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hat is anhat is anrganizationrganizationStructuretructure= The framework of ActivitiesA sales organization defines duties, roles, rights,and responsibilities of sales people engaged insellingactivities meant for the effective execution of thesales function.
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What is the purpose of
O.S.Define the Role and ResponsibilityDefine the Line of Authority
Establish lines of communicationProvide for coordination and balance
Proper work distribution and removesambiguity
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3
How OrganizationalDesign Increases
Profitability
nhances aom pa ny s
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Building Blocks of
Organization StructureFormalization
Centralisation
DepartmentalisationChain of Command
Span of control
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Four basic type of
organisation Structure areFormal and informal
Tall and Flat
Line and staffCentralized and Decentralized
Horizontal and Vertical
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L e w i s S t o n e r P r e s i d e n t - O w
J a k e P r e s t o n
V i c e P r e s i d e n t
T w o S a l e s p e o
. IGURE 4 2 COMPUTE CORPORATION S LINE ORGANIZATION
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S t a f f
C h a r l e s T h o m p s o n
S a l e s M a n a g e r
J o h n F r i e d m a n
A d v e r t i s i n g / P r o m o t i o n
M a n a g e r
P e t e L i k
M a r k e t R
M a n a g e r
. IGURE 4 3 ALARM SYSTEM CORPORATION S FUNCTIONAL ORGANIZATIONAL DESIGN
L i n e J o h n A b b o t t
V i c e P r e s i d e n t o f M a
T e n S a l e s p e o p l e
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C e n tra liza tio n o r
D e ce n tra liza tio n :Authority patterns in organizationsCentralized Decision making retained in the
- .hands of upper level managersDecentralized
Decisions delegated to lower.levels in the organization
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C e n tra liza tio n
( )Structural Choice?A d v a n ta g e s o f d e ce n tra liza tio n R e d u c e d
in fo rm a tio n
o v e rlo a d o n .u p p e r m a n a g e rs In cre a se d
m o tiva tio n a n da cco u n ta b ility
th ro u g h ou t.o rg a n iza tio n
;Few e r m an ag erslo w e r
b u re a u cra tic
A d v a n ta g e s o fce n tra liza tio n
E a sie rco o rd in a tio n o f
o rg a n iza tio n a l.a ctiv itie s D e cisio n s fitte d to
broado rg a n iza tio n a l
.o b je ctiv e s E xe rcise o f stro n g
le a d e rsh ip in.crisis
Fa ste r d e cisio n
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H o rizo n ta l
D iffe re n tia tio nFo cu s is o n d ivisio n a n d g ro u p in g o f ta sks to
.m e e t b u sin e ss o b je ctiv e s
:S im p le stru ctu re C h a ra cte ristic o f sm a ll e n tre p re n e u ria l
.com p a n ie s E n tre p re n e u r ta kes o n m o st m a n a g e ria l
.ro le s .N o fo rm a l o rg a n iza tio n a rra n g e m e n ts
.H o rizo n ta l d iffe re n tia tio n is lo w
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V e rtica l D iffe re n tia tio n
( )S p a n o f co n tro l d ivisio n o f a u th o rity T h e n u m b e r o f su b o rd in a te s th a t a sin g le
.m a n a g e r d ire ctly m a n a g e sO rg a n iza tio n a l h ie ra rch y ch o ice s
Fla t stru ctu re s Fe w o rg a n iza tio n a l le v e ls W id e spa n s of con tro l
Ta ll stru ctu re s M a n y o rg a n iza tio n a l le v e ls N a rro w sp a n s of con tro l
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Types of DepartmentalizationFunctional
Product
Geographical
Process
Customer
.IGURE 4 4 TEXTRON CHEMICAL CORPORATION GEOGRAPIC SPECIALIZATION
M a n a g e r i a l
L e v e l
O p e r a t i n g
L e v e l
V i c e P r e s i d e n t
o f M a r k e t i n g
N a t i o n a l S a l e s
M a n a g e r
C e n t r a l D i v i s i o n a l
S a l e s M a n a g e r
6 R e g i o n a l S a l e s
3 0 D i s t r i c t S a l e s
2 4 0 S a l e s p e o p l e
E a s t e r n D i v i s i o n a l
S a l e s M a n a g e r
7 R e g i o n a l S a l e s
M a n a g e r s
3 5 D i s t r i c t S a l e s
2 4 0 S a l e s p e o p l e
W e s t e r n D i v i s i o
S a l e s M a n a g e r
5 R e g i o n a l S a l e s
2 5 D i s t r i c t S a l e
2 0 0 S a l e s p e o p l e
AM a n a g e r sA M a n a g e r s
A
M a n a g e r sB M a n a g e r sB M a n a g e r sB
C CC
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F u n c t i o n a l
G e o g r a p h i c
C u s t o m e r
P r o d u c t
P r e s i d e n t
V i c e P r e s i d e n tM a r k e t i n gV i c e P r e s i d e n tP r o d u c t i o n
U . S .M a r k e t i n gM a n a g e r
I n t e r n a t i o n a lM a r k e t i n gM a n a g e r
C o n s u m e rG o o d sM a n a g e r s
I n d u s t r i a lG o o d sM a n a g e r s
