Types of Organizational Structures
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Types of Organizational Structures. Formal versus Informal Structures Bureaucratic versus Adaptive Structures. In bureaucracies (Weber): Everyone knows what is expected of them (specific job descriptions) Everyone knows to whom they report (hierarchy of authority)

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Types of Organizational Structures

Formal versus Informal Structures

Bureaucratic versus Adaptive Structures

  • In bureaucracies (Weber):

  • Everyone knows what is expected of them

  • (specific job descriptions)

  • Everyone knows to whom they report

  • (hierarchy of authority)

  • Everyone has impersonal rules to guide them

  • (company manuals, procedures etc)


Benefits of bureaucracy
Benefits of Bureaucracy

  • Helps us handle complexity

  • Gives us identity

  • Adds structure and routine to our lives


The Process of Organizing

1. Grouping similar activities together.

(Horizontal differentiation)

2. Assigning a manager to each group

(Vertical differentiation)

3. Provide for coordination

(Integration)


I. Horizontal Differentiation

Type of

Activity

1. Departmentation Line

2. Establish Support Units Staff



Departmentation and Structural Types

1. Functional Structure

Uses departmentation by function

Advantages Disadvantages

- Greater efficiency -As complexity

through economies increases,harder

of scale to coordinate

- Strong control at top -Lack of general

managers


Amgen’s Organizational Structure

CEO

VP VP VP VP VP

Develop. Finance Sales & Operations Human

Marketing Resources

VP VP VP VP

Intellectual Product Research General

Property Develop. Counsel


Structural Types:continued

2. Divisional Structure

Departmentation by Product

Departmentation by Geography

Departmentation by Customer


Product Structure: Microsoft 2005 Reorganization

CEO

Platform

Products &

Services

Entertain-

ment &

Devices

Business

Windows Business XBox

Server & Tools Software Videogames

MSN Mobile Phones


Product Structure: GE 2008 Reorganization

CEO

Technology

Infrastructure

Energy

Infrastructure

GE Capital

NBC Universal

Does not include the consumer and industrial division which GE intends to

sell or spin-off.


Product Structure: GE Update 2011

CEO

Global

Growth &

Operations

Energy

GE

Capital

Home &

Business

Solutions

GE

Healthcare

Aviation

Transport - ation

Reflects the sale of NBC and the fact they were unable to sell all of their consumer and Industrial division


Product Structure: ConAgra1

CEO

Agri- Beatrice Beef Food- Frozen Poultry

Prod- Foods Co.s Service Prep. Co.

ucts Co. Foods

Grocery Refrig. Trading Swift

Products Prepared & Processing & Co.

Co.s Foods Co.s

Co.s

1

Prior to restructuring in 2000


ConAgra Brands

Act II Eckrich Peter Pan

Armour Fleischman’s Slim Jim

Banquet Healthy Swift

Blue Bonnet Choice Premium

Butterball Hunt’s Swiss Miss

Country LaChoy Van Camp

Orville Reddenbacher’s Wesson

Each generates over $100 million in sales


Geographic Structure: Macy’s

CEO

Macy’s

East

Macy’s

Florida

Macy’s

MidWest

Macy’s

North

Macy’s

NW

Macy’s

South

Macy’s

West

Macy’s

.Com


Customer Structure: ConAgra after 2000

CEO

Food Retail Agricul-

Service (Grocery tural

(restaurants) stores) Products


Divisional Structures

Advantages Disadvantages

-Profit Centers can be -Less efficient due to

used to push responsibility duplication of

for profits lower in the org. activities

-More responsive to change -Increased demand

for coordination

-Good training for general -Loss of control at

managers the top


Structural Types: continued

3. Matrix Structure

CEO

Production Finance Marketing

A

B

C

PA FA MA

PB FB MB

PC FC MC


Matrix Structures

Advantages Disadvantages

-Increased flexibility -Dual reporting

& adaptability relationships

-Improved coordination -Potential power

struggles

-Empowered workforce -Problems

associated with

working in

groups


Structural Types: continued

4. Team Structure

Use of task forces, cross functional

teams

5. Network Structure


Extreme Network Structure: The Virtual Org.

Our Org.

Manufacturing

(done by an

Asian Co.)

Marketing

(done by a

European Co)

Finance

(done by an

Indian Co.)


Network Structure

Advantages Disadvantages

-allows org. to compete -Employee

even globally with few morale,

resources commitment?

-Flexibility - can add/ -Greater

drop subcontractors uncertainty

easily due to lack of

hands on

control


Summary Slide

Bureaucratic Structures Adaptive Structures

Functional Divisional Matrix Team,

Network

***Exact location on this continuum will depend on other structural dimensions


Other Forms of Departmentation

- Departmentation by Time

- Departmentation by Process or

Equipment

- Departmentation by Simple Number

- Hybrid Departmentation


Hybrid Structure: Altria Group*

CEO

Kraft Philip Philip Philip

Foods Morris Morris Morris

USA Intl. Capital

* Prior to the spin-off of Kraft and Philip Morris Intl


Hybrid: Pepsi Cola

CEO

PepsiCo

Americas

Foods

PepsiCo

Americas

Beverages

PepsiCo

Europe

PepsiCo

Asia Middle East & Africa

Frito-Lay

North

America

Quaker

Foods

North

America

Latin

America

Food &

Snacks


Types of Departmentation: Review

Departmentation can be done by:

Function

Product

Geography

Customer

Time

Process/Equip.

