Transcript CLASSICAL ORGANIZATION DESIGN

Output-Oriented
Divisionalized Forms
Product Line Departmentalization
President
VP- Soap
Products
VP – Cleansing
Products
VP – Margarine
Products
VP – Refinery
Products
Product line structure is a design that groups similar or
related products together.
Insurance Company by Product
Lines
Product Line Divisions with
Corporate Support Units
President
VP – Sales and
Marketing
VP – Research
& Development
VP - Finance
VP – Materials
Management
VP – Canned
Soups Division
VP – Frozen
Vegetables Division
VP – Baked Goods
Division
This structure provides centralized support
functions/services for the needs of several different
product lines.
Levi Strauss – Product Lines with
Corporate Support Units
Product Team Structure
CEO
VP – Sales
& Marketing
VP – R&D
VP - Operations
VP – Materials
Management
VP - Finance
Product Development Teams
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PTM
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PTM
PTM
Product Division
Product Division
PTM -Product Team Mgr
●-Functional specialists
Product Division
Product Team Structure
The Product Team structure is a cross between the
product division structure where support functions are
centralized and the multi-divisional structure where
each division has its own support functions.
It is used primarily where the focus of the industry is
on product customization. The functional orientation of
specialists is seen as not in the best interests of the
product divisions.
Process Departmentalization
President
VP – Lathe
Cutting Division
VP – Treatment of
Materials Division
VP – Painting
Division
Process structure is a design that group similar
organizational processes together. These processes
are usually technologically-based, but not always.
An Example – Process Departments
President
Accounting
Heavy Casting
Division
Stamping
Division
Screw Machine
Division
A metalworking company
Plastic Extension
Division
Customer Departmentalization
President
VP – Consumer
Goods Division
VP – Industrial
Goods Division
VP – Custom
Products Division
Customer-based structure is a design that groups similar
customer groups together.
Geographic/Territory
Departmentalization
President
VP – Southern
Region
VP – Midwest
Region
VP – West
Coast Region
Geographic or territorial structure is a design that groups
similar/localized regions together.
A Geographical Division Firm
Wal-Mart’s Corporate Structure
CEO
COO
Materials
Management
Northern
US
Southern
US
Sales and
Marketing
Eastern
US
Western
US
International
Operations
A geographically-based set of divisions, including international
Advantages of Divisional Forms
• Evaluate departments as autonomous
profit centers
• Facilitate coordination between functions
for rapid response
• Add flexibility to a firm’s structure
• Focus on client needs
• Develop broadly trained managers
Disadvantages of Divisional Forms
• Increase coordination problems between
specialized functional/divisional areas
• Lead to decreased communication
between functional specialists across
divisions
• Contribute to a lack of clarity of
functional area responsibilities and a
duplication of services
Strengths of Divisional Forms
• Suited to fast change in unstable environment
• Client satisfaction because product
responsibility & contact points are clear
• High coordination across functions
• Units adapt to differences in
products/processes/territories
• Best in large organizations
• Best when several product/services are offered
Weaknesses of Divisional Forms
• Lose economies of scale in functional
departments
• Poor functional coordination across
division lines
• Lose in-depth competence & technical
specialization
• Integration & standardization across
division lines is difficult
The Conglomerate Design
(Multi-Divisional, SBU)
CEO
Periodical
Operations
Publishing
Operations
Entertainment
Operations
Investment
Banking Operations
Oil Services
Operations
Fine China
Operations
Pearson PLC, a British firm, uses a conglomerate form
to manage several unrelated businesses. Conglomerate
forms usually result from unrelated diversification, and
act as a “holding company.”