Transcript Lecture 3
Organizational structure and design ? Organization An organization is a collection of people working together in a coordinated and structured fashion to achieve one or more goals. A consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals A social arrangement for the performance of the collective goals controlled 1 Organizational structure and design ? Organization Social arrangements: Organizations are collection of peoples and machines in a structured way Collective goals: Existence of organizations depend up achievement of common goals Controlled performance: Controlled performance means deliberate allocated on resource between organization members which includes: •Resource allocation •Control function 2 Organizational structure and design ? Organization and people •Organizations are strongly influenced by the people that form part of them. •Organizations can take in part of the personality of the people within them and their attitudes, perceptions and behaviors affect how an organization will operate. Organization’s Role in Society •Organizations exist to allow accomplishment of work that could not be achieved by people alone. •As long as the goals of an organization are appropriate, society will allow them to exist and 3 they can contribute to society Organizational structure and design ? Why organizations exist? •Together they individually achieve what cannot achieve •Overcome environmental and biological limitations •Increase productively due to: •Work specialization / division of labour •Exchange •Synergy: Together we grow better •Increased knowledge enhancement •Transaction – cost organization: •Saving in time •Reduce cost development economies approach and to 4 Organizational structure and design ? Images and perception of organizations Our lives become, for better and for worse, a society of organizations. We are born in organizations and are educated in organizations that we can later work in organizations. At the same time, organizations supply us and entertain us, they govern us and harass us. Finally we are buried by organizations (Henry Mintzberg). Images/Metaphors of 0rganizations: Gereth Morgan 1. Organizations are machines 2. Organizations are biological organism 3. Organizations are human brains 4. Organizations are cultures or subcultures 5. Organizations are sub systems 6. Organizations are political systems 7. Organizations are psychic prisons 8. Organizations are systems of change and transformation 5 9. Organizations are instruments of domination Organizational structure and design ? Classification of organizations •By ownership: •By control: •Activity: •Legal structure: •Objective: •Accountability •Source of finance: •Region: Private, private Managers, trustees Retailer, manufactures, hospital Partnership, company Commercial, non commercial Debt, equity National or international 6 Organizational structure and design ? Basic Classification of organizations •Business organizations •Non business organizations Business organizations •Definition: •Legal •Capital •Profit objective •Types : •Sole - proprietorship •Partnership •Company •Activities: •Manufacturing •Mining •Energy •Retailing •Services •Services are intangible •Services are inseparable •Services are heterogeneous 7 •Intellectual production Organizational structure and design ? Basic Classification of organizations Non business organization •Public organizations •Non profit organizations Public organizations •Definition: •Run by government •Capital •Non-profit objective •Diverse nature •Characteristics •Accountable to parliament •Command resources •Base on fairness •Equality •Resource based not price based •Types : •Regulatory bodies •Health institutions •Educational institutions •Policy making bodies •Etc 8 Organizational structure and design ? Basic Classification of organizations Non business organization •Public organizations •Non profit organizations Non profit organizations •Definition: •Formed for purpose •Capital •Non-profit objective •Public service •Types : •Clubs •Trade unions •Associations •Charities •Professional association 9 Types of organizational structure ? Simple Structure An organization that is low in specialization and formulization but high in centralization This Organization reflects the owner as president with all employees directly reporting to him 10 Types of organizational structure ? Functional Structure An organization in which similar and related occupational specialties are grouped together Plant Manager Manager Engineering Manager Accounting ADVANTAGES Manager MIS Manager Human Resources Manager Purchasing DISADVANTAGES •Helps top management in coordinating and •Creates a rigid and slow moving organization controlling the entire organization to follow a •Leads to a loss of innovation and innovation uniform strategic direction thinking as employee become more process •Clarifies the roles/responsibilities and what is oriented (focused on following correct expected of each employee procedures and protocol) rather than results oriented •Allows each department to focus on its own work / activities •Does not allow for sharing of information / ideas across departmental lines (which is viewed as •Provides clear accountability at both the being especially important in today’s knowledge departmental and individual level economy) 11 Types of organizational structure ? Divisional Structure An organization made up of self-contained units President Vice President Fuels Vice President Lubricants And Waxes Vice President Chemicals Marketing Marketing Marketing Planning and Economics Planning and Economics Planning and Economics Supply and Distribution Supply and Distribution Supply and Distribution Manufacturing Manufacturing Manufacturing 12 Types of organizational structure ? ------------------Geographical Structure An organization in which activities in a given area or territory be grouped and assigned to a manager President Marketing Personnel Western Region Personnel Southwest Region Engineering Purchasing Central Region Production Finance Southeast Region Accounting Eastern Region Sales ADVANTAGES DISADVANTAGES •Places responsibility at a lower level •Places emphasis on local markets and problems •Improves coordination in a region •Takes advantage of economies of local operations •Better face-to-face communication with local interests •Furnishes measurable training ground for general managers •Requires more persons with general manager abilities •Tends to make maintenance of economical central services difficult and may require services such as personnel or purchasing at the regional level •Increases problem of top management control 13 Types of organizational structure ? Customer based / Product Structure An organization in which activities reflect a primary interest in customers President Community-City Banking Real Estate & Mortgage loans ADVANTAGES Corporate Banking Agricultural Banking Institutional Banking DISADVANTAGES •Enables an organization to be more aligned •Individual departments can become too with the needs of its customers autonomous which makes setting and •Promotes innovation and innovative coordinating a single strategic direction to be thinking as the organizational culture followed difficult becomes more focused on problem solving •It limits the sharing of information / ideas across / meeting customer needs than following the organization lines (which is viewed as being processes and protocol especially important in today’s knowledge economy) 14 Types of organizational structure ? Modern Organization Designs Strategic Business Units (SBUs) Project Structure Matrix Structure Virtual Structure1 15 Modern Organization Designs Strategic Business Units (SBUs) The SBU structure groups similar division into business units and delegates authority and responsibility for each unit to a senior executive who reports directly to CEO Chief Executive Officer Chief Strategy Officer (CSO) Chief Finance Officer (CFO) Chief Operating Officer (COO) Industrial Products SBU Adhesive Packaging Division Tubes / Cores Division Paper Division Chief Information Officer (CIO) VP of Human Resources VP of Marketing Consumer Products SBU Reels Division Flexible High Packaging Density Film Division Division Metal Ends Division Rigid Division 16 Modern Organization Designs Project Structure An organization in which activities require a great deal of planning, research and coordination General Manager Project A Quality Control Engineering R&D Project B Contract Scheduling Administration Manufacturing Purchasing Quality Control Engineering R&D Contract Scheduling Administration Manufacturing Purchasing 17 Modern Organization Designs Matrix Structure An organization in which specialists from functional departments are assigned to work on one or more projects led by a project manager Head of Design Function Head of Engineering Function Head of Purchasing Function Project Manager Project Team Project Manager Project Team Project Manager Project Team Head of Construction Function 18 Modern Organization Designs Virtual Structure An organization in which a very few activities are carried out and as much as possible work is carried out by other organizations Design Company Logistics Company Core Company Sales and Marketing Company Manufacturing Company Finance Company 19 Questions ? 20 Thank You 21