Organizational Structure and Controls
©2000 South-Western College Publishing
Structure TypesStructure Types
All organizations require some form of organizational All organizations require some form of organizational structure to implement and manage their strategiesstructure to implement and manage their strategies
Firms frequently alter their structure as they grow in Firms frequently alter their structure as they grow in size and complexitysize and complexity
Three basic structure types:Three basic structure types:
Functional StructureFunctional StructureMulti-divisional Structure (M-form)Multi-divisional Structure (M-form)
Simple StructureSimple Structure
Strategy & StructureStrategy & StructureGrowth PatternsGrowth Patterns
Sales Growth CoordinationSales Growth Coordinationand Control Problemsand Control Problems
Efficient implementationEfficient implementationof formulated strategyof formulated strategy
MultidivisionalMultidivisionalStructureStructure
Efficient implementationEfficient implementationof formulated strategyof formulated strategy
Sales Growth CoordinationSales Growth Coordinationand Control Problemsand Control Problems
Functional Functional StructureStructure
Simple Simple StructureStructure
Simple StructureSimple Structure
Owner / ManagerOwner / Manager
Owner/Manager makes all major decisions Owner/Manager makes all major decisions directly and monitors all activitiesdirectly and monitors all activities
Difficult to maintain this structure as Difficult to maintain this structure as the firm grows in size and complexitythe firm grows in size and complexity
* Production* Production* Finance* Finance
* Engineering* Engineering* Accounting* Accounting
* Sales & Marketing* Sales & Marketing* Human Resources* Human Resources
Functional StructureFunctional StructureFirst stage beyond a Simple StructureFirst stage beyond a Simple Structure
Appropriate for single or dominant-business firmsAppropriate for single or dominant-business firms
Allows specialization of tasksAllows specialization of tasks
Overcomes information processing limits of Overcomes information processing limits of single owner/managersingle owner/manager
Functional department heads report to Chief Functional department heads report to Chief Executive Officer who integrates decisions and Executive Officer who integrates decisions and actions from a company-wide point of viewactions from a company-wide point of view
Risks conflicts between myopic function managersRisks conflicts between myopic function managers
ProductionProductionFinanceFinance EngineeringEngineering AccountingAccounting Sales & Sales & MarketingMarketing
Human Human ResourcesResources
Functional StructureFunctional Structure
Chief Executive OfficerChief Executive Officer
Corporate Corporate FinanceFinance
Corporate Corporate R&DR&D
Corporate Corporate MarketingMarketing
Corporate Corporate Human Human
ResourcesResources
Strategic Strategic PlanningPlanning
MarketingMarketingEngineeringEngineering OperationsOperations PersonnelPersonnel AccountingAccounting
Functional Structure forFunctional Structure forCost LeadershipCost Leadership Strategy Strategy
Office of the PresidentOffice of the President
CentralizedCentralizedStaffStaff
• Operations is main functionOperations is main function
• Process engineering is Process engineering is emphasized rather than new emphasized rather than new product R&Dproduct R&D
• Formalized procedures allow Formalized procedures allow for low-cost culturefor low-cost culture
• Structure is mechanical; job Structure is mechanical; job roles are highly structuredroles are highly structured
Relatively large Relatively large centralized staff centralized staff coordinates coordinates functionsfunctions
MarketingMarketingNew New Product Product R&DR&D
OperationsOperations HumanHumanResourcesResources
FinanceFinance
R&DR&D MarketingMarketing
Functional Structure forFunctional Structure forDifferentiationDifferentiation Strategy Strategy
President andPresident andLimited StaffLimited Staff
• Marketing is the main function for tracking new product ideasMarketing is the main function for tracking new product ideas• New product R&D is emphasizedNew product R&D is emphasized• Most functions are decentralizedMost functions are decentralized• Formalization is limited to foster change and promote new ideasFormalization is limited to foster change and promote new ideas• Overall structure is organic; job roles are less structuredOverall structure is organic; job roles are less structured
