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Clark Equipment Corp.
Forks & Small
Earthmovers Division
Trucks
Division
Tools
Division
PurchasingMaterials
HandlingFabrication Painting Assembly Sales Distribution
Human
Resources
Department
Engineering
Department
Line and Staff OrganizationLine and Staff OrganizationLine do the mainlineLine do the mainline
functions/Staff assistfunctions/Staff assist
StaffStaff
ManagersManagers
LineLine
ManagersManagers
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Line & Staff Distinction
Line: Unquestioned, direct authority to make
decisions and take action. Eg.: Restaurant
manager, Foreman
Staff: An advisory authority in which a person
studies a situation & makes recommendations
but has no authority to directly take action.
Eg.: Legal Department
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Departmentalization
DepartmentalizationProcess of grouping jobs into logical units i.e.departments or divisions
Traditional
Functional
Product/Divisional
Geographic/International
Process
Customer
Multiple bases
Contemporary Project
Matrix
Team Boundary-less
Virtual
Network
Modular
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Traditional Organizational Structure
Designs
Functional structure
Departmentalization by function i.e. Groupingjobs by functions performed
Functions: Operations, finance, human
resources, and product research and
development
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Diagram Functional Departmentalization
Company is structured around basic business functions
Advantages
Cost saving advantages from in-depth specialization i.e. putting together peoplewith common specialties, skills, knowledge and orientations
Better planning & control due to more coordination within functions
Suitable for company with Single product, or small no. of similar products
Disadvantages
Poor communication across different functional areas Low understanding
Continuous pursuit of functional goals can cause Limited view of organizational
goals
Insufficient for an organization with multiple products
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Traditional Organizational Structure
Designs
Product/Divisional structure
Departmentalization according to specific
products being created i.e. Grouping jobs by
Product Lines.
Here, various business units or divisions (SBUs)
operate as separate businesses with limitedautonomy under the larger corporate umbrella
Eg: General Motors Buick, Cadillac, Chevrolet,
Saturn & Pontiac Divisions
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Diagram Product/Division Departmentalization
Advantages
+ Focus on results: Managers are responsible for own profit centres
+ Individual attention to each product line: Allows growth & diversification
+ Closer to customers
Disadvantages
Duplication of functions increases cost & reduces efficiency
Limited view of organizational goals, competition between divisions
Food Service
Division
Infant Foods
Division
Condiments
Division
Star-Kist Tuna
Division
Pet Foods
Division
Frozen-Foods
Division
Misc.Products
Division
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Traditional Organizational Structure
Designs
Geographical structure
Departmentalization according to the areas servedby a business i.e. Grouping jobs on the basis of
territory or geography
Eg.: Airlines, Large consulting firms
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Diagram Geographical Departmentalization
Advantages+ Local managers can address specific regional issues accurately
+ Serve needs of unique geographic markets better
+Helps in expansion & generates more goodwill in each area
+Especially suitable for services like transport/banking/insurance
Disadvantages
Uneconomical due to duplication of functions
Difficult to coordinate large headquarters staff required
Competition between various regional offices
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Traditional Organizational Structure
Designs
Process oriented structure
Departmentalization according to productionprocesses i.e. Grouping jobs on the basis of the
flow of the manufacturing/service processes used
to create a good or service
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Diagram Process Departmentalization
Advantages
+ More efficient flow of work activities
Disadvantages
Can only be used with certain types of products
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Traditional Organizational Structure
Designs
Customer oriented structure
Departmentalization according to types ofcustomers likely to buy a given product i.e.Grouping jobs by type of customer and theirrespective requirements
Eg.:
Deptt Stores Mens wear, womens wear, kids wear
Educational Institutes BB/MBA, Full time/Part time
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Diagram Customer Departmentalization
Advantages
+ Brings together all the resources necessary to satisfy a group of customers,under a single managers control . Customers problems can be met by
specialists
Disadvantages
Duplication of functions Limited view of organizational goals
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SU
M
MA
RY
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Multiple Forms of Departmentalization
66 -- 1515
President
VicePresident
Marketing
VicePresident
Production
VicePresident
Finance
ChennaiPlant
Manager
NoidaPlant
Manager
MumbaiPlant
Manager
Consumer
Products
Industrial
Products
Consumer
Products
Industrial
Products
Consumer
Products
Industrial
Products
Functional DepartmentalizationFunctional Departmentalization
Geographical DepartmentalizationGeographical Departmentalization
Product DepartmentalizationProduct Departmentalization
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Contemporary Organizational
Structure Designs
Project structures A project may be defined as a diverse set of
specialized technical activities which are to beperformed within the given time frame and coststructure.
