 57.
General Motors’ Organization Structure, 1921
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The Basic Tasks of Organization
THE ORGANIZATIONAL CHALLENGE: To design structure & systems that: Permit specialization Facilitate coordination by grouping individuals & link
groups with systems of communication, decision making, & control
Create incentives to align individual & firm goals
Achieving high levels of productivity requires SPECIALIZATION
Specialization by individuals necessitates COORDINATION
For coordination to be effective requires COOPERATION
But goals of employees == goals of owners THE AGENCY PROBLEM
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(a) Self Organizing Team:
10 interactions
(b) Hierarchy:
4 interactions
Hierarchy Economizes on Coordination
But what about effectiveness of coordination?--Depends upon the organization’s task
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Tightly-coupled, integrated system: Change in any part of the system requires system-wide adaptation
Loose-coupled, modular hierarchy: partially-autonomous modules linked by standardized interfaces permits decentralized adaptation and innovation
Hierarchy of Loosely-Coupled Modules Allows Flexible Adaptation
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Weber’s Principles of Bureaucracy
• Rational-legal authority• Specialization of labor• Hierarchical structure• Coordination and control through rules and
standard operating procedures• Standardization employment practices• Separation of jobs and people• Formalization of administrative acts, decisions
and rules
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Mechanistic and Organic Forms
FEATURE MECHANISTIC ORGANIC
Task definition Rigid & highly Flexible; less specialized specialized
Coordination Rules & directives Mutual adjustment.l& control imposed from the top Cultural control
Communication Mainly vertical Horizontal & vertical
Commitment To immediate superior To the organization & its
& loyalty goals & values
Environmental Stable with low tech- Dynamic, ambiguous, context nological uncertainty high technological
uncertainty
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Designing the Hierarchy: The Basis for Defining Organizational Units and their Relationships
Units may be defined on the basis of Common Tasks, Products, Geographical Proximity, or Process/Function
Critical issue: Intensity of Coordination—Employees with the greatestinterdependence should be grouped into same organizational unit.
Additional criteria: Economies of Scale, Economies of Utilization,Learning, Standardization of Control Systems
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Board of Directors
President’s Council Corporate Functions
North American Operations
Delphi Automotive Systems
International Operations
GM Acceptance Corporation
Hughes Electronics
Midsize & Luxury Car Group
Small Car Group
GM Power Train Group
Vehicle Sales, & Marketing Group
Development & Technical Cooperation Group
GM Europe
Asian & Pacific Operations
Latin American, African, & Middle East Operation
General Motors’ Organization Structure, 1997
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Corporate Executive OfficeChairman & CEO
Corporate Staff
Finance Business R&D Human LegalDevelopment Resources
GE AircraftEngines
GE Trans-portation
GEIndustrialSystems
GEPlastics
GEAppliances
GESupply
GE PowerSystems
GE MedicalSystems
GELighting
GE SpecialtyMaterials
NBC GE Capital
26 businesses organized into 5 segments: Consumer Mid-market Specialized Specialty EquipmentServices Financing Financing Insurance Management
Service Divisions
General Electric’s Organization Structure, 2002
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Mobil Corporation, 1997
Board of Directors
CEO
Executive Office
North America M&R
Technology
Worldwide Chemicals
North America
Europe & CIS
Africa & Middle East
Asia/ Pacific
New Exploration
South America
Worldwide LNG & IPP
Support ServicesCorporate Center
Shipping
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Royal Dutch/Shell Group, 1994: A Matrix Structure
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Corporate
GuidelinesDraft
BusinessPlans
Discusswith
Corporate
RevisedBusiness
Plans
Corporate
Plan
Forecasts/Scenarios/
Planning assumptions
Approvalby
Board
Annual Performance
Targets
Performance
Review
CapexBudget
The Generic Strategic Planning Cycle