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REPORT SUBMISSION

GROUP AND ORGANIZATIONAL DYNAMICS


ORGANISATION STRUCTURE

Division H
Group 3

Rohit Zende- H066


Sakshi Waigaonkar- H065
Aishwarya Deshmukh- H013
Anurag Samanta- H052
Nisarg Maheshwary- H034
Vijayshankar Raman- H048
Table of Contents
Introduction .................................................................................................................... 4
Literature Review ........................................................................................................... 5
Methodology.................................................................................................................. 11
Findings and Analysis ................................................................................................... 12
Recommendations ......................................................................................................... 15
Conclusion..................................................................................................................... 16
Referencing ................................................................................................................... 17
Abstract
Conceptualization and implementation of organizational structure is the demonstration of a
systematic thought process. The organization that we have considered from the Pharmaceutical
sector is GlaxoSmithKline Pharmaceuticals Ltd, India. An organizational structure defines how
job tasks are formally divided, grouped, and coordinated among the staff and employees of the
organization. Organizational structure is a way or technique by which organizational activities
are divided, organized and delegated by the employees and the staff of the organization. The
organizations created the structures to harmonize, synchronize and interrelate the activities of
work factors like knowledge, skill, expertise, experience, and control the member
performances of each employee working in the given organization. The organization is
composed of elements, relationship between these elements and structure as a generality
composing a unit. Detailed overview of organizational structure shows that any organizational
structure is composed of hard elements on one side and soft elements on the other side. The
organizational structure basically has 6 elements which are – work specialization or division
of labor, departmentalization, chain of command, span of control, centralization and
decentralization and formalization. During our review we have taken all these elements into
consideration. The review of literature views structural relations from various aspects and
every element. Organizational structure is shown in an organizational chart. The presents study
is descriptive and qualitative, the method of data collection has been frequent visits to the
company GlaxoSmithKline Pharmaceuticals Ltd and interacting and enquiring with the staff
and the employees.
Introduction
Organizational structure is the way job tasks are formally divided, grouped, and
coordinated. Any organization’s structure is managed by taking the following 6 elements
into deep consideration-

1. Work specialization: It is also called division of labor. It is the degree or extent to which
the activities or tasks in the organization are divided into separate or distinct jobs. The basic
essence of work specialization is to divide a task or a job into smaller tasks which in turn
need to be completed by different individuals. Due to this, individuals specialize in doing
a part of activity or a task rather than the complete job which makes them attain maximum
efficiency and utilize their full potential.
We have taken into account work specialization as an essential element while considering
GSK as an organization.

2. Departmentalization: It is the basis by which jobs or tasks or activities in an


organization are grouped together. Once the jobs have been divided by work specialization,
they need to be grouped so that tasks having a common motive can be coordinated. This
is called departmentalization. There are various ways by which the jobs are grouped like
by their functionality, product or services offered, geography, skillset, knowledge,
educational background.

3. Chain of command: The Chain of command is the unbroken line of authority that
extends from the top of the organization to the lowest echelon and clarifies who reports to
whom. The other factors to take into consideration here are Authority and Unity of
Command. Authority refers to the right entitled or inherent in a managerial position to give
orders and expect them to be obeyed. The principle of unity of command helps to preserve
the concept of the unbroken line of authority. This element holds employees accountable
for their job.

4. Span of control: Span of control is important because it largely determines the number
of levels and managers, an organization can effectively and efficiently manage or handle.
The wider or larger the Span of Control of any organization or a company, the more
efficient the organization is. The smaller or narrower the span of control also can help to
keep a close eye and a close control. Span of control also depends on the size of the
organization. Example: a startup would have a narrower span of control as compared to a
conglomerate which would function effectively with a wider span of control.

5.Centralization and Decentralization: Centralization is the degree to which decision


making is concentrated at a single point in any organization or a company. The concept of
centralization includes only formal authority, rights inherent to a position. Latest research
shows that centralized organizations are better at avoiding commission errors like making
bad choices whereas decentralized organizations are better at avoiding omission errors like
losing great opportunities.

