MANU 3318 Organizational Structures PDF

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA MANU 3318 MFGA 3309 Managing Organizational Structure and Culture When a company expands to Ø Supply goods or services Ø Produces variety of diff. products Ø Engage in several diff. markets i...

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA MANU 3318 MFGA 3309 Managing Organizational Structure and Culture When a company expands to Ø Supply goods or services Ø Produces variety of diff. products Ø Engage in several diff. markets in such conditions the company can adopt Departmentalization  Functional Product Customer Geographic Process  Arranging the business according to what each section or department does. Department can be Shared staffed with training. management specialized responsibility. Coordination within Supervision is the department is facilitated. easier. Inter department Accountability Delays when documentation of Decision-making and performance there are activities is not becomes slow. are difficult to problems. possible. monitor. Divisional Structures Divisional Structure Managers create a series of business units to produce a specific kind of product for a specific kind of customer Divisional Organization CEO V.P. V.P. V.P. Product/Service Product/Service Product/Service Area 1 Area 1 Area 1 Head of Head of Head of Head of Head of Human Head of Head of Human Head of Head of Human R&D Operations Resources R&D Operations Resources R&D Operations Resources Head of Head of Head of Head of Head of Head of Finance Marketing Finance Marketing Finance Marketing Product, Market, and Geographic Structures Figure 10.4  Organizing according to the different types of products produced.  Allows functional managers to specialize in one product area Division managers become experts Product in their area Structure Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources  Geographic Structure Divisions are broken down by geographic location Types of Global geographic structure Divisional Managers locate different divisions Structures in each of the world regions where the organization operates. Generally, occurs when managers are pursuing a multi-domestic strategy  It’s based on geographical or regional structure.  Global Product Structure Each product division takes responsibility for deciding where to Types of manufacture its products and how to market them in foreign countries Divisional worldwide Structures Global Geographic and Global Product Structures Figure 10.5  Market Structure Groups divisions according to the particular Types of kinds of customers they serve Divisional Allows managers to be responsive to the needs of their customers and act flexibly in Structures making decisions in response to customers’ changing needs  Matrix Structure An organizational structure that simultaneously groups people and resources by function and product. Matrix Results in a complex network of superior- subordinate reporting relationships. Design The structure is very flexible and can Structure respond rapidly to the need for change. Each employee has two bosses (functional manager and product manager) and possibly cannot satisfy both.  Matrix Structure Figure 10.6  Product Team Structure Does away with dual reporting Product relationships and two-boss managers Team Design Functional employees are Structure permanently assigned to a cross- functional team that is empowered to bring a new or redesigned product to work Product Team Design Structure Product Team Structure Figure 10.6  Hybrid Structure The structure of a large Hybrid organization that has many Structures divisions and simultaneously uses many different organizational structures Federated’s Hybrid Structure Figure 10.7 Coordinating Functions: Allocating Authority Authority The power vested in a manager to make decisions and use resources to achieve organizational goals by virtue of his position in an organization. Coordinating Functions: Allocating Authority Hierarchy of Authority An organization’s chain of command, specifying the relative authority of each manager. Span of Control: the number of subordinates who report directly to a manager Allocating Authority Line Manager Staff Manager Someone in the direct Managers who are line or chain of functional-area command who has specialists that give formal authority over advice to line people and resources managers. The Hierarchy of Authority and Span of Control at McDonald’s Corporation Figure 10.8 Tall and Flat Organizations Tall structures have many levels of authority and narrow spans of control. As hierarchy levels increase, communication gets difficult creating delays in the time being taken to implement decisions. Communications can also become distorted as it is repeated through the firm. Can become expensive Tall Organizations Figure 10.9 Tall and Flat Organizations Flat structures have fewer levels and wide spans of control. Structure results in quick communications but can lead to overworked managers. Flat Organizations Figure 10.9 Minimum Chain of Command Minimum Chain of Command Top managers should always construct a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources  Decentralizing authority Centralization and giving lower-level managers and non-managerial employees the right Decentralization to make important decisions about of Authority how to use organizational resources  Disadvantages Teams may begin to pursue their own Decentralizing goals at the expense of organizational Authority goals Can result in a lack of communication among divisions Integrating Mechanisms Figure 10.10 Organizational Culture Organizational culture shared set of beliefs, expectations, values, and norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals Sources of an Organization’s Culture Figure 10.11 Characteristics of Organizational Members Members become similar Ultimate source of over time which may organizational culture is hinder their ability to adapt the people that make up and respond to changes in the organization the environment  Organizational Ethics Organizational Ethics moral values, beliefs, and rules that establish the appropriate way for an organization and its members to deal with each other and people outside the organization  Employment Relationship Human resource policies: Can influence how hard employees will work to achieve the organization’s goals, How attached they will be to it Whether or not they will buy into its values and norms Organizational Structure  In a flat, decentralized structure: people have more freedom to choose and control their own activities Organizational norms that focus on being creative and courageous and Structure taking risks appear gives rise to a culture in which innovation and flexibility are desired goals.  Strong, Adaptive Cultures Versus Weak, Inert Cultures Adaptive cultures values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective Strong, Inert cultures Adaptive Those that lead to values and norms Cultures that fail to motivate or inspire Versus Weak, employees Lead to stagnation and often failure Inert over time Cultures