2. Functional Organisation
1840’s great wave of organisational
change
Telegraph
Continuous process manufacturing: mass
manufacturing
Appearance of rail road: most significant
3. Functional Organisation
(Contd.)
Sizable administrative organisation required
Set of managers to supervise functional activities
over an extensive geographical area
Command of middle and top executives to
monitor, evaluate and co-ordinate
First natural rail road links: 50 miles
“complex” contracting required
Decentralised line and staff organisation
4. General Motors
Durant’s regime
Primarily oriented to selling
Buying plants and integrating them with the
sales system
General office not more that 2-3 personal
assistants
5. Crisis of 1920 at GM
Sales plummeted and Durant resigned
Sloan structure
Objective
Line of authority throughout extensive
operations and
Coordinate each branch of service
6. Principles of Reorganisation
Responsibility attached to each Chief
Executive in no way be limited
Certain central organizational functions are
absolutely essential to the logical
development and proper control of the
corporation’s activities
Example
Distribution of financial and accounting functions
between VP and division head
7. Implementation
Defining division boundaries
Policy on interdivisional billing
ROI became the basic criterion for
appraisal
8. Development of Statistical and
Financial Controls
Uniform accounting procedures
Periodic forecasting of demand
Cash deposited in specific a/cs with
sole control of general office
Periodic demand forecasts by outsiders
9. Defining Role of the Advisory
Staff
Coordinate, appraise and plan policy
Interdivisional Committee with a
permanent secretary and office to
reduce line - staff friction
Final decisions by either operating
divisions or executive committee
11. Microsoft in 1999 -
Decentralisation
Eight new divisions – revenue & profit goals
Business enterprise divn: corporate customers
Home & retail divn: home applications, children
Business productivity group: knowledge workers
Sales and support group: ISP, small business, etc.
Developer group: tools for corporate programmers
Consumer & commerce group: via web portal
Consumer windows divn: make PC user friendly
Microsoft research: basic research
“I am running my own little company”
12. Matrix Orgn. Structure
Combining functions and products
Functional form
Pooling and Sharing of Specialised
Resources
Co-ordination Difficult
13. Matrix Orgn. Structure
(Contd.)
Product form
Facilitates co-ordination among specialists
Clear responsibility
Duplication of specialists
Disadvantages
Confusion/ Conflict
Power struggle
14. Canadian
Division
Mexican
Division
United
State
Division
French
Division
British
Division
Chemicals
Product
Group
Consumer
Goods
Product
Group
Automobile
Product
Group
North American Area European Area
Individual Business Division
Global
Matrix
Struc-ture