6. Formalization: Formalization refers to the degree to which jobs within the organization
or the company are standardized. It helps the employees to expect how to handle the same
input in exactly the same way which results in consistent and uniform output. This helps
streamline the output process delivering standardized results.
Literature Review
Organizational Structure
An organizational structure is outlined as “a system which defines the hierarchy in an
organization. It gives an identity to each job, defines functions and to whom one reports to
within the organization.” A structure is developed to establish how the organization operates
to execute its goals with maximum efficiency.
The formal organization is typically portrayed by an organizational chart and job descriptions.
The official reporting relationships are clearly familiar to each manager.
Alongside the formal organization exists an informal organization that may be a set of evolving
relationships and patterns of human interaction inside an organization that aren't formally
prescribed.
Types of Structures :
(i) Line organizational structure: A line organization has solely direct, vertical
relationships between completely different levels within the firm. There are solely line
departments-departments directly concerned in accomplishing the primary goal of the
organization. For example, in a very typical firm, line departments embrace production
and marketing. In a line organization authority follows the chain of command.
Advantages:
1. Tends to modify and clarify authority, responsibility and answerability
relationships
2. Promotes fast decision making
3. Simple to understand.
Disadvantages:
(i) Because the firm grows larger, organization becomes very ineffective.
(ii) Improved speed and adaptability might not offset the lack of specialised
information.
(iii) Managers could need to become specialists in several fields.
(iv) There is an inclination to become excessively dependent on the few key people
that can perform varied jobs.

(ii) Staff or functional authority organizational structure: The jobs or positions in an


organization are classified as- (i) Line position: a position within the direct chain of
command that's liable for the action of an organization’s goals; (ii) Staff position: A
position supposed to give expertise, recommendation and support for the line positions.
(iii) The line officers or managers have the direct authority (known as line authority) to be
exercised by them to attain the organizational goals. The staff officers or managers have
staff authority (i.e., authority to recommendation the line) over the line. This is also
known as functional authority.
An organization where staff departments have authority over line personnel in slim areas of
specialization is thought as functional authority organization.
While this sort of organizational structure overcomes the disadvantages of a pure line
organizational structure, there are major disadvantages:
They are:
(i) The potential conflicts ensuing from violation of principle of unity of command and
(ii) The tendency to stay authority centralized at higher levels within the organization.

Functional Structure
(iii) Divisional organizational structure: In this type of structure, the organization can have
different basis on which departments are formed. They are:
(a) Function,
(b) Product,
(c) Geographic territory,
(d) Project and
(e) Combination approach.

Product Divisional Structure


Matrix organizational structure: It is a permanent organization designed to attain specific
results by using groups of specialists from totally different functional areas within the
organization.

Advantages:
1. Decentralized decision making process.
2. Strong product/project co-ordination system.
3. Improved environmental monitoring system.
4. Fast response to change in environment.
5. Flexible and effective use of resources.
6. Efficient use of support systems.
Disadvantages:
1. High administration cost.
2. Confusion over authority and responsibility.
3. High chances of conflict.
4. Overemphasis on group decision making.
5. Focus on internal relations.

Matrix Structure

(iv) Flatarchy/Hybrid organizational structure: Blending a functional structure and a flat


structure leads to a flatarchy organizational structure that permits for additional higher
cognitive process among the levels of a company and, overall, flattens out the vertical
appearance of a hierarchy.
Advantages:
1. Alignment of corporate and divisional goals is clear.
2. Functional expertise and efficiency is attained.
3. Adaptability and flexibility in divisions can be exercised.
Disadvantages:
1. Conflicts between corporate departments and units can become unavoidable.
2. Excessive administration overhead costs.
3. Slow response to exceptional situations like corporate crisis.
Flatarchy Structure

Evolution of Organization Structure:


Each of those phases of growth, evolution and revolution is marked by specific experiences of
the members of the organization. In the starting of every phase, all processes work smoothly.
Then, the organization develops on. The once excellent processes and structures become
inadequate – till the case becomes unacceptable for management and/or employees. (Very few
businesses initiate amendment processes before they reach a very unacceptable scenario.) In
such a scenario of crisis, it's time for amendment. These changes ought to be enforced,
controlled, and changed so as to realize a brand new fit between organizational wants and its
structures and processes.
 Evolution and revolution as organization grows

In this paper, researcher describes the five phases of the organization, why it transcends from
one phase to another and the key factors that causes development of the company. The author
describes two terms - evolution and revolution. The former being longer periods of growth
where no major upheavals occur in organizing practices and the latter being the periods of
substantial turmoil in the organization.

