W6 7 organizational design-structure

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  • Last few weeks, we have discussed about business strategy and now we are on the operational part to execute the strategy. The first component is the organizational structure.
  • Inform students and the methodology today. Like last week, we will select two groups, and each group will present.

Transcript

  • 1. Organizational Design – Organizational Structure
    Team teaching
    Laboratory of Sytem Development and Industrial Management (PSMI)
    Departemen of Industrial Engineering
    Institut Teknologi Sepuluh Nopember (ITS)
    2011
  • 2. Group Discussion
    Discuss the following topics concerning with your study case!
    Look at your organization,
    Explore the structure – whether it is established or not, why do they choose this structure, is there any changes from the first launch of the structure? What are the consideration?
    Explore the issue of:
    Vertical vs horizontal integration
    Communication
    Response to challenge and environmental changes
    Authority & Control
    4. Discuss the autority and control within your organization, and link with your exploration (point 1-2)
    Copyright 2004 Prentice Hall
    2
  • 3. Alignment Framework
    Business
    Strategy
    Organization
    Structure
    Human Resources
    Management
    “HR systems and theorganization structure should be managed in a way that is congruent withorganizational strategy (hence the name ‘matching model)”
    (Fombrun et al, 1984).
    3
  • 4. 4
    Naomi Stanford, 2007, “Guide to Organisational Design”
    4
  • 5. By the end of today’s class, students will:
    Be able to explain what organizational design is
    Be able to explain the main consideration of designing the organization
    Session objectives
    5
  • 6. Organizational Design: Organizational Structure
    6
  • 7. Economies and Diseconomies of Work Specialization
    © 2003 Prentice Hall Inc. All rights reserved.
    7
  • 8. © 2003 Prentice Hall Inc. All rights reserved.
    What Is Organizational Structure? (cont’d)
    Grouping Activities By:
    8
  • 13. What Is Organizational Structure? (cont’d)
    9
    © 2003 Prentice Hall Inc. All rights reserved.
  • 14. © 2003 Prentice Hall Inc. All rights reserved.
    Common Organization Designs
    A Simple Structure:Jack Gold’s Men’s Store
    10
  • 15. Functional Structure
    Copyright 2004 Prentice Hall
    11
  • 16. 12
    Functional Structure
    A functional structure is a design that groups people on the basis of their common skills and expertise or resources they use.
    Functional structure is the bedrock of horizontal differentiation.
    An organization groups tasks into functions to increase the effectiveness with which it achieves its goals.
  • 17. Figure 1: Functional Structure
    13
  • 18. Functional Structure: Advantages
    14
    Provides people with the opportunity to learn from one another and become more specialized and productive
    People who are grouped together by common skills can supervise one another and control each other’s behavior.
    People develop norms and values that allow them to become more effective at what they do.
  • 19. Control Problems in a Functional Structure
    Communication Problems: As more organizational functions develop, each with their own hierarchy, they become increasingly distant from one another.
    Measurement Problems: Information needed to measure the profitability of any functional group is difficult to obtain.
    Location Problems: Does not allow handling of sales on a geographic basis
    15
  • 20. Functional Structure: Control Problems
    16
    Customer Problems: Servicing needs of new kinds of customers are difficult.
    Strategic Problems: Top managers spend too much time finding ways to improve coordination.
  • 21. 17
    Solving the Control Problem
    Managers can solve control problems by redesigning the functional structure between functions.
  • 22. Divisional Structure Product Structure Geographical Structure Market Structure
    Copyright 2004 Prentice Hall
    18
  • 23. 19
    Divisional Structure I: Product Structure
    Product structure: a divisional structure in which products (goods or services) are grouped into separate divisions according to their similarities or differences
    Organizations need to decide how to coordinate its product activities with support functions.
    Three kinds of product structure
  • 24. 20
    Product Division Structure
    Product division structure: a structure in which a centralized set of support functions service the needs of a number of different product lines
    Divided into product-oriented teams of functional specialists who focus on the needs of one particular product division
  • 25. Figure 2: Product Division Structure
    21
  • 26. Figure 3: Product Team Structure
    22
  • 27. 23
    Divisional Structure II: Geographic Structure
    When the control problems that companies experience are a function of geography, a geographic divisional structure is appropriate.
    Allows the organization to adjust its structure to align its core competences with the needs of customers in different geographic regions
    Allows some functions to be centralized and others decentralized
  • 28. Figure 4. Geographic Structure
    24
  • 29. Divisional Structure III : Market Structure
    A market structure aligns functional skills and activities with the needs of different customer groups.
    Each customer group has a different marketing focus, and the job of each group is to develop products to suit the needs of its specific customers.
    Each customer group makes use of centralized support function.
    25
  • 30. 26
    Figure 5.Market Structure
  • 31. © 2003 Prentice Hall Inc. All rights reserved.
    Common Organization Designs (cont’d)
    Key Elements:
    • Gains advantages of functional and product departmentalization while avoiding their weaknesses.
    • 32. Facilitates coordination of complex and interdependent activities.
    • 33. Breaks down unity-of-command concept.
    27
  • 34. Figure 6. Matrix Structure
    28
  • 35. Matrix Structure (College of Business Administration)
    (Director)
    (Dean)
    Employee
    29
  • 36. © 2003 Prentice Hall Inc. All rights reserved.
    New Design Options
    Characteristics:
    • Breaks down departmental barriers.
    • 37. Decentralizes decision making to the team level.
    • 38. Requires employees to be generalists as well as specialists.
    • 39. Creates a “flexible bureaucracy.”
    30
  • 40. © 2003 Prentice Hall Inc. All rights reserved.
    New Design Options (cont’d)
    Concepts:
    Provides maximum flexibility while concentrating on what the organization does best.
    Disadvantage is reduced control over key parts of the business.
    31
  • 41. © 2003 Prentice Hall Inc. All rights reserved.
    A Virtual Organization
    32
  • 42. Another reference for organizational structure
    33
    Review the lecture note of general courses presented by Patdono Suwignjo, PhD
  • 43. Assignment for next Week
    Copyright 2004 Prentice Hall
    34