Chapter 12 Lecture 1 Organizational Structure

8/2/2019 Chapter 12 Lecture 1 Organizational Structure

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ORGANIZATIONALSTRUCTURE

Chapter 12 Lecture 1


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Every Organization has a

StructureBut structures can differ

Due to choice

Due to national laws

The words used to describe them also can

differ

Organization chart, design, structureThe way they are drawn can differ

pyramid, sideways pyramid, circle


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The Structural Configuration

is the skeleton of the organization

reflects corporate governance

is intended to meet organizationalobjectives

arises out of strategic directions

and causes managers to ask:what structure will best aid us in meeting

our strategy and objectives?


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Restructuring Occurs for Many

Reasons

Turnover in top management

Competitive positioning

Mergers and/or acquisitions

Cost-savings

Even the illusion of managerial control


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The Illusion of Managerial

ControlWe 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 wetend 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.


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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


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Your Job

Understand organizational objectives

(articulated in the varied levels of

strategy)

Analyze the structure

Assess the match betweenorganizational strategies and structures


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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

executive

European companies often have a two-tier

board In Germany, duties are split between

supervisory and management boards

Spain and France often use an executivecommittee


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Beneath the Board are

Several Structural Types Intra and interorganizational networks

Special cases

Functional, divisional, hybrids


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Networks

Intraorganizational networks

internal networks

shamrockspiderwebs

Interorganizational networks

strategic alliances

joint ventures

partial acquisitions/mergers

cross-sector partnerships


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Special Cases

Family structure

Holding companies

Virtual structure


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Except for born globals, Most

Companies Grow intoExpansion


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Most Common StructuralTypes

Among Global Firms are: Functional structure

Divisional structure

Hybrid structures

Combined functional/divisional structure

Matrix structure


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Global Functional Structure

VP Marketing VP Finance

Country A Country B

Product 1 Product 2 Product 3

VP Operations VP R&D VP Legal issues

CEO


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Divisional Structure Can Take

Different Forms Product

Geographic

Customer group served


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Global Geographic Division

Structure

Admin/Finance

VP for the Americas VP Europe VP E. Asia

Marketing Operations

Australia/NZ Indonesia Islands

VP Australasia

CEO


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Global Product Structure

DIVISIONAL STRUCTURE (BY PRODUCT LINES)

FRAGRANCES SKIN CARE PRODUCTS HAIR CARE PRODUCTS OTHER PRODUCTS

COSMETICS CORPORATION


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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


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We Use a Matrix to

Organize Roles andRelationships in Business

Education


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Global Matrix Structure

Management

financing

parts

sports utilities

light trucks

autos

Strategic Business units N. America Latin America Europe Asia

Executive Committee

Chairman of the Board


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Combined Functional andDivisional Structure

Danone Group, 2003

Chair and CEO Vice Chair and COO

General

SecretaryExec VP,

Finance

Exec VP,

Fresh Dairy

Exec VP,

Water

Exec VP,

Biscuits and

Cereal Snacks

Exec VP,

Asia-PacificExec VP,

Intl Strategy


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Intraorganizational Structures

spiderwebs

internal networks

shamrocks

horizontal keiretsu

chaebol


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Mitsubishi Group Network


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Mitsubishi Village


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Interorganizational Structures

Strategic alliances

Joint ventures

Partial acquisitions


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Special Cases

Family structuresusually hierarchical with a

patriarch/matriarch or a set of family members

who divide tasks according to skill or obligation Structures that arise out of national tradition

German firms always have union representation

and two levels of boards

Holding companies

Virtual organizations


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Chapter 12 Lecture 1 Organizational Structure