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Types of Organizational Structures

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

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  1. 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)

  2. Benefits of Bureaucracy • Helps us handle complexity • Gives us identity • Adds structure and routine to our lives

  3. 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)

  4. I. Horizontal Differentiation Type of Activity 1. Departmentation Line 2. Establish Support Units Staff

  5. Types of Departmentation

  6. 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

  7. 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

  8. Structural Types:continued 2. Divisional Structure Departmentation by Product Departmentation by Geography Departmentation by Customer

  9. Product Structure: Microsoft 2005 Reorganization CEO Platform Products & Services Entertain- ment & Devices Business Windows Business XBox Server & Tools Software Videogames MSN Mobile Phones

  10. 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.

  11. 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

  12. 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

  13. 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

  14. 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

  15. Customer Structure: ConAgra after 2000 CEO Food Retail Agricul- Service (Grocery tural (restaurants) stores) Products

  16. 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

  17. Structural Types: continued 3. Matrix Structure CEO Production Finance Marketing A B C PA FA MA PB FB MB PC FC MC

  18. Matrix Structures Advantages Disadvantages -Increased flexibility -Dual reporting & adaptability relationships -Improved coordination -Potential power struggles -Empowered workforce -Problems associated with working in groups

  19. Structural Types: continued 4. Team Structure Use of task forces, cross functional teams 5. Network Structure

  20. 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.)

  21. 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

  22. Summary Slide Bureaucratic Structures Adaptive Structures Functional Divisional Matrix Team, Network ***Exact location on this continuum will depend on other structural dimensions

  23. Other Forms of Departmentation - Departmentation by Time - Departmentation by Process or Equipment - Departmentation by Simple Number - Hybrid Departmentation

  24. 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

  25. 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

  26. Types of Departmentation: Review Departmentation can be done by: Function Product Geography Customer Time Process/Equip. Simple Number Hybrid Composite

  27. Functions of Staff 1. Service 2. Advise 3. Control 4. Initiation 5. Innovation

  28. 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?

  29. Vertical Differentiation: continued 1. Short-Circuiting A B C

  30. Short-Circuiting: continued Why it happens: - Need for speed and accuracy - To prevent executive isolation - To protest unfair supervision Problems:

  31. Short Circuiting: depends on - Importance of subject matter - Nature of contact - Degree intermediary level is kept informed

  32. 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?

  33. 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

  34. 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?

  35. Vertical Differentiation: continued 3. Sources of Authority -Formal Authority Theory -Acceptance Theory of Authority (Psychological Contract) -Competence Theory of Authority -Charismatic Theory of Authority

  36. Types of authority in Organizations Line Authority Staff Authority Functional Authority P A B R&D C X Z Y

  37. 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?

  38. 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

  39. III. Integration A. Basic Management Techniques Goal Setting SOPs Referral up the Hierarchy Techniques to supplement basic coordination techniques

  40. Referral up the Hierarchy

  41. 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

  42. 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

  43. Types of Lateral Relations Direct Contact Liaison Roles Committees/Task Forces Integrator Roles Matrix Structure More Formal, More Costly

  44. 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

  45. Which Type of Structure is Best? It Depends!!! Depends on what???

  46. 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

  47. 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.

  48. 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.

  49. James Thompson Type of Type of Type of Technology Interdependence Coordination Mediating Pooled Standardization Long-Linked Sequential Planning Intensive Reciprocal Mutual Adjustment

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