COMBS – Lecture 5
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COMBS – Lecture 5 Business Management S Mahelal 2012
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COMBS – Lecture 5. Business Management S Mahelal 2012. Organizational Structure. Learning Objectives: Explain the concepts of organizational structure and design Identify the common structures used by organizations and describe their strengths and weaknesses of each of these structures. - PowerPoint PPT Presentation
Transcript of COMBS – Lecture 5
COMBS – Lecture 5Business Management
S Mahelal2012
© 2008 Prentice-Hall Business Publishing 2
Organizational Structure
Learning Objectives:Explain the concepts of organizational structure and designIdentify the common structures used by organizations and describe their strengths and weaknesses of each of these structures
© 2008 Prentice-Hall Business Publishing 3
Principles of Organizational Structure
Organizational structureThe sum of ways an organization divides its labor into distinct, coordinated tasks
Organizational designAssessing the organization’s strategy and environmental demandsDetermining the appropriate organizational structure
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Principles of Organizational Structure
Organizational chartsIllustration of relationships- Units- Lines of authority among
supervisors and subordinates
Illustrated by use of labeled boxes and connecting lines
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Suncor Energy Organizational Structure
CEO
ExecutiveVice-President
Oil Sands
ExecutiveVice-PresidentMarketing and
Refining
ExecutiveVice-President
Natural Gas andAlternative
Energy
SeniorVice-President
Major Projects
Adapted from Exhibit 7.1
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Line of Authority
A line of authority specifies who reports to whom
CEO
Vice PresidentMarketing
Vice PresidentManufacturing
Vice PresidentHuman
Resources
Brand Manager
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Unity of Command
CEO
Vice PresidentMarketing
Vice PresidentManufacturing
Vice PresidentHuman
Resources
Brand Manager
An employee should have only one boss
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Span of Control
CEO
Vice PresidentMarketing
Vice PresidentManufacturing
Vice PresidentHuman
Resources
The number of employees reporting to a given supervisor
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Tall Organizational Structures
Levels = 4Span of Control = 3Total Employees = 40
Adapted from Exhibit 7.4
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Flat Organizational Structures
Levels = 3Span of Control = 7Total Employees = 57
Adapted from Exhibit 7.4
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Centralization and Decentralization
Centralized organizationsRestrict decision making to fewer individuals, usually at the top of the organization
Decentralized organizationsTend to push decision-making authority down to the lowest level possible
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Combinations of Formal/Informal and Centralized/Decentralized
U.S. Military PhilipsElectronics
Mitsubishi Club Med
Centralized Decentralized
Formal
Informal
Adapted from Exhibit 7.5
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Functional Structure
CEO
Vice PresidentMarketing
Vice PresidentSales
Vice PresidentManufacturing
Vice PresidentHuman
Resources
MarketResearch
Advertising
Promotion
East region
South region
West Region
Purchasing
Operations
Logistics
Recruiting
Training
Compensation
Adapted from Exhibit 7.6
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Functional Structure
StrengthsSmall- to medium-sized firms with limited product diversificationSpecialization of functional knowledgeLess duplication of functional resourcesFacilitates coordination within functional areas
WeaknessesWeak coordination across functional groupsRestricted view of overall organizational goalsLimits customer attention Slower response to market changesBurdens chief executives with decisions
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Geographical/Regional Structure
CEO
Vice PresidentNorth America
Vice PresidentEurope
Vice PresidentSoutheast Asia
Vice PresidentLatin America
Vice PresidentAfrica
Adapted from Exhibit 7.10
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Geographical/Regional Structure
Strengths:Facilitates local responsivenessDevelops in-depth knowledge of specific regions/countriesCreates accountability by regionFacilitates cross-functional coordination within regions
Weaknesses:Often creates cross-regional coordination difficultiesCan inhibit ability to capture global scale economiesDuplicates resources and functions across regions
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Matrix Structure
Adapted from Exhibit 7.11: Matrix Structure
CEO
Health Beauty Cleaning Food
NA
AP
EMEA
LA
Adapted from Exhibit 7.11
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Matrix Structure
StrengthsInformation flow Decision quality Suited to a changing and complicated business environmentFlexible use of human resources
WeaknessesComplexity of performance evaluationsInhibited ability to respond to changing conditionsDiffused accountabilityConflicts between differing perspectives and objectives
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Mixed (or Hybrid) Structure (cont.)
CEO
Vice PresidentNorth America
Vice PresidentLatin America
Vice PresidentAsia/Pacific
Vice PresidentEMEA
Marketing
Operations
Sales
Marketing
Operations
Sales
Marketing
Operations
Sales
Marketing
Operations
Sales
Adapted from Exhibit 7.12