I n t e r n a t i o n a lS a l e sM a n a g e r
E u r o p e a nD i v i s i o n
L a t i nA m e r i c a nD i v i s i o n
A s i a n aA f r i c a nD i v i s i o
S o a p P r o d u c t sD i v i s i o n a lM a n a g e r
P a p e r P r o d u c t sD i v i s i o n a lM a n a g e r
F o o d P r o d u c t sD i v i s i o n a lM a n a g e r
E a s t e r nS a l e sD i v i s i o n
C e n t r a lS a l e sD i v i s i o n
W e s t e r nS a l e sD i v i s i o n
V i c e P r e s i d e n tE n g i n e e r i n g
.IGURE 4 5 MULTIPLE DESIGN FACTORS
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C u s t o m e r
S a l e s M a r k e t i n g M a n u f a c tT e c h n i c a l
S u p p o r t
S u p p l i e r S e l l i n g T e a m
. -IGURE 4 6 CROSS FUNCTIONAL SELLING TEAM
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D e sig n D e sig n
Environment
StrategicPlan
Culture
Technologyetermineesign
rorganizationastructure
etermineesignrorganizationa
structure
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Determinants of Structure
The environment: The quicker the
environment changes, the more problemsface managers.
Structure must be more flexible whenenvironmental change is rapid.
Usually need to decentralize authority.
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Determinants of Structure
Strategy: Different strategies requirethe use of different structures.
A differentiation strategyneeds a flexible structure, low
cost may need a more formalstructure.
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Determinants of Structure
Technology:The combination of skills, knowledge, tools,
equipment, computers and machines used in theorganization.
More complex technology makes it harder formanagers to regulate the organization. Technologycan be measured by:
Task Variety: new problems a managerencounters.
Task Analyzability: programmed solutionsavailable to a manager to solve problems.
High taskvariety and low analyzability presentmany unique problems to managers.
Flexible structure works best in these conditions.
Low taskvariety and high analyzability allowmanagers to rely on established procedures.
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Technology & Peoples Small Batch Technology:produces small
quantities of one-of-a-kind products.Based on the skills of the workers who need
a flexible structure.s Mass Production Technology:automated
machines make high volumes of standardproducts.Workers perform repetitive tasks so a
formal structure works well.s Continuous Process Technology:totally
mechanized systems of automatic machines.Workers must watch for unexpected
problems and react quickly. A flexiblestructure is needed here.
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Determinants of Structure
s Human Resources:the final factor affecting
organizational structure.Higher skilled workers who need to work
in teams usually need a more flexiblestructure.
Higher skilled workers often haveprofessional norms (CPAs, physicians).
Managers must take into account all four
factors (environment, strategic plan,technology and culture) when designing thestructure of the organization.
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DepartmentalizationTraditional view:
Jobs have to begrouped back
togetherMost
organizationswill use a
combination oftypes
Contemporary view:
Customerdepartmentaliza
tion is highlypopular
Cross-functionalteams are being
used in additionto rigidfunctionaldepartmentaliza
tion
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Structure
V . P . T V . P . C
V . P . M D i r e c t
C o r p . P
E x e c . V
F i n a n c e
S e n i o r
S t o r e s
D i r e c
T r a n s p
V . P .
D i s t r i b
S e n i o r
L o g i s t i
C l a r k J o
C E O
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Product Structure
W a s h i n g
D i v i s i o
L i g h t i n
D i v i s i o
T e l e v i s
D i v i s i o
C o r p o r M a n a g
C E O
C o r p o r
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Geographic Structure
N o r t
R e g
W e s
R e g
S o u t
R e g
E a s t
R e g
C o r pM a n a
C E O
C o r p o
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Market Structure
L a r g e B
C u s t o m
S m a l l B
C u s t o m
E d u c a t
I n s t i t u
I n d i v i d
C u s t o m
C o r p o
M a n a g
C E O
C o r p o r
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Matrix & Product Teams
Matrix structure:managers group people by
function and product teams simultaneously. Results in a complex network of reporting
relationships. Very flexible and can respond rapidly to
change. Each employee has two bosses which can
cause problems.Functional manager gives different
directions than product manager and
employee cannot satisfy both.Product Team Structure:no 2-way reporting
and the members are permanently assignedto the team and empowered to bring aproduct to market.
