Lesson 2 - Types of Traditional Structures

Unit 5 Traditional Organizational Structures BOH4M Lesson 2 Date:  o Describe organizing as a management function Planning Ahead — Chapter 7 o Understand, describe and Learning Goals sketch the traditional types of...

Unit 5 Traditional Organizational Structures BOH4M Lesson 2 Date:  o Describe organizing as a management function Planning Ahead — Chapter 7 o Understand, describe and Learning Goals sketch the traditional types of organization structures o Examine different types of organizational structures. oTraditional structures 2  Traditional Organizational structures Departmentalization is the process of grouping people and jobs into work units 3 major types: 1. Functional structures 2. Divisional structures – Product – Geographical – Customer service – Process 3. Matrix structures 3  1. Functional structures People with similar skills and performing similar tasks are grouped together into formal work units Members work in their functional areas of expertise Are not limited to businesses Work well for small organizations producing few products or services Works well in stable environments with predictable problems 4 Functional structures in a business, branch bank, and hospital 5  Potential advantages of functional structures: Economies of scale and efficient use of resources Task assignments consistent with expertise and training High-quality technical problem solving In-depth training and skill development Clear career paths within functions 6 Potential disadvantages of functional structures: Difficulties in pinpointing responsibilities Functional chimneys problem (a lack of communication, coordination, and problem- solving across the various function) Sense of cooperation and common purpose break down Narrow view of performance objectives Excessive upward referral of decisions, which may slow the process and risk harming performance 7  2. Divisional structures Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region Common in complex organizations Avoid problems associated with functional structures 8  Divisional Structures (cont’d) Types of divisional structures and how they group job and activities: – Product structures focus on a single product or service – Geographical structures focus on the same location or geographical region – Customer structures focus on the same customers or clients to meet the special needs of different customer groups – Process structures focus on the same 9 Divisional structures based on product, geography, customer, and process 10  Advantages of Divisional structures: In a desire to avoid functional chimneys problem – More flexibility in responding to environmental changes – Improved coordination – Clear points of responsibility – Expertise focused on specific customers, products, and regions – Greater ease in restructuring Adding or closing divisions 11  Disadvantages of divisional structures: Duplication of resources and efforts across divisions Increasing costs Competition and poor coordination across divisions As divisions compete for resources and top- management attention Emphasis on divisional needs at expense of organizational goals 12  3. Matrix structure Combines functional and divisional structures to gain advantages and minimize disadvantages of each Used in: – Manufacturing – Service industries – Professional fields – Non-profit sector – Multi-national corporations 13 Potential Advantages of Matrix Structures: Better cooperation across functions Improved decision making Increased flexibility in restructuring Better customer service Better performance accountability Improved strategic management 14  Potential Disadvantages of Matrix Structures: Two-boss system is susceptible to power struggles Two-boss system can create task confusion and conflict in work priorities Team meetings are time consuming Team may develop “groupitis” Increased costs due to adding team leers to structure 15  Sony Organization Data (Functional, Divisional, matrix?) https://www.sony.net/SonyInfo/CorporateInf o/Data/organization.html 16 Watch the Video on Organizational Structure 17  Success criteria I know I am successful if: I can describe organizing as a function of management I can identify and explain 3 major types of organizational structures (functional, divisional, matrix), their advantages and disadvantages 18