CREATING EFFECTIVE ORGANIZATIONAL STRUCTURE Traditional Forms of Organizational

CREATING EFFECTIVE ORGANIZATIONAL STRUCTURE .

Traditional Forms of Organizational Structure • Organizational structure 9 refers to formalized patterns of interactions that link a firm’s tasks, technologies, and people 10 -2

Traditional Forms of Organizational Structure • Structure provides a means of balancing two conflicting forces 9 Need for the division of tasks into meaningful groupings 9 Need to integrate the groupings for efficiency and effectiveness 10 -3

Dominant Growth Patterns of Large Corporations 10 -4

SIMPLE STRUCTURE • Simple Structure 9 An organizational form in which the ownermanager makes most of the decisions and controls activities, and the staff serve as an extension of the top executive. 10 -5

SIMPLE STRUCTURE • Advantages 9 Highly informal 9 Centralized decision making 9 Little specialization • Disadvantages 9 Employees may not understand their responsibilities 9 May take advantage of lack of regulation 10 -6

FUNCTIONAL STRUCTURE 10 -7

FUNCTIONAL STRUCTURE • Functional Structure 9 An organizational form in which the major functions of the firm, such as production, marketing, R&D, and accounting, are grouped internally. 10 -8

FUNCTIONAL STRUCTURE • Advantages 9 Enhanced coordination and control 9 Centralized decision making 9 Enhanced organizational-level perspective 9 More efficient use of managerial and technical talent 9 Facilitated career paths and development in specialized areas 10 -9

FUNCTIONAL STRUCTURE • Disadvantages 9 Impeded communication and coordination due to differences in values and orientations 9 May lead to short-term thinking (functions vs. organization as a whole) 9 Difficult to establish uniform performance standards 10 -10

DIVISIONAL STRUCTURE 10 -11

DIVISIONAL STRUCTURE • Divisional organizational structure 9 An organizational form in which products, projects, or product markets are grouped internally. 9 Also called multidivisional structure or MForm 10 -12

Divisional Structure • Advantages 9 Strategic business unit (SBU) structure 9 Separation of strategic and operating control 9 Quick response to important changes in external environment 9 Minimal problems of sharing resources across functional departments 9 Development of general management talent is enhanced 10 -13

Divisional Structure • Disadvantages 9 Can be very expensive 9 Can be dysfunctional competition among divisions 9 Differences in image and quality may occur across divisions 9 Can focus on short-term performance 10 -14

SBU Structure • Strategic business unit (SBU) structure 9 An organizational form in which products, projects, or product market divisions are grouped into homogeneous units. 10 -15

SBU Structure • Advantages 9 task of planning and control by the corporate office more manageable 9 individual businesses can react more quickly to important changes • Disadvantages 9 may become difficult to achieve synergies 9 additional level of management increases overhead expenses 10 -16

Holding Company Structure • Holding company structure 9 An organizational form in which the divisions have a high degree of autonomy both from other divisions and from corporate headquarters. 10 -17

Holding Company Structure • Advantages 9 cost savings associated with lower overhead 9 autonomy increases the motivational level of divisional executives • Disadvantages 9 inherent lack of control and dependence 9 limited staff support 10 -18

Matrix Structure 10 -19

Matrix Structure • Matrix organizational structure 9 an organizational form in which there are multiple lines of authority and some individuals report to at least two managers. 10 -20

Matrix Structure • Advantages 9 Facilitates the use of specialized personnel, equipment and facilities 9 Provides professionals with a broader range of responsibility and experience • Disadvantages 9 Can cause uncertainty and lead to intense power struggles 9 Working relationships become more complicated 9 Decisions may take longer 10 -21

QUESTION Strategic business unit (SBU) and holding company structures result from extensive A. Diversification B. Vertical integration C. International expansion D. Organizational flattening 10 -22

THANK YOU ! 10 -23