INTERNATIONAL

ORGANIZATION
STRUCTURE
Unit 3
Anjali Singh `
Organization
 Formal division of work between different
members of the organization
 Superior – subordinate relationship
 Formal channels of communication
 Levels of Management
Designing Organization Structure
 External Environment
 Overall Objectives of the enterprise
 Nature of Business
 Organization Climate–working atmosphere
 Management Style
 Mode of entry
 Technology
 Size of the organization
 What determines Structure?
 Degree to which tasks divided into separate jobs
 On what basis will the jobs be grouped together
 To whom do groups and Individuals report
 How many direct reports can a manager manage
 Where does the decision making authority lie ?
 To what degree will there be rules & regulations to direct
employees & managers
Determinants & Outcome

Causes Structure Outcome

•Strategy • Mechanistic • Performance
•Size • Organic • Satisfaction
•Technology
•Environment
Approaches to Organization Structure

 Product division Structure

 Geographical Structure
 Strategic business units
 Matrix Structure
 Function Structure
Product Division Structure
Chief Executive Officer

Support
department

Product Product Product Product

A B C D
Advantages
 Appropriate for multiple products
 More effective control amongst various functional
areas
 Division is self-autonomous hence decision taking
is at this level itself
 Faster decisions
 Divisional heads are responsible for profits and
losses
Disadvantages
 Unnecessary duplication of resources
 Inter-department inconsistencies regarding issues
like pay, promotion etc
 Inter – department/ product conflict
Geographical Organization Structure
HQ

USA Europe Asia Africa

India China East Asia

Operations Operations Operations
Advantages
 Products & services are custom designed
 Firm can respond to the needs of the area
 Customer needs are better served
 Can adapt to varying legal needs
 Firms can pinpoint responsibility for profit or loss
Disadvantages
 Duplication of personnel
 Duplication of equipment & facilities
 Difficulty in coordination of company wide
activities
 Lack of uniformity
 Lack of consistent company image
 Another layer of management
Strategic Business Unit

COO – HQ

HQ – level managers

Group Manager Group Manager Group Manager

SBU 1 SBU 2 SBU 3
Advantages
 Provides a strategically relevant way to organize the
portfolio
 Promotes cohesiveness amongst separate but related
businesses
 Strategic planning at the most relevant level
 Strategic review is more objective & effective
 Resource allocation to areas with greatest growth
opportunities
Disadvantages
 Distance between corporate office & SBU
 Conflict between SBU heads for resource
allocation
 Matrix Organization Structure

Managing Director

General Mgr

HQ HQ HQ HQ HQ
- HR Finance Marketing Production R&D

Project R&D
HR Finance Marketing Production
Manager Specialist
Specialists Specialist Specialist Specialist
Country A
Matrix – Suitability
 Management attention has to be focused on 2 or
more key issues
 Diverse information has to be processed
 Problem solving is complex
 Change is rapid
Matrix – advantages
 Advantages of both project and functional
organization structure
 Lowers cost as functional experts used only when
required
 Flexibility – number and specialists can be changed
as per requirements
 Lower level employees involved in decision making
hence motivated
 Project manager can be developed as general
manager
Matrix – disadvantages
 Complex to manage
 Increases administrative costs
 Conflict between the 2 heads
 Violates unity of command
 Creates role ambiguity & role conflict
 Project manager needs to have good inter-personal
skills
 Decision making requires inputs from many sources
Relationship between HQ &
subsidiary
 Information sharing
 Resource sharing
 Decision flows
 Co-ordination of activities
 Control of Operations
 Strategy formulation