Stages of evolution and revolution cause the company to transcend from one phase to
another. The five phases through which company passes are creativity, direction, delegation,
coordination and collaboration. The five phases attributes can be divided into five domains:
management focus, organization structure, top management style, control system and
management reward emphasis.

Phase 1) The birth stage of organization


Phase 2) The stage of sustained growth where there is clear demarcation of activities
Phase 3) The key attribute is decentralized organizational structure with management focus
on expansion of market.
Phase 4) Characterized by top executives taking responsibility of administration focus on
consolidation of company
Phase 5) Characterized by social control and self- discipline to overcome red tapism.
 Organizational Structure affected by Strategic Change

In this paper, the author explains the importance for organizations to make rapid changes in
their strategies, in their quest to gain competitive edge in the market and how continuous
updating in strategies require organizations to alter its culture, structure, productivity and
outcomes accordingly.
Strategy defines the plans of action designed to achieve a particular goal, by an organization.
Effectively formulated strategies integrate, assemble and allocate firm’s resources in order to
align them to its external environment.
An organizational structure defines the hierarchy within an organization. It distinguishes each
job, its function and where it reports to within the organization. A clear organization structure
helps establish a set of core beliefs reducing the ambiguity amongst employees.
 The Performance Implications of Fit Business Strategy, Marketing

Organization Structure and Strategic Behavior


In this paper the researchers present and test a fit-as-moderation model that posits that overall
firm performance is influenced by how well the marketing organization's structural
characteristics and strategic behavioral emphases complement alternative business strategies.
This study represents an important contribution to the understanding of strategy
implementation in three regards: First they use an expanded business strategy framework as
the foundation for this research on strategy implementation. Second they build on prior
research (i.e. Vorhies and Morgan 2003) that examines the impact of marketing organization
structure and business strategy on firm performance within the confines of a specific industry
(i.e., trucking) by considering a much broader range of industries. Third, they assess whether
the explanatory power of the model is enhanced by the inclusion of four types of strategic
behavior.
Equifinality - holds hat superior organizational performance can be achieved through a
variety of different strategies and that overall firm performance is less dependent on a
specific strategy than on how well the firm implements the chosen strategy.
For organizational structure they give 3 constructs. Formalization is the degree of
which formal rules and procedures govern decisions and working relationships.
Centralization refers to whether decision authority is closely held by top managers or is
delegated to middle and lower level managers. Specialization refers to the degree to which
tasks and activities are divided in the organization and the degree to which workers have
control in conducting those tasks.
They also have included organizational behavior in the article. Organizational
behavior refers to organizational members work-related activities. According to Snell (1992),
management attempts to influence organizational behavior through the use of control
systems. In this study, they examine strategic behaviors that have the potential to create
superior performance through enhancing the execution of business strategy.
Competitor-oriented behaviors, innovation-oriented behaviors and internal/cost-oriented
behavior described the structural and behavioral characteristics that should be most critical to
the achievement of superior performance for each of the four business-level strategies.
Prospectors: The key to success for prospectors is the development of innovative new
products and entry into new markets.
Analyzers: The key to success of analyzers is to bring out either improved or less expensive
versions of products that prospectors introduced while defending core markets and products.
Low Cost Defenders: The key to success or low-cost defenders is to provide quality products
or services at the lowest overall cost.
Differentiated Defenders: The key to success or differentiated defenders is to provide
premium service and/or high-quality products to select sets of customers who value and are
willing to pay for them.

