20120427164238BBPP1103_ANS

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FACULTY OF SCIENCE AND TECHNOLOGY

SEMESTER JAN / 2012

BBPP 1103 - PRINCIPLE OF MANAGEMENT

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Table of contents

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1.0 INTRODUCTION..………………………………………………. 3

2.0 TYPES OF ORGANISATIONAL STRUCTURE. ……………… 4

2.1 Functional Structure..………………………………………………. 5

2.2 Geographical Structure..……………………………………………. 11

2.3 Matrix Structure ………………………………………………....…. 15

2.4 Product Structure...…………………………………………………. 20

3.0 SUMMARY ………………………………………………………... 25

References

INTRODUCTION

An organization able to be described as management structure that determine

relationships between functions and positions, and subdivides and delegates roles,

responsibilities, and authority to carry out defined tasks in a section or department.

Organizations able to be seen regardless in large or small scale and old or new concept,

organization should be solid, permanent, and orderly structured.

Modern organizations are more structured and hierarchical as compared to

conventional one. Organizations are observed to exist with various structures. As pointed out

by Mohr (1982, pp. 102–103), the early theorists of organizational structure, Taylor, Fayol,

and Weber had seen vital of structure for effectiveness and efficiency and assumed if there is

no any issue rise on the current structure , people could fashion and adapt accordingly.

Meanwhile in the 1930s, the rebellion began which defined as human relations theory, no

more people should be treated as the artifact, but rather an advocacy of the creation of a

distinguish sort of structure, one in which the requirements, knowledge, and opinions of

employees might be given greater recognition towards an organization.

Nevertheless, a different view arose in the 1960s, recommending that the

organizational structure is "an externally caused phenomenon, an outcome rather than an

artifact." (Mohr, L. B, 1982). This explains organization may build by the influenced of the

environment regardless specific or general issue. In the 21st century, organizational theorists

such as Lim, Griffiths, and Sambrook (2010) are proposing that organizational structure

development is very much dependent on the management strategies and the workers as a

limitation by the power and authority distribution between them, and influenced by their

environment and the outcome.

In the new centuries, many organizations are designed as hierarchies, with each

manager reporting to one and only one manager at the next higher level. Within the

hierarchical structure, there is substantial variation in the number of levels and in the set of

activities grouped together. The several groupings are pertaining to organization such as

functional, product, matrix, geography and customer. For instance, other organizations may

apply a matrix structure in which each low-level manager reports to two or more superiors.

In the 21st century, parts of organizations are not purely employed hierarchical

structures, many management are still prone to practice the existence of the flat community

structure within their organizations (Butler Jr., J.K., 1986, p.5). For functional hierarchy,

departments were distributed into styling, engineering, manufacturing, research, public

relations, and personnel division (Sloan 1963, p. 190).

2.0 TYPES OF ORGANISATIONAL STRUCTURE

Generally, organizational structures are able to be described based on the type of

departmentalization. It means the different organizational units which the division of system

and organization that is responsible to resolving the duties given. Differentiation of task or

activity into separate segments is called departmentalization. Briefing about grouping tasks in

different departments or it can be defined as division of work. The functions reflect the nature

of the business. The advantage of this type of grouping is obtaining efficiencies from

consolidating similar specialties and people with common skills, knowledge and orientations

together in common units. There are several types of departmentalization that being applied in

most of the organization in Malaysia which are functional, product, matrix geographical and

consumer. Each type of departmentalization will be described as below:

2.1 Functional structure:

Figure 1.0: Functional Departmentalization example

Departmentalization by function organizes by a group of people who have similar

skills which has its own functions and objectives to be performed. The functions reflect the

nature of the business. The advantage of this type of grouping is obtaining efficiencies from

consolidating similar specialties and people with common skills, knowledge and orientations

together in common units.

Functional departmentalization indicates grouping activities by functions performed.

Activities can be grouped according to function (work being done) to pursue economies of

scale by placing employees with shared skills and knowledge into departments for example

human resources, IT, accounting, manufacturing, logistics, marketing, and engineering.

Functional departmentalization can be used in all types of organizations. Figure 1.0 illustrates

departmentalization by function.

Figure 1.1 – Sourced by: Error! Hyperlink reference not valid.