The project structure is designed to handle it Specialists from different functional departments are
assigned to work on projects led by project managers.
Project staff becomes independent of functional deptts
Employees work continuously on projects: as one project
is completed, they move on to another
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Diagram Project Departmentalization
Advantages
+ Customized: Fluid design, can be tailor made to meet requirements provides flexibility, coordination, responsibility and greater check.+Facilitates timely completion of projects.+Found fit in situations like product development, new plant installation
Disadvantages
Complex & Challenging: lack of prescribed organizational processes,unclear responsibility whom to assign? who will do what work?Task/personality conflicts among specialists due to different orientations
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Matrix Organization
It is also called as grid organization - It is a hybrid organization
structure combining functional & product/project
departmentalization, in which members report to two or more
managers.
A matrix is a highly flexible form that is readily adaptable to changing
circumstances. Functional specialists are recruited to work on in product
divisions/projects They report to the division/project head & the functional
head.
Some companies use the matrix organization as a temporary measure tocomplete a specific project. The end of the project usually means the end of
the matrix. Matrix structures rely heavily on committee and team authority.
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Exhibit An Example of a Matrix Organization
Advantages
+ Flexible & Economical design efficient use of employees, responsive to changes
+ Focus on product/project decision making through technical & functionalexcellence
+Provides opportunities of personal development to the employees
Disadvantages Complexity in relationships, Problem in coordination:Dual reporting may causeindiscipline, ambiguity (lack of clarity) and role conflict
Task and personality conflicts
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Contemporary Organizational
Structure Designs
Team structures
The entire organization is made up ofCross functionalteams i.e. work groups composed of individuals fromvarious functional specialties
Such organizations have little or no underlyingfunctional hierarchy and rely almost exclusively onthese self-managed teams of empowered employees
Advantages: Employees are more involved and empowered. Reduced barriers
among functional areas.
Disadvantages: No clear chain of command. Pressure on teams to perform.
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Contemporary Organizational Structure Designs
Boundaryless Organization
An flexible and unstructured organizational designthat breaks down traditional barriers between the
organization and its customers and suppliers. Removes internal boundaries:
Eliminates the chain of command
Has limitless spans of control
Uses empowered teams instead of departments
Eliminates external boundaries:
Uses virtual, network, and modular organizational structuresto get closer to stakeholders.
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Table Contemporary Organizational Designs
Boundary less Structure
What it is: A structure that is not defined by or
limited to artificial horizontal, vertical,
or external boundaries;
Includes virtual, network
& modular types of organizations.
Advantages: Highly flexible and responsive.
Draws on talent wherever its found..
Disadvantages: Lack of control.
Communication difficulties..
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Removing External Boundaries
Virtual Organization
An organization that consists of a core of full-time employees and that hiresspecialists to work on opportunities that arise.
Use of electronic technology to link workers and functions at scattered sites Company databases to give information
Real time tracking of goods logistics
Growth fueled by 3 factors Electronic technology digital transfers of audio/video
Rapid spread of computer networks
Growth of telecommuting
Network Organization
A small core organization that outsources its major business functions (e.g.,manufacturing) in order to concentrate what it does best. Eg: Proctor &Gamble Colgate toothpaste
Modular Organization
A manufacturing organization that uses outside suppliers to provide productcomponents for its final assembly operations.
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Network Organization
It is a flexible, usually a set of alliances amongdifferent companies that have come together fora specific, single purpose.
It allows organizations to focus on that whichthey do best i.e., their core competence.
In this way organizations can discontinueactivities not part of its core and may outsourcesuch functions from other firms.
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