Fundamentals of Organizational Structure - PowerPoint PPT Presentation

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Fundamentals of Organizational Structure

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  1. Fundamentals of Organizational Structure

  2. Organization Structure • Three Components • Formal reporting relationships • Grouping of people and departments • Design of systems to ensure effective communication, coordination, and integration

  3. Linkages • Vertical • Control • Centralized decision-making • How achieved: • Hierarchical referral • Rules and plans • Vertical Information Systems

  4. Linkages • Horizontal • Learning • Decentralized decision-making • How achieved: • Information systems • Direct contact • Task forces • Integrator • Teams

  5. Organizational Structure • Required Work Activities • Reporting Relationships • Departmental Grouping Options • Functional • Divisional • Multifocused • Horizontal • Modular

  6. Functional Structure CEO Finance Marketing Engineering

  7. Divisional Structure • AKA Product Structure • Decentralized decision-making • Strengths • Weaknesses

  8. Divisional Structure CEO Product One Product Two Product Three

  9. Divisional Structure CEO Soft Drinks Aquafina Gatorade

  10. Geographical Structure • Designed according to where product will be offered

  11. Geographic Structure CEO United States Asia Europe

  12. Matrix Structure • Combines functional and divisional structure • Conditions • Need to share scarce resources • Two critical outputs: • In-depth knowledge and new products • Complex and uncertain domain • Who’s in charge? • Strengths • Weaknesses

  13. Horizontal Structure • Reengineering • Faster and better service for customers • Organized around processes and teams • Strengths • Weaknesses

  14. Modular Structure • Subcontracts processes • Manages them from a central hub • Business focuses only on core competency • Strengths • Weaknesses

  15. Hybrid Structure • Centralized functional structure for stable products; other products may have self-contained departments • Certain departments work through entire organization (functional), but processes are focused in other areas (horizontal).

  16. Applications • Have scarce resources and need efficiency? • Need inter-functional coordination, innovation, and learning?

  17. What Causes Problems? • Decision-making is delayed • Non-responsiveness to environmental changes • Too much conflict/ “Turf wars”