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Major Concerns in Organizing. Division of Labor (Differentiation) Coordination (Integration). Organizing Involves:. VERTICAL STRUCTURE - Coordination from Top to Bottom Who reports to whom? Vertical linkages Chain of Command Rules and Plans Information Systems. Organizing Involves:. - PowerPoint PPT Presentation
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Major Concerns in OrganizingMajor Concerns in Organizing Division of Labor (Differentiation)Division of Labor (Differentiation) Coordination (Integration)Coordination (Integration)
Organizing Involves:Organizing Involves:VERTICAL VERTICAL STRUCTURESTRUCTURE
- Coordination from Top to - Coordination from Top to Bottom Bottom
» Who reports to whom?Who reports to whom?» Vertical linkages Vertical linkages
Chain of CommandChain of Command Rules and PlansRules and Plans Information SystemsInformation Systems
Organizing Involves:Organizing Involves:HORIZONTAL STRUCTUREHORIZONTAL STRUCTURE
- Departmentalization- Departmentalization»Who works together?Who works together?»Horizontal linkages (for cross-Horizontal linkages (for cross-
functional communication)functional communication) Information systemsInformation systems Direct contact (liaisons, etc.)Direct contact (liaisons, etc.) Task forcesTask forces Full time integratorsFull time integrators TeamsTeams
Departmentalization TypesDepartmentalization Types Internal Operations Internal Operations
OrientedOriented– FunctionalFunctional– Network (Virtual)Network (Virtual)
Output OrientedOutput Oriented– DivisionalDivisional
» ProductProduct» GeographicGeographic» CustomerCustomer
– Team (Cluster)Team (Cluster)
CombinationsCombinations– Hybrid Hybrid
» different types at different types at differentdifferent places in an places in an org.org.
– Matrix (Multi-Matrix (Multi-focused)focused)
» different types different types simultaneously at the simultaneously at the samesame places in an org. places in an org.
Functional ApproachFunctional ApproachDepartments based on similar activities, skills Departments based on similar activities, skills and resource use.and resource use.
CEOCEO
VPVPFinanceFinance
VPVPProductionProduction
VPVPMarketingMarketing
Divisional ApproachDivisional ApproachDepartments based on working on similar Departments based on working on similar output (product/geography/customer). output (product/geography/customer). Functions (e.g., marketing) are split among the Functions (e.g., marketing) are split among the divisions.divisions.
CEOCEO
VPVPBeerBeer
VPVPComputersComputers
VPVPLawnmowersLawnmowers
Functions (e.g., marketing) are split Functions (e.g., marketing) are split among the divisions.among the divisions.
Exam ple: Food & B everage M anufacturing
Marketing F inance Manufacturing
G eneral ManagerFoods D ivis ion
Marketing Finance Manufacturing
G eneral ManagerSoft D rink s D ivis ion
President
Departmentalization by Division Departmentalization by Division (Product)(Product)
Geographic divisions Geographic divisions All functional skills in each regionAll functional skills in each region
C orp ora teH ead q u arte rs
C orp ora teF in an ce
V P E u rop e
E as t C oas tR eg ion
M an u fac tu rin g F in an ce M arke tin g
C en tra lR eg ion
W es t C oas tR eg ion
V P N orth A m eric a V P F ar E as t
P res id en t
Exam ple : C om puter M anufacturer
Marketing Sales F inance
G enera l ManagerC om m ercia l Market
Marketing Sales F inance
G eneral ManagerC onsum er Market
P resident
Departmentalization by CustomerDepartmentalization by Customer
Functional ApproachFunctional Approach Advantages:Advantages:
– Efficient use of resources Efficient use of resources – Economies of ScaleEconomies of Scale– In-depth skill specializationIn-depth skill specialization
Disadvantages:Disadvantages:– Poor communication among departmentsPoor communication among departments– Slow response to external changesSlow response to external changes– Loyalty more to function than customer or Loyalty more to function than customer or
the whole organizationthe whole organization
Divisional ApproachDivisional Approach Advantages:Advantages:
– Quicker changes in an unstable environmentQuicker changes in an unstable environment– More in touch with customersMore in touch with customers
Disadvantages:Disadvantages:– Duplication of resources needed across Duplication of resources needed across
divisions (i.e., Costs)divisions (i.e., Costs)» Competition for resources among divisionsCompetition for resources among divisions» More managers neededMore managers needed
– Less professional specializationLess professional specialization
Project CProject CManagerManager
Project BProject BManagerManager
Project AProject AManagerManager
