organization structure final

8/8/2019 Organization Structure Final

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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


9/40Copyright 2001 Houghton Mifflin Company. All rights reserved. 9

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



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



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


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



M a n a g e r s

3 5 D i s t r i c t S a l e s


W e s t e r n D i v i s i o



2 5 D i s t r i c t S a 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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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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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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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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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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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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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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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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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.

organization structure final

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