Multi-Divisional StructureMulti-Divisional Structure
Each division is operated as a separate businessEach division is operated as a separate business
Appropriate for related-diversified businessesAppropriate for related-diversified businesses
Key task of corporate managers is exploiting synergies Key task of corporate managers is exploiting synergies among divisionsamong divisions
Managers use a combination of strategic controls and Managers use a combination of strategic controls and financial controlsfinancial controls
Managers try to strike a balance between:Managers try to strike a balance between:Competing among divisions for scarce capital resourcesCompeting among divisions for scarce capital resourcesCreating opportunities for cooperation to develop synergiesCreating opportunities for cooperation to develop synergies
The goal is to maximize overall firm performanceThe goal is to maximize overall firm performance
Multi-Divisional StructureMulti-Divisional Structure
Balance on these dimensions may change over timeBalance on these dimensions may change over time
The decision-making of managers in a Multi-The decision-making of managers in a Multi-Divisional structure may be:Divisional structure may be:
Centralized or DecentralizedCentralized or DecentralizedBureaucratic or Non-bureaucraticBureaucratic or Non-bureaucratic
Changes in strategyChanges in strategyDegree of diversificationDegree of diversificationGeographic scopeGeographic scopeNature of competitionNature of competition
Structure will evolve over time with:Structure will evolve over time with:
DivisionDivision DivisionDivision DivisionDivision DivisionDivision
ProductionProductionFinanceFinance EngineeringEngineering AccountingAccounting Sales & Sales & MarketingMarketing
Human Human ResourcesResources
Multi-Divisional StructureMulti-Divisional Structure
Chief Executive OfficerChief Executive Officer
Corporate Corporate FinanceFinance
Corporate Corporate R&DR&D
Corporate Corporate MarketingMarketing
Strategic Strategic PlanningPlanning
Corporate Corporate Human Human
ResourcesResources
PresidentPresident
Strategic Strategic Business Business Unit AUnit A
SBU FormSBU FormRelated-Linked StrategyRelated-Linked Strategy
Corporate Corporate FinanceFinance
Corporate Corporate R&DR&D
Corporate Corporate MarketingMarketing
Strategic Strategic PlanningPlanning
Corporate Corporate Human Human
ResourcesResources
DivisionDivisionDivisionDivisionDivisionDivision
Strategic Strategic Business Business Unit CUnit C
DivisionDivisionDivisionDivisionDivisionDivision
Strategic Strategic Business Business Unit BUnit B
Strategic Strategic Business Business Unit DUnit D
• Structural integration exists among divisions within SBUs, but not across SBUsStructural integration exists among divisions within SBUs, but not across SBUs• Each SBU may have its own budget for staff to foster integrationEach SBU may have its own budget for staff to foster integration• Corporate headquarters staff serve as consultants to SBUs and divisionsCorporate headquarters staff serve as consultants to SBUs and divisions
Competitive FormCompetitive FormUnrelated /Holding Company StrategyUnrelated /Holding Company Strategy
PresidentPresident
LegalLegalAffairsAffairs
FinanceFinance
• Corporate headquarters has a small staffCorporate headquarters has a small staff• Finance and auditing are the most prominent functions in the headquartersFinance and auditing are the most prominent functions in the headquarters• Divisions are independent and separate for financial evolution purposesDivisions are independent and separate for financial evolution purposes• Divisions retain strategic control, but cash is managed by the corporate officeDivisions retain strategic control, but cash is managed by the corporate office• Divisions compete for corporate resourcesDivisions compete for corporate resources
AuditingAuditing
DivisionDivisionDivisionDivisionDivisionDivisionDivisionDivision DivisionDivision
Cost LeadershipCost LeadershipDecentralizationDecentralizationDifferentiationDifferentiationCentralizationCentralization