According figure 1.1, this organization involves in developing and implementing

departmentalization by function. In this case, managing director is a top level management

followed by business management, corporate function, human resources management and

operations as a middle level management. Business management as marketing department is

responsible to project BASF PETRONAS Chemicals' manufactured products (OMP) around

the world. Management for corporate functions is divided by three sections. This department

responsible for accounting and financial, information technology related services to the

various constituents of the business and acquires goods and services through world class

procurement of raw materials, technical goods & services and packaging. Human resources

management recovers all areas related with recruitment of employees, including delegates

from BASF and staff seconded from PETRONAS. Meanwhile, operation management is

responsible to apply procedure, technique and specialist knowledge required in a certain task.

This management can be categorized as technical division.

Figured 1.2 - Sourced by: http://www.mpc.gov.my/home/?cont=ds&item=d3

The Malaysia Productivity Corporation (MPC) known as the National Productivity

Corporation which is a cooperative project between the United Nations Special Fund and the

Federal Government, with the International Labour Organisation acting as its executing

agency. Based on figure 1.2, development, measurement and certification management were

put together in a line of authority to provide value-added information on productivity, quality,

competitiveness and best practices through research activities and databases. In addition,

MPC also is responsible to develop human capital and organizational excellence for building

a knowledge-based society through training, systems development and best practices.

WINTRAD INDUSTRIES SDN BHD

Figure 1.3 - Sourced by: http://www.wintrad.com.my/chart.htm

The management is illustrated in figure 1.3, WINTRAD INDUSTRIES SDN BHD

which known as a professional company in designing, manufacture and supply of Low

Voltage Switchgear. As a top level management, managing director as well as general

manager is responsible to be as an advisor and negotiator for new tender and role as a leader

for this organization. Middle level management, manager for each functions are responsible

as a spokesperson to general manager and managing director from lower level management

and as a leader for lower level management to ensure the organization move towards

achieving its objectives. Manufacturing division, sales and marketing division, finance and

administration division as a lower level management responsible to focus on objectives

organization and controlling work daily to ensure achieve organization target.

Figure 1.4 - Sourced by: http://www.murata.com.my/Portal/MMEPortal.nsf/dx/organization-structure.htm

Murata Electronics (Malaysia) Sdn. Bhd.(MME) is an overseas subsidiary of Murata

Manufacturing Co. Ltd. in Japan. The objective of the organization is solely on production

base and sales footing of the Murata Group in Malaysia and Southeast Asia. According figure

1.4, managing director as a top level management responsible as figurehead entertaining his

clients and act as channel for communication between his department and outside his

organization. There are divided by seven department management for implementation, this

section responsible carry out time planning and effectively organize the sources and

information.

2.2 Geographical structure:

Manager

South region North Region Central region

Figure 2.0 – Geographical Structure example

A geographic structure is typically found in companies with operations in large region, such

as national or international organizations. Each location will have its own internal structure and

management, allowing them to conduct business activities in certain geographical locations. The

advantage of this structure is most beneficial in international locations, where companies need help

in transitioning their operations to specific international markets. In addition the organization can

organize effective and efficient to the requirements of the specific market and advantage to market

to different countries.

Other than that, the organization can reduce of costs management to allocate any

organization to entire location. The disadvantage for the geographical structure is the organization

difficult to make centralized of decision-making. This difficult will be arising in coordinating between

department as the departments in geographic structure cause of location far from each others.

Manager must give responsibility to another authority to take actions and improve organization

rather than giving a directive from the head of organizations.

Figure 2.1 - Sourced by : http://www.cosway.com.my/

COSWAY (M) Sdn Bhd is a Malaysian-based is multi-level network marketing. They began

their operations in December 1979. It is a simple concept of distributing quality product and unique

network marketing system. Concept for the business, to allocate the hundreds of COSWAY’s

stockiest centre throughout the country which ensure that there will always be a centre close to

where you work or live via a network. Today, it has grown to become one of Asia’s, Brazil’s and

México’s largest network marketing companies. The consumer product related home care, personal

care, food, auto care, healthcare and fashion.

Figure 1.2 - Sourced by: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence

According figure 2.2, Samsung Electronics has a total 196 subsidiaries around the world

including production subsidiaries, sales subsidiaries, distribution subsidiaries and research

laboratories. Samsung Electronics produce the product of consumer electronics, semiconductor,

telecommunication, digital media and digital convergence technologies. In this organization,

management is the ability to react effective and efficient within the scope of requirement and more

important when the products and services that are produced are marketed to different countries.

Samsung global network also includes one global headquarters in Korea and nine regional

headquarters in North America, Europe, China, Southeast Asia, Southwest Asia, Latin America, CIS,

Middle East, and Africa.