EngineeringEngineeringManagerManager
MarketingMarketingManagerManager
SoftwareSoftwareManagerManager
e.g., Functional and Product structures combined.e.g., Functional and Product structures combined.Employees are assigned to a specific project Employees are assigned to a specific project team and have a permanent functional unitteam and have a permanent functional unit
Matrix StructureMatrix Structure
PresidentPresident
8 - 1414
Global Matrix Structure
CanadianDivision
Individual business division
Automobileproductgroup
Chemicalsproductgroup
Consumergoodsproduct group
North American Area
UnitedStatesDivision
MexicanDivision
European Area
BritishDivision
FrenchDivision
Pacific Area
JapaneseDivision
TTaiwanDivision
Matrix Structure: General Motors’ ITMatrix Structure: General Motors’ IT
Matrix ApproachMatrix Approach Two chains of command simultaneously (e.g., Two chains of command simultaneously (e.g.,
functional and product or product and geog.)functional and product or product and geog.) To get the advantages of both structures. For To get the advantages of both structures. For
example: Functional (efficiency, high example: Functional (efficiency, high specialization) and Divisional Structures specialization) and Divisional Structures (decentralized decision making)(decentralized decision making)
Often used with sophisticated technology, fast-Often used with sophisticated technology, fast-changing environment and/or multinational changing environment and/or multinational firmsfirms
Disadvantages of MatrixDisadvantages of Matrix Violates the unity of command conceptViolates the unity of command concept Many meetings to coordinate activities Many meetings to coordinate activities High conflict between two sides of matrixHigh conflict between two sides of matrix Need for extensive human relations Need for extensive human relations
trainingtraining
Team ApproachTeam Approach Cross-functional teams (Clusters) Cross-functional teams (Clusters)
consist of employees from various consist of employees from various functional departments functional departments
Teams typically have more decision Teams typically have more decision making power than previously held by making power than previously held by workers at their levels.workers at their levels.
Team StructureTeam StructureCEOCEO
FunctionalFunctional ManagersManagers
SalesSales DesignDesign ProductionProduction
Product A Team Product B Team Product C Team
=
= Team member
Product Team Manager
Team ApproachTeam Approach AdvantagesAdvantages
– More ideas and skills availableMore ideas and skills available– Quicker response time (than centralized)Quicker response time (than centralized)– Better moraleBetter morale– Reduced administrative overheadReduced administrative overhead
DisadvantagesDisadvantages– ConflictConflict– Time and resources spent on meetingsTime and resources spent on meetings
Network ApproachNetwork Approach Organization (Virtual) divides major Organization (Virtual) divides major
functions among separate companies functions among separate companies brokered by a small headquarters brokered by a small headquarters organizationorganization
Somewhat like a Somewhat like a functional functional organization.organization.
CoreCoreFirmFirm
(U.S.A.)(U.S.A.)
ProductProductDevelopmentDevelopment
FirmFirm(France)(France)
MarketingMarketingFirmFirm
(U.K.)(U.K.)
CustomerCustomerServiceService
FirmFirm(U.S.A.)(U.S.A.)
ProductionProductionFirmFirm
(China)(China)AccountingAccounting
FirmFirm(U.S.A.)(U.S.A.)
Network Organizational StructureNetwork Organizational Structure
Network ApproachNetwork Approach AdvantagesAdvantages
– Global competitiveness, especially by small Global competitiveness, especially by small firmsfirms
– FlexibilityFlexibility– Reduced CostsReduced Costs
DisadvantagesDisadvantages– No hands-on controlNo hands-on control– Limited loyalty among member firmsLimited loyalty among member firms
Designs for Global OperationsDesigns for Global Operations Basic Global StructuresBasic Global Structures
– Global Global ProductProduct Division Structure Division Structure» Meganational StrategyMeganational Strategy
Diverse products each sold in many countriesDiverse products each sold in many countries– Global Global GeographicGeographic Division Structure Division Structure
» Multidomestic StrategyMultidomestic Strategy Products/services tailored to specific countries/regionsProducts/services tailored to specific countries/regions
– Global Global MatrixMatrix Structure Structure» Transnational StrategyTransnational Strategy
Global Integration with Local ResponsivenessGlobal Integration with Local Responsiveness– Global Global FunctionalFunctional Structure Structure
» Goal: Tight, centralized controlGoal: Tight, centralized control (Rare)(Rare)