A Global and Entrepreneurial Perspective

MANAGEMENT

PRINCIPLES OF MANAGEMENT

Sr. No. Chapter No. Chapter Heading1 1 Management: Science, Theory and Practice (27th September 2010)2 4 Essentials of Planning and Managing by Objectives (4th Oct)3 5 Strategies, Policies and Planning Premises (11th Oct)4 6 Decision Making (18th Oct)

5 7 The Nature of Organizing, Entrepreneuring, and Reengineering (25th Oct)

6 8 Organization Structure: Departmentation (1st Nov)7 9 Line/ Staff Authority, Empowerment and Decentralization8 10 Effective Organizing and Organization Culture9 14 Human Factors and Motivation

10 15 Leadership11 16 Committees, Teams and Group Decision Making12 18 The System and Process of Controlling

Sessional Evaluation External Evaluation15 15 20 50 50

Quiz per Class Assignment & Presentation Mid-term Total Sessional External Exam

Organization Structure: Departmentation

Chapter 6

TABLE OF CONTENTS

1. DEPARTMENTATION BY ENTERPRISE FUNCTION2. DEPARTMENTATION BY TERRITORY OR GEOGRAPHY3. DEPARTMENTATION BY CUSTOMER GROUP4. DEPARTMENTATION BY PRODUCT5. MATRIX ORGANIZATION6. STRATEGIC BUSINESS UNITS7. xORGANIZATION STRUCTURES FOR THE GLOBAL

ENVIRONMENT8. THE VIRTUAL ORGANIZATION9. xTHE BOUNDARYLESS ORGANIZATION10. CHOOSING THE PATTERN OF DEPARTMENTATION

QUIZWHAT DEPARTMENTS WOULD YOU LIKE TO HAVE IN YOUR FUTURE IT ORGANIZATION?NAME ANY

DEPARTMENTATION BY ENTERPRISE FUNCTION

Departmentation: “Grouping of activities according to the functions of an enterprise, such as production, sales and financing”. Functions may be production, sales, finance, Human Resources, IT, Technology, Marketing, engineering etcFunctional department

Found in Not found in

Production Manufacturing company Madrisahs, schools, transport

Sales Distribution, Telecommunication, FMCGs

NGOs

Advantages Disadvantages

Functional departmentation is a logical reflection of functions

De-emphasizes overall company objectives

Maintains power and prestige of major functions

Overspecializes and narrows view points of key personnel

Follows principle of occupational specialization

Reduces coordination between functions

Simplifies training Responsibility for profits is at the top only

Furnishes means of tight control at top

Slow adaptation to changes in the environment

Limits development of general managers

DEPARTMENTATION BY TERRITORY OR GEOGRAPHY “Grouping of activities by area or territory is common in

enterprises operating over wide geographic areas” for example automobile assembling, chain retailing, wholesaling, oil refining, postal service, courts etc

Advantages Disadvantages

Places responsibility at lower level Requires more persons with general manager abilities

Places emphasis on local markets and problems

Tends to make maintenance of economical central services difficult and may require services such as personnel or purchasing at the regional level

Takes advantage of economies of local operations

Increases problem of top management control

Better face to face communication with local interests

Furnishes measurable training ground for general managers

DEPARTMENTATION BY CUSTOMER GROUP “Grouping of activities that reflects a primary interest in

customers for example consumer banking, corporate banking, wholesale super stores (macro), Glow, Djuice etc

Advantages Disadvantages

Encourages concentration on customer needs

May be difficult to coordinate operations between competing customer demands

Gives customer feeling that they have an understanding supplier (banker for instance)

Requires managers and staff expert in customer problems

Develops expertise in customer areas

Customer groups may not always be clearly defined

DEPARTMENTATION BY PRODUCT “Grouping of activities according to products or product lines

especially in multiline, large enterprises

Advantages Disadvantages

Places attention and effort on the product line

Requires more persons with GM abilities

Facilitates use of specialized capital, facilities, skills and knowledge

Tends to make maintenance of economical central services difficult

Permits growth and diversity of products and services

Presents increased problem of top management control

Improves coordination of functional activities

Places responsibility for profits at the divisional level

Furnishes measurable training ground for general managers

MATRIX ORGANIZATION “the combining of functional and project or product patterns

of departmentation in the same organization” for example installation of a data processing system, construction, engineering etc

Advantages Disadvantages

Oriented towards end results Conflict in organization authority exists

Professional identification is maintained

Possibility of disunity of command exists

Pinpoints product-profit responsibility

Requires manager effective in human relations

Project A Manager

Project B Manager

Project C Manager

Project D Manager

STRATEGIC BUSINESS UNITSDistinct businesses set up as units in a larger company to

ensure that certain products or product lines are promoted and handles as through each was an independent business”

To be an SBU, the unit must:have its own mission, distinct from othersHave definable group of competitorsbe able to prepare its own integrative partsmanage its own resources in key areasbe of appropriate size

Potential problemsThe allocation of resources to individual SBUs can result in

underinvestment in core competencies (such as in engines in automobiles) that benefit the total organization

The SBU managers may tend to hide talented people rather than lend them to another SBU

THE VIRTUAL ORGANIZATIONA rather loose concept of a group of independent firms or

people that are connected through, usually information technology

Benefits:These operate with minimal HR expensethe competencies of remotely operating parts or people or other

organizations are accessibleOrganizations are flexibleReduced risks involvedThese can respond rapidly to market needs

Disadvantage: The other competitors have the room to take advantage of

the same competencies as wellThe virtual library, or virtual university or people working

from home for organizations are few examples

CHOOSING THE PATTERN OF DEPARTMENTATIONKeeping in mind the following helps the managers to

decide on the type of department they chooseThe situation the organization is facingWhat kind of jobs are to be doneWho are people and what are their personalitiesWhat is the technology employed in the departmentWhat kind of customers they haveWhat are the internal and external factors of the

organizationWhat are the goals and objectives of the organizationWhat are the advantages and disadvantages of each type

of departmentationThe types may be modified depending upon the situationA mixed type of departmentation may also be adopted