Figure 2.3 - Sourced by: http://renchin.com/?tag=7-eleven

7-Eleven operating as a franchise, is the world's largest operator, franchisor and licensor of

convenience stores. Private labels for 7-Eleven are slurpee and big gulp. In addition, 7-Eleven would

come to own or operate several brands of food and concepts. Concept for the business, operating in

24 hours per day and easy for customer to buy any food and beverages located in any places. The

main objectives for the organization are to fulfill the needs of customers.

2.3 Matrix Structure:

Figure 3.0 – Matrix Structure example

As above illustration figure 3.0, the matrix structure defined as a product manager (A

until D) can report more than two different of managers. The type of this structure combines

two or more types of departmentalization at the same time. For example, in this organization,

product manager “A” has to produce the sample product which is ordered from design vice

president. When the product has been produce, product manager “A” must report the progress

of the product to three of vice president from manufacturing, marketing and controller to

evaluate cost of the product and customer satisfied.

Advantage for matrix structure, the organization can manage effective and efficiency

in a large scale production. Furthermore, organizations can achieves synchronization

necessary to meet dual demands from customer, easy to make decisions and frequent changes

in unstable environment. Apart from that, matrix structure provides opportunity for both

functional and product skill development and exceptional for medium size organization with

multiple product to produce.

The disadvantage of this matrix structure is employees must have excellent

interpersonal skills and extensive training to conduct the big projects that have many phases

to be completed. This situation can make conflict of authority and confusing among

employees to make report more than one supervisor and managers. Besides from that, the

matrix structure will not functioning unless participants understand it and adopt collegial

rather than vertical-type relationship.

Figure 3.1 - Sourced by: http://www.townplan.gov.my/english/image/service_regionalplan_chart.jpg

Based on figure 3.1, this is the chart of organization department of town country

planning in peninsular Malaysia, Ministry of Housing and Local Government. The objective

for this department requires the setting up of a Regional Planning Committee (RPC) for a

region in an area consisting of two or more States. Example for matrix structure determined in

regional’s planning committee secretariat department and projects of national priority

department, those lower-level management have to report more than one supervisor or

manager.

Figure 3.2 - Sourced by: http://www.chemlab.com.my/organization.asp

Chemical Laboratory or CHEMLAB is a member of the KAM Holdings Group of

Companies. The objectives this organization to specializing in many aspects of scientific and

technology services in this part of the world. This requires technical people excellence in

assisting its clients to operate extra optimally and profitably, even as complying with existing

and future government regulations. Figure 3.2 shows the matrix structure able to be

implemented by regions manager to report two or more different managers. As an example,

Johor and Kuching region managers must report to quality assurance manager, senior

manager, sales manager and quality director.

PERUNDING DMA SDN BHD

Figure 3.3 – Sourced by: http://www.pdma.com.my/ver1/?mobj=001&mact=content&pid=14

According figure 3.3, PERUNDING DMA SDN BHD was incorporated on 1st August

1995 in Kuala Lumpur, and the objective for the organizations is a chartered quantity

surveyors consultant firm. The matrix structure for this organization interconnected with low

level management. As a professional surveyor consultancy firm, most of surveyor related to

each other to make right decision to preparation tender report and tenders document. Human

relations skill needed to build long term relationships and increase the number of clients who

value the services we provide to their business and their success.

Figure 3.4 - Sourced by: http://www.snia.org/about/organization/staff/org_chart

The missions for this organization to association with local industry to developing and

achieve standards, technologies, and educational services to authorize organizations in the

management of information. Via looking at the figure 3.4, even though they implement the

departmentalization by function, in certain cases, they are also applying matrix structure as

well. For instance, by referring to business services director which is indicate in orange box,

the membership manager is not only able to report to his director, he can report directly as

well to the executive director. Besides, the Marketing Programs and Design Manager also can

have an interconnection with the Online Programs and Website Manager

2.4 Product Structure:

Company

ABC

Shampoo Toothbrush Facial Wash

Figure 4.0 – Product Structure example

The intention for product structure is to focus of producing a product and services.

Based on figure 4, the organizations have to produce three different products with three

different structure organizations. Employees in different units that is responsible to

accomplish the duties given. In such an arrangement, the top manager of the product group

typically has considerable autonomy over the operation.

The advantage of this type of structure is that the personnel in the group can focus on

the particular needs of their product line and become experts in its development, production,

and distribution. A disadvantage, at least in terms of larger organizations, is the duplication of

resources. Each product group requires most of the functional areas such as finance,

marketing, production, and other functions. The top leadership of the organization must

decide how much redundancy it can afford.