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Matrix Structure
CEOEO.unc.uncManagersanagers
Salesales Designesign Productiroductionnroductroduct
eam Aeam Aroductroduct
eam Beam Broductroduct
eam Ceam C
roduct Team
= wo boss employee
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Hybrid Structures
Many large organizations have divisionalstructureswhere each manager can selectthe best structure for that particular division.One division may use a functional structure,
one geographic, and so on.
This ability to break a large organization intomany smaller ones makes it much easier tomanage.
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21st Century Organizational
Trends
Globalization
Increasingly globalized sales, manufacturing,research, management
Movement from direct exports to having sales officesin different countries to having manufacturing to
all functions spread across the globeIncreasingly globalized labor market
Due to:
reduced cost and improved quality of
international transportation andcommunication
search for unsaturated markets
exploit regional cost and expertise differences
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21st Century Organizational
Trends
DiversityWorkforce getting more heterogeneous sexually,
racially, culturally, individually, etc.
Source of both innovation andconflict/communication problems
Need to cope with different styles of interaction,dress, presentation, physical appearance
Due to:
changing demographicsglobalization of the labor market
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21st Century Organizational
Trends
FlexibleOrganizational systems and processes and people
that can respond differently to different situations
Fewer detailed rules and proceduresGreater autonomy, encouragement for initiative
Customizable employment relationships:telecommuting, job sharing, mommy tracks, payfor skills
Lifetime employability, not lifetime employmentDue to:
differentiated customer needs -- filling themexactly is source of competitive advantage
increasing diversity in workplaceincreased pace of change in technology and
markets
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21st Century Organizational
Trends
FlatFewer levels of management,Workers empowered to make decisionsFewer differences in responsibility (not in pay)
across levels
Due to:need for speed, which makes it helpful to
empower employees to make decisions, whichmeans fewer managers are needed
changes in information technology mean lessneed for the communication and controlfunctions of middle managers
globalization means intensified competition,which increases the need to cut costs
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21st Century Organizational
Trends
NetworkedDirect communication across unit & firm
boundaries, ignoring chain of command
Cross-unit team structures
Outsourcing & downsizingStrategic alliances with competitors and othersNow have firms that are your competitors,
customers and collaborators all at the same
time
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21st Century Organizational
Trends
NetworkedClose coordination among firms (e.g., JIT systems)
and information sharing (open computer systems)
Across the board contact with customers, not justofficial boundary spanners
CustomizationDecentralizationDue to:
new information technologies, especiallygroupware, client-server, distributed
computingfast changing customer needs and competitor
offeringsmore complicated products require better
integration of manufacturing, design, andmarketing functions
Coordinating Functions
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Coordinating Functions
To ensure sufficient coordination between
functions, managers delegate authority.Authority:the power vested in the
manager to make decisions and useresources.
Hierarchy of authority:describes the
relative authority each manager has from topto bottom.
Span of Control:refers to the number ofworkers a manager manages.
Line authority:managers in the directchain of command for production of goodsor services. Example: Sales
Staff authority:managers in positionsthat give advice to line managers.
Example: Legal
T ll & Fl t O i ti
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Tall & Flat Organizations
Tall structureshave many levels of
authority relative to the organizations size.As levels in the hierarchy increase,
communication gets difficult.The extra levels result in more time being
taken to implement decisions.Communications can also become garbled
as it is repeated through the firm.Flat structureshave few levels but wide
spans of control.
Results in quick communications but canlead to overworked managers.
Minimum Chain of Command
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Minimum Chain of Command
Managers should carefully evaluate:
Do they have the right number of middlemanagers?
Can the structure be altered to reducelevels?
Centralized v. DecentralizedDecentralized operations puts more authority
at lower levels and leads to flatorganizations.
Workers must be able to reach decisions. Divisions and functions can begin to lose
sight of organizational goals and focusonly on their small area.
I t ti M h i
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Integrating Mechanisms
Direct contact:get managers from different
divisions or functions together to solve mutualproblems.
Liaison Roles:one manager in each area isresponsible for communication with other areas.
Task Forces:temporary committees formed acrossdivisions to solve a specific problem.
Cross-functional teams:works much like apermanent task force that deals with recurring
problems.Matrix structure:already contains many integrating
mechanisms.
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Strategic Alliances
Strategic alliance:a formal agreement
committing two or more firms to exchangeresources to produce a good.
Network Structure:a whole series of strategicalliances.
Created between suppliers, manufacturers, anddistributors.Toyota and Honda use many such alliances.
Network structures allow firms to bringresources together in a boundary-lessorganization.