Orgdesign.ch.+4

7/29/2019 Orgdesign.ch.+4

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Managing Organization Design.

Ch. 4

Structure, Environment, Fit



More Common Organization Structures

1. Functional Structures: Groups together people with similar skills who perform

similar tasks. e.g., - cottonweb.2. Divisional Structures : Groups together people working either on the same

product, in the same area, with similar customers, or on the same processes. e.g.,

GE, Coca Cola

3. Matrix Structures: Combines functional and divisional approaches. This has

horizontal lines of authority (in addition to vertical authority)on the basis of products or projects. e.g., Ford, Microsoft

4. Network Structures: An organization operating with a central core that is linked

through “networks” of relationships with outside contractors and suppliers of

essential services. e.g., Amazon

5. Team Structures: People having different expertise join together in order toachieve some common objective. There is no formal hierarchy between team

members. e.g., advertising companies, filmmaking. Teams are found within the

above four types of organizational structures.



Characteristics : Central Control, High expertise in various departments, Efficient use of

resources, Lack of communication between various departments, inflexibility to changing

conditions



Characteristics : Some decentralization, more flexible to environmental changes, improved

coordination, duplication of resources, some times unhealthy rivalry between divisions



Sample Divisional Structure – Region based



Characteristics : Better cooperation across functions, improved decision making, increased

flexibility, improved communication, some times confusing as there are two bosses for one

employee, power struggles.



Network Structures

Characteristics :High operating efficiency, high revenue to size ratio, firms can focus on

core competencies while outsourcing the rest, complex structures, high reliance on other

partners in the network



Team Based Organizations

1. These organizations use permanent and temporary teams to

achieve their objectives.

2. No formal hierarchy

3. Usually small in size

4. Different members have different expertise

5. High communication and flexibility

6. e.g., Advertising agencies, software houses, movie making



Remember:

In practice many of the organizations use a combination of these different

structures. So do not get confused if you find a functional organization in

which there are teams, or a divisional organization which outsources manyof its operation because of its good net-work.

A good question for you to ponder over is which of these structure is an

alternate to bureaucracy. And can this structure solve business and societal

problems on large scale.



Some theoretical justifications for different organizational

structures

Contingency

• In management and organization theory a contingency is something that

managers cannot avoid

• Arise from routines rather than from emergencies.

• Different organizations face different contingencies

• Most important contingencies

• Environment

• Technology

• Size

•This theory argues that, Organizations, no matter where they are, will havesimilar designs if they have similar contingencies

• Earlier writers such as Taylor assumed one best way to organize, irrespective

of contingencies



Contingencies

• Key assumptions

– Environment: The more certain and predictable the environments in which

organizations operate, the more probable it is that they will have

bureaucratic structures

–

Technology: As organizations adopt more routinized technologies – technologies with repetition and routines associated with them – they tend

to become more bureaucratic

– Size: As organizations become bigger, they become more bureaucratic



Environment

• What is environment of an organization?

• A mechanistic organization is most frequently to be found in

stable environments

•

E.g., any traditional factory in a traditional industry, such as agarment factory

• An organic organization is more likely to be found in firms that

are smaller, that operate in highly uncertain environments, andoriented to discovery and learning

• Constant innovation is required

• E.g., Google



Burns and Stalker’s StructuresBoth types have these bureaucratic dimensions but to different degrees.



Size

• The works of Austin School (Pugh and Hickson, 1976)

• Based on literature review and discussions with managers

•

Size matters

• The larger the organization the more bureaucratic it becomes



Technology

Technology is not just the machinery, but processes, organizational

relations, knowledge and skills

Woodward’s (1965) classification of technology,

1. Small Batch and unit production

2. Large batch and mass production

3. Process production



Mintzberg’s (1981) five types of organizational designs

1. Simple Structure

2. Machine Bureaucracy

3. Professional Bureaucracy

4. Divisional Form

5. Adhocracy



Questions?

Comments !

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