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Organizational Structure
 

Organizational Structure

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    Organizational Structure Organizational Structure Presentation Transcript

    • Organizational Structure
    • Organizational Configuration
      • Structure
      • Processes
      • Relationships
      • An organization’s structure reveals:
      • Who is responsible for what
      • Who communicates with whom
      • The levels of skills required at upper level
    • Types of structures:
      • Functional: grouping done on the basis of functions, for example, production, distribution, sales, marketing, finance
      • Advantages:
      • Pooling of expertise
      • No duplication of functions
      • Suited to centralized organizations
      • Disadvantages:
      • Vertical barriers
      • Focus on internal processes
      • Struggle to cope with change
    • Divisional Structure
      • When functionally structured business grows by diversification, divisional structure is likely to be adopted
      • Advantages:
      • Flexibility – in response to strategy
      • Specialist expertise
      • Manager’s interest in division’s strategy
      • Enabling management by head office from distance
      • Disadvantages: high central management costs
      • Duplication of functions with all functions represented in divisions
      • Vertical barriers may prevent information sharing between divisions
      • Can be complex hierarchical process
      • Product Division – Geographic Division – Holding Company
    • Matrix Organization
      • Matrix structures attempt to ensure co-ordination across functional lines by the embodiment of dual authority in the organizational structure.
      • Advantages:
      • Greater flexibility
      • Should improve communication
      • Dual authority – multiple orientation
      • Responsibility to achieve end results
      • Inter-disciplinary cooperation – mix of skills and expertise
      • Disadvantages:
      • Dual authority
      • Role stress
      • Costly – additional product managers
      • One manager may feel threatened
      • Requires consensus which may slow down decision making
    • Centralization vs Decentralization
      • Flexibility of structure depends upon an organization’s approach to decision making
      • In centralization upper level hierarchy retains authority to make decisions
      • In decentralization authority is given to specific units or persons to make immediate decisions without referring them to the higher authorities
    • Centralization
      • Advantages:
      • Better management control/co-ordinated decisions
      • Goal congruence
      • Standardization
      • Balance between functional units and divisions
      • Economies of scale
      • Top managers make decisions (experience)
      • Quick decisions in times of crises
      • Disadvantages:
      • Reduced job satisfaction at lower level
      • Senior management does not have knowledge of all organizational activities
      • Stress on senior managers
      • Limited career opportunities and development for subordinates
      • Decisions take considerable time
    • Mintzberg Configuration
      • Six possible configurations:
      • Simple structure – strategic apex – op core
      • Machine bureaucracy – techno-structure
      • Professional bureaucracy – dominance of op core
      • Divisional form – strong middle line
      • Adhocracy – complex & disorderly structure e.g. project teams
      • Missionary organizations – based on common set of beliefs: unwilling to change or compromise
    • Planning and control processes
      • Formal or informal
      • Focused on inputs or outputs
      • Direct or indirect processes
    • Generic Control Processes
      • Direct supervision – hands on control
      • Planning process – standardization
      • Performance management – KPIs
      • Internal market processes – transfer pricing or service level agreements
      • Culture
      • Self-control by employees
    • External Relations
      • Outsourcing
      • Strategic Alliances
      • Networks
      • Virtual organizations
    • Outsourcing
      • Advantages:
      • Reduced cost
      • Overcome skills shortage
      • Flexibility
      • Allows organization to focus on their core skills
      • Disadvantages:
      • Loss of control
      • Dependency on suppliers
      • Loss of confidentiality
      • Loss of in-house skills
    • Strategic Alliances
      • Reasons:
      • Cost sharing
      • When take overs prohibited
      • Complementary markets
      • Learning
      • Technology ( R & D )
      • Innovation
      • Problems: core competencies/not new ones
    • Networks
      • Networks of experts come together for a particular project or purpose
      • Teleworking
      • One contact point for customers
      • Service networks
    • Virtual organization
      • The virtual organization is a temporary network of companies that come together quickly to exploit fast changing opportunities
      • Technology: informational networks will help companies to link up. Things done electronically
      • Opportunism: companies will band together to avail opportunities and evaporate
      • No borders: More cooperation among competitors, suppliers and customers
      • Trust: reliability, fate of one will depend on another
      • Excellence: partners will bring core competencies “best of everything”