Organizing ion Srtructure

8/2/2019 Organizing ion Srtructure

http://slidepdf.com/reader/full/organizing-ion-srtructure 1/35

Understanding

Organisations



Organizational Design Defined

A plan for arranging and

coordinating the activities

of an organization for thepurpose of fulfilling its

mission and achieving its

goals.



Components of Organizational

Design



Organizational Structure

Defines the primary reporting relationships

that exist within an organization.

The chain of command and hierarchy of

responsibility, authority, and accountability are

established through organizational structure.



Common Forms of Organizational

Structure

Functional structure

Divisional structure

Matrix structure



Functional Structure

Members of the organization are groupedaccording to the particular function that they

perform within the organization. Appropriate when an organization’s greatest

source of complexity comes from the diversetasks that must be performed rather than fromits products, geographic markets, or consumergroups.



Example of a Functional

Structure



Advantages

Facilitates specialization

Cohesive work groups

Improved operational

efficiency

Functional Structure: Advantages



Functional Structure: Disadvantages

Disadvantages

Focus on departmental vs.

organizational issues

Difficult to develop generalistsneeded for top-level

management

Only top-level management heldaccountable for profitability





Matrix structure


Structure



Types of Divisional Structure

Product divisional Most appropriate for organizations with relatively

diverse product lines that require specialized efforts toachieve high product quality.

Geographic divisional

Most appropriate for organizations with limitedproduct lines that either have wide geographiccoverage or desire to grow through geographicexpansion.

Customer divisional

Most appropriate for organizations that have separate

customer groups with very specific and distinct needs.



Product Divisional Structure



General Mgr.CentralDistrict

General Mgr.SouthernDistrict

General Mgr.WesternDistrict

General Mgr.NorthernDistrict

General Mgr.EasternDistrict

Chief Executive

District StaffPersonnelAccounting & Control

Corporate StaffFinance & AccountingPersonnelMarketingLegalPlanningResearch & Development

MarketingProductionEngineering

Geographic Organizational Structure



Departmentation by customers

Banks

MD

CommunityCity banking

Corporatebanking

Institutionalbanking

Real estate & Mortgage loans

Agriculturalbanking





Matrix structure


Structure



Matrix Structure

A structure in which the tasks of the

organization are grouped along two

organizational dimensions simultaneously.

Examples include:

Product/functionProduct/geographic region



Vice President,Production

Vice President,Engineering

Vice President,Purchasing

Vice President,Administration

Chief Executive Officer

ProjectManager

AEngineering

StaffProduction

StaffPurchasing

AgentAdministration

Coordinator

Project

ManagerB

EngineeringStaff

ProductionStaff

PurchasingAgent

AdministrationCoordinator

ProjectManager

A

Engineering

Staff

Production

Staff

Purchasing

Agent

Administration

Coordinator

Matrix Organizational Structure



Matrix Structure: Advantages

Advantages

Can achieve simultaneous

objectives

Managers focus on two

organizational dimensions,

resulting in more specific job

skills



Matrix Structure: Disadvantages

Disadvantages

Complex, leading to

difficulties in implementation

Behavioral difficulties from“two bosses”

Time consuming from a

planning/coordinationperspective



STRATEGIC BUSINESS

UNITS

Some firms encounter difficulty in evaluating and

controlling the operations of their divisions as the

diversity, size, and number of these units continue to

increase.

Under these conditions, a firm may add another layer

of management to improve strategy implementation,

to promote synergy, and to gain greater control overthe firm’s diverse business interest.

This can be accomplished by creating groups that

combine various divisions (or parts of some

divisions) in terms of common strategic elements.



STRATEGIC BUSINESS UNITS

Contd...

These groups, commonly called strategic business

units (SBUs), usually are based on the independent

product-market segments served by the firm.

The SBU structure’s main value appears to be that it

provides a way for the largest companies to regain

focus in different parts of their business that werecentral to earlier success yet which became “lost” or

dysfunctional in the complexity and size brought on

by the company’s success.



Overall organizational design is defined by

three primary components:

Organizational structure

Integrating mechanisms

Locus of decision making


Design



Managing Complexity Through

Integration

Interdependence is the degree to which work groups are interrelated.

Three primary levels of work groupintegration:

Pooled interdependence

Sequential interdependence

Reciprocal interdependence



B

C

D

A

F

E

Occurs when organizational units have a

common resource but no interrelationship with

one another.

Pooled Interdependence

Head-

quarters



Sequential Interdependence

Occurs when organizational units must

coordinate the flow of information,

resources, and tasks from one unit toanother.

A B C



Occurs when

information, resources,

and tasks must be

passed back and forth

between work groups.

Reciprocal Interdependence

A

C

E F

D

B



Integrating Mechanisms

Methods for managing the flow of information,resources, and tasks within the organization.

Three major categories of integrating

mechanisms are:General management systems.

Methods of increasing coordination

potential.Methods of reducing the need for

coordination.



General Management Systems

Some coordination of work units may beachieved through the development of generalmanagement systems such as:

The managerial hierarchy

Rules and procedures

Plans and goals

Such mechanisms form the foundation of anorganization’s integration system.



Increasing Coordination Potential

Two popular mechanisms for increasing coordination

potential both vertically and horizontally in the

organization are information systems and lateral

relationships.

Information systems facilitate the flow of

information up and down the traditional chain

of command and across organizational units.

Lateral relationships exist across work unitsand serve as mechanisms for exchanging

decision-making information.



Overall organizational design is defined by

three primary components:

Organizational structure

Integrating mechanisms

Locus of decision making


Design



Locus of Decision Making

Locus of decision making refers to the

degree to which decision making iscentralized versus decentralized.



Centralized Decision Making

Advantage

Gives top-level management maximum

control.

Disadvantage

Limits the organization’s ability torespond quickly and effectively tochanges in the environment.



Decentralized Decision Making

Advantage

Organizations can respond to

environmental change more rapidly andeffectively because the decision makersare the people closest to the situation.

Disadvantage

Top-level managers lose some control.



Mechanistic Vs. Organic Systems

Mechanistic Systems

Highly centralized organizations in whichdecision-making authority rests with top-levelmanagement.

Organic Systems

Decentralized organizations that push decision

making to the lowest levels of the organizationin an effort to respond more effectively toenvironmental change.



What do you think would be the major form of

departmentation in the following organisations?

Why?

An international company operating in twenty-

five countries with a limited product line

An engineering-design organisation that designs

large projects, such as oil fields or airports.

A medium-sized manufacturing company with a

single major product.

A large consumer – products organisation selling

throughout the India.

Organizing ion Srtructure

Documents

Transcript of Organizing ion Srtructure