organizing - part 2

8/8/2019 Organizing - PART 2

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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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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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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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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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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.

organizing - part 2

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