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.
  • W6 7 organizational design-structure

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

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