Multi-Divisional StructureMulti-Divisional StructureThe choice between centralization and decentralization The choice between centralization and decentralization is frequently based on the business-level strategy is frequently based on the business-level strategy implemented in each divisionimplemented in each division
Complex Multi-Divisional structure firms may be Complex Multi-Divisional structure firms may be simultaneously centralized and decentralized , simultaneously centralized and decentralized , depending upon the various business-level strategies depending upon the various business-level strategies employed throughout the firm’s individual businessesemployed throughout the firm’s individual businesses
Multi-Divisional structure firms use a combination of:Multi-Divisional structure firms use a combination of:
Financial ControlsFinancial ControlsStrategic Controls Strategic Controls
A Structural evolution based on A Structural evolution based on GeographicGeographic lines usually lines usually implies a implies a Multi-DomesticMulti-Domestic International Strategy International Strategy
Evolution of Multi-Divisional StructureEvolution of Multi-Divisional Structure
North North AmericaAmerica AustraliaAustraliaEuropeEurope AsiaAsia Latin Latin
AmericaAmerica AfricaAfrica
Product AProduct A Product BProduct B Product CProduct C Product DProduct D
Chief Executive OfficerChief Executive Officer
Corporate Office (Staff)Corporate Office (Staff)
Implementation of a Implementation of a MultidomesticMultidomestic Strategy StrategyWorldwideWorldwideGeographicGeographic
AreaAreaStructureStructure
MultinationalMultinationalHeadquartersHeadquarters
AsiaAsia UnitedUnitedStatesStates
LatinLatinAmericaAmerica EuropeEurope
AustraliaAustraliaMiddleMiddleEast/East/
AfricaAfrica
• Green circles indicate decentralization of operationsGreen circles indicate decentralization of operations• Emphasis is on differentiation by local demand to fit a cultureEmphasis is on differentiation by local demand to fit a culture• Corporate headquarters coordinates financial resources among Corporate headquarters coordinates financial resources among
independent subsidiariesindependent subsidiaries• The organization is like a decentralized federationThe organization is like a decentralized federation
Product AProduct A Product BProduct B Product CProduct C Product DProduct D
A Structural evolution based on A Structural evolution based on ProductProduct lines lines usually implies a usually implies a GlobalGlobal International Strategy International Strategy
Evolution of Multi-Divisional StructureEvolution of Multi-Divisional Structure
Chief Executive OfficerChief Executive Officer
Corporate Office (Staff)Corporate Office (Staff)
Implementation of a Implementation of a GlobalGlobal Strategy StrategyWorldwideWorldwide
ProductProductDivisionalDivisionalStructureStructure
• Green circle indicates centralization to coordinate information Green circle indicates centralization to coordinate information flow among worldwide productsflow among worldwide products
• Headquarters uses many intercoordination devices to facilitate Headquarters uses many intercoordination devices to facilitate global economies of scale and scopeglobal economies of scale and scope
• Headquarters also allocates financial resources cooperativelyHeadquarters also allocates financial resources cooperatively• The organization is like a centralized federationThe organization is like a centralized federation
MultinationalMultinationalHeadquartersHeadquarters
WorldwideWorldwideProductsProductsDivisionDivision
WorldwideWorldwideProductsProductsDivisionDivision
WorldwideWorldwideProductsProductsDivisionDivision
WorldwideWorldwideProductsProductsDivisionDivision
WorldwideWorldwideProductsProductsDivisionDivision
WorldwideWorldwideProductsProductsDivisionDivision
Strategic NetworksStrategic Networks
A Strategic Network is a grouping of organizations A Strategic Network is a grouping of organizations that has been formed to create value through that has been formed to create value through participation in an array of cooperative arrangements, participation in an array of cooperative arrangements, such as a strategic alliancesuch as a strategic alliance
A Strategic Center Firm often manages the networkA Strategic Center Firm often manages the network
