CREATING EFFECTIVE ORGANIZATIONAL DESIGN

CREATING EFFECTIVE ORGANIZATIONAL DESIGN

Traditional Forms of Organizational Structure

• Organizational Structure refers to formalized patterns of interactions that link the tasks, technologies, and people of a firm.

• Structure are designed to ensure that resources are used most effectively toward accomplishing an organizations mission.

• Structure provides managers with a means of balancing two conflicting forces: a need for division of tasks into meaningful groupings and the need to integrate such groupings in order to ensure organizational efficiency and effectiveness.

• Structure identifies the executive, managerial, and administrative organization of a firm as well as indicating responsibilities and hierarchical relationships.

Patterns of growth of large Corporations

Strategies leading to new structure

Dominant growth path for U.S firms

SIMPLE STRUCTURE

Simple Organizational Structure

FUNCTIONAL STRUCTURE

Functional Organizational structure

Advantages Disadvantages

•Pooling of specialists enhances coordination and control•Centralized decision making enhances an organizational perspective across functions.•Efficient use of managerial and technical talent.

•Differences in functional area orientation impede communication and coordination.•Tendency for specialist to develop short term perspective and narrow functional orientation.•Functional areas may overburden toplevel decision makers.•Difficult to establish uniform performance standards

Functional Structure

DIVISIONAL STRUCTURE

Divisional Structure

Advantages Disadvantages

•Increases strategic and operational control, permitting corporate-level executives to address strategic issues.•Quick response to environmental changes.•Increased focus to products and markets.•Minimized problems associated with sharing resources across functional areas.•Facilitates development of general managers.

•Increased cost incurred through duplication of personnel, operations, and investment.•Dysfunctional Competition among divisions may detract from overall corporate performance•Difficulty in maintaining uniform corporate image.•Overemphasis on short-term performance.

MATRIX STRUCTURE

use to combine products groups and geographical units.

Matrix Structure

Advantage Disadvantages

•Increases market responsiveness through collaboration and synergies among professional colleagues.•Allows more efficient utilization of resources.•Improves flexibility, coordination and communication.•Increases professional development through a broader range of responsibility.

•Dual reporting relationships can result in uncertainty regarding accountability.•Intense power struggles may lead to increased levels of conflict.•Working relationships maybe more complicated and human resources duplicated.•Excessive reliance on group processes and teamwork may impede timely decision making.

INTERNATIONAL OPERATIONS: IMPLICATIONS FOR

ORGANIZATIONAL STRUCTURE

3 major contingencies that seem to influence the structure adopted by firms with international operations.

The type of strategy that is driving a firm’s foreign operations

Product diversityThe extent to which a firm is dependent on

foreign sales.

The primary types of structures to manage a firms international

operations:International DivisionGeographic-area DivisionWorldwide FunctionalWorldwide product DivisionWorldwide Matrix

Boundaryless Organizational Design

Replace the traditional forms of Organizational structure.

3 different types of boudaryless Organization

Barrier-free OrganizationModular OrganizationVirtual Organization

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