Professional Documents
Culture Documents
Chapter 8- Organizing
Primary Management Decision- How to organize work
How do we divide tasks into jobs?
How do we coordinate the work and link jobs?
Division and integration
o More division there is, the more challenge there is with integration (building
different parts of a house example)
How managers can shape the architecture of their organization to successfully implement firms strategy
Organization Architecture
Problems in tall hierarchies that may result in lower organizational efficiency and effectiveness
Distorted information
o Information can get accidently distorted as it passes through layers in hierarchy;
decisions may be based on inaccurate information and poor performance may
result
Deliberate Distortion by midlevel managers
Influence Costs- The loss of efficiency caused by deliberate information
distortion for personal gain within an organization
Expensive
Salaries and benefits of multiple layers of midlevel managers can add u p to
significant overhead which increases cost structure of firm and puts it at
competitive disadvantage
Inherent Inertia
More centres of power and influence= more voices arguing against change =
slower to change
Delayering: Reducing the size of a hierarchy
Delayering: Reducing the number of layers in a hierarchy to boost firms performance
Way of enforcing decentralization and reaping the associated efficiency gains
Large firms can function with relatively flat structure if their organization architecture is
designed correctly
Disadvantage of delayering: Causes stress and poor morale among managers if process
is not handled correctly
Advantage: Works well for firms that are active in single line of business and focuses on a single
geographic area, economies of scale, performance improvements and efficiencies
Disadvantages: Problems of coordination and control arise when different business areas are
managed within the framework of a functional structure
Coordination: when different activities that constitute a business are embedded in
different functions, it is difficult to achieve coordination between functions
Control: No individual/management team is responsible for performance of each
business; lack of accountability within organization
Multidivisional Structure
Multidivisional Structure- A structure in which a firm is divided into different divisions, each of
which is responsible for a distinct business area
Responsibility for operating decisions and business level strategy is decentralized to divisions
who are held accountable for their performance
Advantages:
Creates internal environment that gets divisional managers to focus on efficiency by:
o High responsibility implies that they have few alibis for poor performance
o Desire for capital to grow
o Pay increases and bonuses creases further incentives
Disadvantages:
Too much pressure to improve performance can result in worst management due to:
o Cutting investments to boost short term performance
Solution: Head office managers need to develop good understanding of
each division, set performance goals that are attainable, and have staff
who can regularly audit accounts and operations of divisions to ensure
that each division is not being managed for short terms results or in a
way that destroys its long term competitiveness
Geographic Structure
Geographic Structure- A structure in which a firm is divided into different units on the basis of
geography
Unilevers Structure:
Head of each geographic area maintains responsibility for profitability in the area under
their control while country managers within each region are given responsibility for local
marketing and sales
Attempt to solve conflicting demands on the organization while maintaining the best
features of multidivisional structure and a geographic structure
Matrix Structure
Matrix Structure- An organization with two overlapping hierarchies; when no single structural
design seems to solve off of firms problems
Need for it is driven by desire for tight coordination between different functions; increase
probability of successful product commercialization and has faster product development
Disadvantages:
Clumsy and bureaucratic
Dual hierarchy structure leads to conflict and perpetual power struggles between
different sides of hierarchy
Difficult to ascertain accountability
Advantages: