Design of organizational structures

Assessing structural alternatives:

Functional structure: a structure in which positions are grouped according to their main functional (or specialized) area.

Common functions (specialized area of expertise): the production (operation); marketing; human resources; finance; accounting; legal

Adv. : in depth development of expertise; clear career path within function; efficient use of resources; possible economies of scale; ease of coordination; potential technical advantage over rivalries

Disadv.: restricted view of org-n among imployees; narrow training for potential managers; inexact measurement of performance; slow response time on multifunctional problems.

Divisional structure

A structure in which positions are grouped according to similarity of products, services, or markets.

Product divisions – created to concentrate on single product or service or at least a relatively homogeneous set of products or services

Geographic divisions; divisions designed to serve different geographic areas.

Customer devisions: set up to service particular types of clients or customers. When major differences between types of customers, various needs.

Adv. Fast response to environmental change; simplified coordination across functions; strong orientation to customer requirements; accurate measurement of division performance; broad training in general management skills.

Disadv. Duplication of resources in each division

Heightened competition among divisions; limited sharing of expertise; restriction of innovations to divisions; neglect of overall goals.

Hybrid Structure: a structure that adopts parts of both functional and divisional structures at the same level of management

Adv. Alingnment of corporate and divisional goals; functional expertise and efficiency; adaptability and flexibility in divisions

Disadv; conflicts between corporate departments and divisions; excessive administrative overheads; slow response to exceptional situations.

Matrix structure; a structure that imposes a horizontal set of divisional reporting relationships onto a hierarchical functional structure.

The vice-presidents of operations, marketing, finance, engineering represent the functional departments that make up the vertical hierarchy. Simultaneously, managers of businesses A,B, C represent divisional units that operate horizontally across the structure. The heads of the major functional and divisional departments that make up the matrix are sometimes referred as matrix bosses.

Matrix stages.

Stage 1. traditional structure, usually functional, follows unity-of-command principle.

Stage 2. temporal overlay, managerial positions are created to take charge of particular projects (project managers), oversee product launches (product mngrs),

State 3. permanent overlay, managerial integrators operate on permanent basis

Stage 4. mature matrix, where matrix bosses have equal power.

Adv. Decentralized decision making; strong project or product coordination; fast response to change; flexible use of human resources; efficient use of support systems

DisAdv. High administration costs; potential confusion over authority and responsibility; heightened prospects for interpersonal conflicts; excessive focus on internal relations; overemphasis on internal relations; -- on group decision making.

Date: 2015-01-12; view: 922