The current state of organization theory is the result of an evolutionary process. Theories have been introduced, evaluated and refined over time ; new insights tend to reflect the limitations of earlier theories.
Team Force or Team Engineering Marketing R & D Sales Production
Integrating Role or Department Computer Hardware Division Integration Role or Department Application Division Computer Software Division
Differentiation & Integration-key aspects Differentiation Integration A highly complex, highly differentiated organization needs high level of integration An organization that has a relatively simple, clearly defined role structure needs to use only simple integrating mechanism Expensive –in terms of the number of managers employed & the amount of managerial time spent on coordinating organizational activities. Unnecessary investment
An organizational setup whereby the authority to make important decision about organizational resources and to initiate new projects is delegated to managers at all levels in the hierarchy…
Centralization Advantages Disadvantages Top managers coordinate organizational activities effectively & keep the organization focused on its goal. Top management become overloaded & need to take care of day-to-day activities & cannot focus on long term decision making Lower hierarchy-afraid to make news or express their ideas Hierarchy of authority exists , people are constantly looking to their superiors for help.
Decentralization Advantages Disadvantages Promotes flexible & responsiveness by allowing subordinate to make on the spot decisions Planning & coordination becomes more difficult Motivates to perform the best Personal goals & objectives can be pursed at the expense of organization
Divisional structure is one in which set of relatively autonomous units or divisions are governed by central corporate office, but each operation division has its own functional specialist who provides product and services different from those of other divisions
Characterized by splitting of the manufacturing function into different product lines or divisions.
Centralized support functions.
Service needs of a number of different product lines.
Typically used by organizations whose products are broadly similar and aimed at the same market.
E.g. Food processors, furniture makers, personal care products, paper products, etc.
Product Division Structure 4-19 Large Food Processor – E.g. Heinz 01/02/10 Vice President Sales and Marketing Vice President Research and Development Vice President Materials Management CEO Vice President Finance PDM PDM PDM PDM Centralized support functions Divisions
To manage complex and diverse value creation activities.
Support functions are placed in self-contained divisions.
Typically used by an organization whose products are very different and that operates in several different industries.
E.g. Cars and fast food industries.
Multidivisional Structure. Consumer Products Company. Corporate Managers CEO Divisional Managers Senior VP Marketing Senior VP Finance Senior VP Materials Management Senior VP Research and Development Functional Managers Corporate Headquarters Staff Division B Support functions Division D Support functions Division A Support functions Support functions Division C 4-21 01/02/10
COMPARISON 01/02/10 MULTIDIVISIONAL STRUCTURE PRODUCT DIVISION STRUCTURE Independence of each division – self contained. Divisions shares the services of a set of centralized functions. New level of management – a corporate head quarters staff – adds more control. No such level – control is lesser. Structure is designed to allow a Company to operate in many different businesses. Structure can only be used to control the activities of a Company that is operating in one business or Industry.
Specialists from the support functions are combined into product development teams.
Typically used by an organization whose products are very technologically complex.
Or whose characteristics change rapidly to suit customer needs.
Product Team Structure. 4-29 01/02/10 Product Division Product Division CEO Functions Product Development Teams Product Division V ice President Research and Development V ice President Sales and Marketing V ice President Manufacturing V ice President Finance Functional specialist V ice President Materials Management PTM Product Team Manager PTM PTM PTM
01/02/10 Matrix Structure CEO V ice President Engineering V ice President Finance V ice President Purchasing V ice President Sales and Marketing V ice President Research and Development Product A Manager Product B Manager Product C Manager Product D Manager Product Team Two-boss employee
01/02/10 Multidivisional Matrix Structure CEO Senior Vice President Marketing Senior Vice President Finance Senior Vice President Research and Development Senior Vice President Materials Management Automobile Products Division Personal Computer Division Consumer Electronics Division
Network Structure Network structures often result from outsourcing. Outsourcing is the process of moving activities that were previously performed inside the organization to the outside (where they are done by other companies). 01/02/10
The boundaryless organization is composed of people who are linked by computers, faxes, computer-aided design systems, and video teleconferencing, and who may rarely or ever see one another face to face.