Figure 4.1 – Sourced by: http://www.berjaya.com/corporate-structure.html

Tan Sri Dato' Seri Vincent Tan Chee Yioun as a owner The Berjaya Corporation

Group, with a total employee strength of 16,000. In figure 4.1, the Group is a diversity in a

consumer product, financial services, hotels and recreation development, property investment

development, gaming and lottery development, food and beverages, technology development

and investment holdings. By the nature of their businesses, Berjaya encouraged its staff to

share their skills and talents in accomplish organization objectives. Beneficial for Berjaya

Corporation Berhad organization allows to expand their experience and expertise, related to

the overall activity of the product and services.

Figure 4.2 – Sourced by: http://thinking-brands.blogspot.com/2010/09/nestle-brand-portfolio.html

Family branding or corporate branding in word of “Nestle” is attached all the brands in

all categories. Figure 4.2 illustrates, every food product meets the needs of customer demands.

In this era, customer more likely to buy the product based on branding name and not

compromise on price. Advantages for the product, if customers constantly to use the nutrition

products for their child, customer will continuously used the next level product to make them

satisfy if the company has a well managed product portfolio.

Figure 4.3 - Sourced by: http://www.terusmaju.com.my/chart.html

Teras Maju Services Sdn Bhd actively involved in the transportation bus industry.

Main service for this organization, to provide transportation as a factory buses for their

clients. Refers illustration figure 4.3, specialist employees develop that are well trained to

provide specific services for buses maintenance. Advantage for the organization, no cost rises

to hire external expertise to service the buses maintenance.

Figure 4.4 - Sourced by: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence

Refer figure 4.4, Samsung Electronics is worldwide supplier in consumer electronics.

There are the largest technology company in the world, Samsung is guided by a simple

philosophy, strong values and high ethical standards that authority of departmentalization.

The most important for the organization, the line authority and staff authority have

cooperation to each other to ensure the effective and efficient of an organization.

SUMMARY

This study attempts to explain organization structure based on rationalization

coordination of interactions among activities. Many organizations are designed as hierarchies,

with each manager reporting to one and only one manager at the next higher level. Therefore,

the function of organization structure is work arrangement by division or management to

individual or grouping intended for achievement of an organization’s objectives. The

important potency to accomplish organizational structure is organizational strategies, size of

organization, technology and environmental factor.

Combination between people, hierarchies and system may recognize as a

departmentalization. Departmentalization can be described as a distribution of work and

employees to different organizational units that are responsible for resolving the duties given.

There are few types of departmentalization had been applied by variety of companies. It can

be observed through their types of organization chart. As above mentioned, those types of

structure are functional, geographical, matrix and product base.

Functional structure is the most common type departmentalization whereby it is quite

straight forward in coordinating the interactions between top management and each specific

department representative which is normally department managers. This typical structure

allows one company to have in depth knowledge and skills on each function. However, there

is still some limitations if they are facing with global and environment changes which it might

slow the response time on it.

Depending on the types of businesses, some companies able covers certain region,

meanwhile the others cover all areas of market demand. For the companies that apply

geographical structure, most likely they will determine the regions either by cardinal

directions or by name of the states. Cardinal point of directions such north, south, east and

west are normally being applied by major players. It is much easier for them to monitor and

track performance and market demand analysis instead of by product or services itself.

Matrix structure presents complex design of hierarchy whereby the authority and

responsibility of manager is bigger than the functional structure. Those companies that apply

matrix structure are more fragile and flexible in terms of reporting matters. Even though, staff

works in the different department, they are able to cross report to another department. This

structure is normally applied within production department by the maintenance people. For

those who applied this structure are able to create huge network within multidisciplinary

department. However, management of this company has to ensure that their staffs are self

driven to carry out major tasks and deal with the multi cross-sectional network.

Product structure is normally applied by those companies who have numbers of

products as their bullet to succeed. In order to penetrate current global changes, certain

companies have to survive to run their businesses. Varieties of product almost certainly have

variety of margin and able to analyze market trend which one is worth to be sold and vice

versa. Limitation on product structure is the companies have to spend their time on market

analysis and determining thoroughly the market trend as well as their benefits on it.

However, in order to fulfill customer demand, an organization is required to study the

market trend and observe the best in class or multinational company best practices. They

might assist new born company and developing company to take a step further in establishing

their own businesses.

2961 words

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