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COMBS – Lecture 5

COMBS – Lecture 5. Business Management S Mahelal 2012. Organizational Structure. Learning Objectives: Explain the concepts of organizational structure and design Identify the common structures used by organizations and describe their strengths and weaknesses of each of these structures.

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COMBS – Lecture 5

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  1. COMBS – Lecture 5 Business Management S Mahelal 2012

  2. Organizational Structure Learning Objectives: Explain the concepts of organizational structure and design Identify the common structures used by organizations and describe their strengths and weaknesses of each of these structures

  3. Organizational structure The sum of ways an organization divides its labor into distinct, coordinated tasks Principles of Organizational Structure Organizational design Assessing the organization’s strategy and environmental demands Determining the appropriate organizational structure

  4. Principles of Organizational Structure Organizational charts • Illustration of relationships • Units • Lines of authority among supervisors and subordinates • Illustrated by use of labeled boxes and connecting lines

  5. CEO Executive Vice-President Oil Sands Executive Vice-President Marketing and Refining Executive Vice-President Natural Gas and Alternative Energy Senior Vice-President Major Projects Suncor Energy Organizational Structure Adapted from Exhibit 7.1

  6. CEO Vice President Marketing Vice President Manufacturing Vice President Human Resources Brand Manager Line of Authority A line of authority specifies who reports to whom

  7. CEO Vice President Marketing Vice President Manufacturing Vice President Human Resources Brand Manager Unity of Command An employee should have only one boss

  8. CEO Vice President Marketing Vice President Manufacturing Vice President Human Resources Span of Control The number of employees reporting to a given supervisor

  9. Levels = 4 Span of Control = 3 Total Employees = 40 Tall Organizational Structures Adapted from Exhibit 7.4

  10. Flat Organizational Structures Levels = 3 Span of Control = 7 Total Employees = 57 Adapted from Exhibit 7.4

  11. Centralized organizations Restrict decision making to fewer individuals, usually at the top of the organization Decentralized organizations Tend to push decision-making authority down to the lowest level possible Centralization and Decentralization

  12. Combinations of Formal/Informal and Centralized/Decentralized Formal U.S. Military Philips Electronics Informal Mitsubishi Club Med Centralized Decentralized Adapted from Exhibit 7.5

  13. CEO Vice President Marketing Vice President Sales Vice President Manufacturing Vice President Human Resources Market Research East region Purchasing Recruiting Advertising South region Operations Training Promotion West Region Logistics Compensation Functional Structure Adapted from Exhibit 7.6

  14. Strengths Small- to medium-sized firms with limited product diversification Specialization of functional knowledge Less duplication of functional resources Facilitates coordination within functional areas Weaknesses Weak coordination across functional groups Restricted view of overall organizational goals Limits customer attention Slower response to market changes Burdens chief executives with decisions Functional Structure

  15. CEO Vice President North America Vice President Europe Vice President Southeast Asia Vice President Latin America Vice President Africa Geographical/Regional Structure Adapted from Exhibit 7.10

  16. Strengths: Facilitates local responsiveness Develops in-depth knowledge of specific regions/countries Creates accountability by region Facilitates cross-functional coordination within regions Weaknesses: Often creates cross-regional coordination difficulties Can inhibit ability to capture global scale economies Duplicates resources and functions across regions Geographical/Regional Structure

  17. CEO Health Beauty Cleaning Food NA AP EMEA LA Matrix Structure Adapted from Exhibit 7.11 Adapted from Exhibit 7.11: Matrix Structure

  18. Strengths Information flow Decision quality Suited to a changing and complicated business environment Flexible use of human resources Weaknesses Complexity of performance evaluations Inhibited ability to respond to changing conditions Diffused accountability Conflicts between differing perspectives and objectives Matrix Structure

  19. CEO Vice President North America Vice President Latin America Vice President Asia/Pacific Vice President EMEA Marketing Marketing Marketing Marketing Operations Operations Operations Operations Sales Sales Sales Sales Mixed (or Hybrid) Structure (cont.) Adapted from Exhibit 7.12

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