The Strategic Center Firm identifies actions that The Strategic Center Firm identifies actions that increase the opportunity for each firm to achieve increase the opportunity for each firm to achieve success through its participation in the networksuccess through its participation in the network
The Strategic Center Firm creates incentives that The Strategic Center Firm creates incentives that reduce the probability of any single firm taking reduce the probability of any single firm taking advantage of its network partnersadvantage of its network partners
A Strategic NetworkA Strategic Network
StrategicStrategicCenterCenterFirmFirm
Network FirmsNetwork Firms
StrategicStrategicCenterCenterFirmFirm
Strategic Center Firm’s Critical FunctionsStrategic Center Firm’s Critical Functions
Strategic OutsourcingStrategic Outsourcing
Capability DevelopmentCapability Development
Technology SharingTechnology Sharing
Building Linkages to Building Linkages to Facilitate LearningFacilitate Learning
StrategicStrategicCenterCenterFirmFirm
Strategic OutsourcingStrategic Outsourcing
Center firm coordinates outsourcing among partners, Center firm coordinates outsourcing among partners, initiates actions and coordinates problem solvinginitiates actions and coordinates problem solving
StrategicStrategicCenterCenterFirmFirm
Strategic Center Firm’s Critical FunctionsStrategic Center Firm’s Critical Functions
Strategic OutsourcingStrategic Outsourcing
Capability DevelopmentCapability Development
Technology SharingTechnology Sharing
Building Linkages to Building Linkages to Facilitate LearningFacilitate Learning
Strategic center firm manages the development and sharing Strategic center firm manages the development and sharing technology-based ideas among network partnerstechnology-based ideas among network partners
Capability and TechnologyCapability and Technology
StrategicStrategicCenterCenterFirmFirm
Center firm attempts to develop each partner’s core Center firm attempts to develop each partner’s core competencies and provides incentives for network firms to competencies and provides incentives for network firms to share their capabilities and competencies with partnersshare their capabilities and competencies with partners
StrategicStrategicCenterCenterFirmFirm
Strategic Center Firm’s Critical FunctionsStrategic Center Firm’s Critical Functions
Strategic OutsourcingStrategic Outsourcing
Capability DevelopmentCapability Development
Technology SharingTechnology Sharing
Building Linkages to Building Linkages to Facilitate LearningFacilitate Learning
StrategicStrategicCenterCenterFirmFirm
Building Linkages to Facilitate LearningBuilding Linkages to Facilitate Learning
Strategic center firm emphasizes to partners the need to build Strategic center firm emphasizes to partners the need to build linkages between value chains and networks of value chains.linkages between value chains and networks of value chains.
The strategic network seeks to develop a competitive The strategic network seeks to develop a competitive advantage in primary or support activitiesadvantage in primary or support activities
IDEOLOGÍA
Partes Básicas de una Organización
Ápice Estratégico
Tecnoestructura
Núcleo de Operaciones
Personal de ApoyoLinea
Intermedia
Fuente: Based on Henry Mintzberg, The Structuring of Organizations (Englewood Cliffs, N. J.: Prentice-Hall, 1979) 215-297; and Henry Mintzberg, “Organization Design: Fashion or Fit?” Harvard Business Review 59 (Jan. – Feb. 1981): 103-116.
Formas de Organización• La Organización Empresarial• La Organización Máquina• La Organización Profesional • La Organización Diversificada• La Organización Innovadora• La Organización Misionaria• La Organización Política
Impulsos por tipos de configuración CONFIGURACIÓ
NPRINC MECANISMO DE COORDINACIÓN
PARTE CLAVE DE LA ORGANZACIÓN
IMPULSOS
Empresarial, nuevos negocios
Supervisión directa
Ápice Estratégico Liderazgo, Dirección
Máquina, banco, manufacturas
Procesos Standard
Tecnoestructutra Racionalización, Eficiencia
Profesional, consultoras
Habilidades Standard
Operaciones Profesionalización; Destreza
Diversificada, múltip. Negocios
Producción Standard
Linea Intermedia Fragmentación, Concentración
Innovadora, Inv & Desarrollo
Adaptación mutua
Apoyo Colaboración, Aprendizaje
Misionaria, ONG’s, Educación
Normas Standard Ideología Descentralización, Cooperación
Política, partidos políticos
Ninguna Ninguna La desunión, Competencia
Top Related