Simple Number

Hybrid

Composite


Functions of Staff

1. Service

2. Advise

3. Control

4. Initiation

5. Innovation


II. Vertical Differentiation

  • Deals with 5 authority related issues:

  • How firmly should one adhere to the hierarchy of

  • authority?

  • How many subordinates should each manager

  • have?

  • What is the nature of authority in organizations?

  • Where should decisions be made in organizations?

  • To what degree should authority relationships

  • be written down?


Vertical Differentiation: continued

1. Short-Circuiting

A

B

C


Short-Circuiting: continued

Why it happens:

- Need for speed and accuracy

- To prevent executive isolation

- To protest unfair supervision

Problems:


Short Circuiting: depends on

- Importance of subject matter

- Nature of contact

- Degree intermediary level is

kept informed


II. Vertical Differentiation:continued

  • Deals with 5 authority related issues:

  • How firmly should one adhere to the hierarchy of

  • authority?

  • How many subordinates should each manager

  • have?

  • What is the nature of authority in organizations?

  • Where should decisions be made in organizations?

  • To what degree should authority relationships

  • be written down?


Vertical Differentiation: continued

2. Span of Control (Span of Management)

Depends on:

- Nature of the work

- Nature of the executive

- Nature of the subordinates

- Methods of management used


II. Vertical Differentiation: continued

  • Deals with 5 authority related issues:

  • How firmly should one adhere to the hierarchy of

  • authority?

  • How many subordinates should each manager

  • have?

  • What is the nature of authority in organizations?

  • Where should decisions be made in organizations?

  • To what degree should authority relationships

  • be written down?


Vertical Differentiation: continued

3. Sources of Authority

-Formal Authority Theory

-Acceptance Theory of Authority

(Psychological Contract)

-Competence Theory of Authority

-Charismatic Theory of Authority


Types of authority in Organizations

Line Authority

Staff Authority

Functional

Authority

P

A

B

R&D

C

X

Z

Y


II. Vertical Differentiation: continued

  • Deals with 5 authority related issues:

  • How firmly should one adhere to the hierarchy of

  • authority?

  • How many subordinates should each manager

  • have?

  • What is the nature of authority in organizations?

  • Where should decisions be made in organizations?

  • To what degree should authority relationships

  • be written down?


Vertical Differentiation: continued

4. Centralization vs. Decentralization

-Costliness of Decisions

-Need for uniformity of policies

-Growth history

-Availability of qualified managers

-Environmental influences

5. Formalization


III. Integration

A. Basic Management Techniques

Goal Setting

SOPs

Referral up the Hierarchy

Techniques to supplement

basic coordination techniques



Integration: continued

A. Basic Management Techniques

Goal Setting

SOPs

Referral up the Hierarchy

B. Reduce the need to

process information

-Create slack resources

-Create self contained

units


Integration: continued

A. Basic Management Techniques

Goal Setting

SOPs

Referral up the Hierarchy

B. Reduce the need to C. Increase the capacity

process information to process information

-Create slack resources -Invest in vertical

-Create self contained information systems

units -Establish lateral

relations


Types of Lateral Relations

Direct Contact

Liaison Roles

Committees/Task Forces

Integrator Roles

Matrix Structure

More

Formal,

More

Costly


Types of Structures

Bureaucratic Adaptive

Mechanized Organic

Structure Summary

Departmentation Functional Divisional, Team,

Network

Use of Staff Large/Diversified Small/

Concentrated

Hierarchy Strict Adherence Short-circuiting

Span of Control Narrow Wide

Source of Authority Position Expertise

Locus of Authority Centralized Decentralized

Formalization High Low

Integration Basic Techniques Supplemental

Job Design Simple/Repetitive Multi-skilled

Work Group Formal Admin. Teams

Unit


Which Type of Structure is Best?

It Depends!!!

Depends on what???


Contingency Factors of Org. Design

1. Organizational Strategy

e.g.

Strategy Structure

Domain Defender

Cost Leader

Concentration

Enthusiastic Prospector

Differentiation

Conglomerate Divers.

More

Mechanistic

More

Adaptive


2. The Nature of the Environment

Structure

Bureaucratic Adaptive

Good Fit,

Maximizes

efficiency

Poor Fit,

Structure too

loose, ineffic.

Stable

Dynamic

Environ.

Good Fit,

Enhances

effectiveness

Poor Fit,

Structure too

tight, ineffect.


3. Nature of Technology

Joan Woodward

Type of Technology Structure Why?

Unit/Small Batch Adaptive # Exceptions

is high

Mass Production Mechanistic Maximizes

efficiency

Continuous Adaptive Consequences

Production of an except.

are high.


James Thompson

Type of Type of Type of

Technology Interdependence Coordination

Mediating Pooled Standardization

Long-Linked Sequential Planning

Intensive Reciprocal Mutual

Adjustment


Summary Statements on Structure

1. Recognition of the external environment

and its influence.

2. Need to match structure with the

situation (Contingency factors)

3. Recognition that different parts of an

organization may face different situations

and, therefore, be structured differently.

4. Recognition that organizations may

choose to alter the situation to fit its

structure.


Strategy

Environment Structure

Technology

Strategy

Environment Structure

Technology

OR


Popular Structural “Buzzwords”

Downsizing

Restructuring

Reengineering


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