ORGANIZATIONAL STRUCTURE

Chapter 12 Lecture 1

Every Organization has a Structure

structures can differ Due to choice Due to national laws The words used to describe them also can differ Organization chart, design, structure The way they are drawn can differ  pyramid, sideways pyramid, circle
But

The Structural Configuration



is the skeleton of the organization  reflects corporate governance  is intended to meet organizational objectives  arises out of strategic directions  and causes managers to ask:  what structure will best aid us in meeting our strategy and objectives?

Restructuring Occurs for Many Reasons



Turnover in top management  Competitive positioning  Mergers and/or acquisitions  Cost-savings  Even the illusion of managerial control

The Illusion of Managerial Control

We trained hardbut it seemed that every time we were beginning to form up into teams, we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization. Petronius Arbiter, 210 B.C.

Structural Choice is Important Because



it focuses attention on particular areas  shapes how resources will be used  directs communication flows  defines control and other processes  illustrates peoples roles relative to others roles

Your Job
 Understand

organizational objectives (articulated in the varied levels of strategy)  Analyze the structure  Assess the match between organizational strategies and structures

Top Managers Answer to a Power Greater than Themselves

  

God or conscience in a wholly owned private firm The family in a family owned firm The Board in a publicly owned firm:  U.S. boards often are chaired by the CEO  Boards in U.K. usually are chaired by a non U. executive  European companies often have a two-tier twoboard  In Germany, duties are split between supervisory and management boards  Spain and France often use an executive committee

Beneath the Board are Several Structural Types



Intra and interorganizational networks  Special cases  Functional, divisional, hybrids

Networks
Intraorganizational networks internal networks shamrock spiderwebs Interorganizational networks  strategic alliances  joint ventures  partial acquisitions/mergers  cross-sector partnerships

Special Cases


Family structure  Holding companies  Virtual structure

Except for born globals, Most Companies Grow into Expansion

Most Common Structural Types Among Global Firms are:



Functional structure  Divisional structure  Hybrid structures  Combined functional/divisional structure  Matrix structure

Global Functional Structure

CEO

VP Marketing

VP Finance

VP Operations

VP R&D

VP Legal issues

Product 1

Product 2

Product 3

Country A

Country B

Divisional Structure Can Take Different Forms



Product  Geographic  Customer group served

Global Geographic Division Structure

CEO Admi / i

h Ameri

rope

VP E. Asi

VP Australasia

Australia/NZ

Indonesia

Islands

rketi

perations

Global Product Structure

DIVISI

AL STRUCTURE (BY PR DUCT LI ES) C SMETICS C RP RATI

FRAGRA CES

SKI

CARE PR DUCTS

HAIR CARE PR DUCTS

THER PR DUCTS

Hybrids Often Emerge to Deal with Problems of Functional and Divisional Forms


Matrix forms are hybrids  Some hybrids combine a mostly functional structure with one or more important products or markets, e.g., North America  Some hybrids combine a mostly divisional structure with one or more important functions, e.g., marketing

We Use a Matrix to Organize Roles and Relationships in Business Education

Global Matrix Structure

Chairman of the Boar

Executive ommittee
Management

Strategic Business units

N. merica

Latin merica

autos

light tr cks

part

financing

port

tilities

Europe

Asia

Combined Functional and Divisional Structure

Danone Group, 2003
Chair and CEO Vice Chair and COO

General Secretary Exec VP, Biscuits and Cereal Snacks

Exec VP, Finance

Exec VP, Fresh Dairy

Exec VP, Water

Exec VP, Asia-Pacific

Exec VP, Intl Strategy

Intraorganizational Structures
      

spiderwebs internal networks shamrocks horizontal keiretsu chaebol

Mitsubishi Group Network

Mitsubishi Village

Interorganizational Structures


Strategic alliances  Joint ventures  Partial acquisitions

Special Cases


 

Family structuresusually hierarchical with a structures patriarch/matriarch or a set of family members who divide tasks according to skill or obligation Structures that arise out of national tradition tradition German firms always have union representation and two levels of boards Holding companies Virtual organizations