 Organizing for a Digital World

The article discusses about how traditional enterprises struggle to cope with pace of
change and how/when to integrate digitalization in the organization. The few factors to look
at which are conducive to move to digitization are level of disruption faced by the businesses.
Companies that face high level of disruption tend to react slowly compared to others.
The culture's openness to change decides how easily the company can integrate digital
operations. The role of the chief digital officer covers variety of responsibilities depending on
sense of urgency, maturity of organization, internal capabilities and resourced and desired
pace of Organization. Some of the responsibility included guide change via digital team
develops digital vision, allocation of budget, tracking initiatives and monitoring key
performance indicators.
Plan of action:
Our plan of action for next stage would be to choose an organization in Pharmaceutical
industry. We would be interacting with the management and the employees of that
organization to know more about the structure of the organization. The objective of the
interaction is to find:
 Impact of the following on Organization Structure
 Nature of Business
 Market
 Technology
 Diversity
Methodology
Glaxo arrived in India as H J Foster and Co. however after their merger with SmithKline
Beecham Pharmaceuticals India Limited in 2001 the company hierarchy has significantly
evolved making GSK one of the world’s largest research-based pharmaceuticals companies.
The methodology that we opted for collection of data through frequent visits to
GlaxoSmithKline Pharmaceuticals Ltd. is as follows:
1. Frequent visit to the organization: GlaxoSmithKline Pharmaceuticals Ltd.
2. Gathering overview about the company from their website and annual reports.
3. Questionnaire:

In order to gain insights about the organizational structure we framed broad


questionnaire that comprised of the following questions.
a) What is the current organizational structure?
b) How has this structure evolved over the period of time?
c) What internal and external factors forced company to change/modify this
structure?
d) What is the reporting structure that is followed in the current setup?
e) What are the advantages and disadvantages of the current structure?
f) Do you recommend any changes to the current structure?
If yes, what is your reason for recommending these changes?
i) How does cross functional communication across departments happen?
k) Do you believe current structure optimizes employee potential?
l) Have the values of the organization disseminated to the grass-root level?
We interviewed the following company employees working at various hierarchical levels of
the organization:
1. M L Suresh, Marketing Head
2. Shailesh Zende, Group Product Manager
3. Manoj Raman, Marketing Manager
4. M R Bhagwan, General Manager
5. Rashi Phoolwani, HR Manager
After a thorough discussion with the employees from perspective of the questionnaire we
gathered data about the hierarchical changes that the organization has gone through and
tabulated the data in the form of flowcharts. Focusing on the reasons for hierarchical changes,
we have discussed and come up with appropriate recommendations.
Findings and Analysis
Here are the flowcharts of the organizational structure in GlaxoSmithKline Pharmaceuticals
Ltd.

The board of directors consists of chief of the board and a specific number of directors. The
managing director is responsible for the performance of the company, as dictated by the board’s
overall strategy. The organizational structure in GSK falling under the command of the
Managing director is Finance, Sales and Pharmaceuticals, Medical, Supply Chain, Human
Resources, Vaccines, Training, Legal, Communication and Government as depicted in the
following flowchart.

The structure of the Sales and Pharmaceutical department is very sophisticated as shown in the
following flowchart.
The sales department has two divisions namely- Marketing and Sales. Each department has
four major areas which are-
1. Vaccines
2. Dermatology
3. Primary care
4. Respiratory
Each area in the marketing division is headed by a Marketing manager. The chain of command
is as follows-
Marketing manager Group Project Manager Product Manager Product
Executive/Marketing trainee
Each area in the sales division is headed by a Sales manager. The chain of command is as
follows-
Sales manager Regional business Manager Area business Manager  Medical
Representative
The medical department is headed by a General manager who in turn controls the Medical
managers of of the four major areas-
1. Vaccines
2. Dermatology
3. Primary care
4. Respiratory
Executives under each area report to their respective medical managers.

The Finance department has a simple structure where the CFO heads the entire Finance team.

The Training department is headed by the Training Head who controls the General Manager
who is in charge of the Training managers.

The Legal department consists of the Legal Director who heads the General managers of
Litigations and Advisory.

The HR department is headed by the Head HR who is in charge of General managers of


Industry Relations and Executive hiring. The General manager of Industry Relations heads a
team of Executives. The General Manager of Executive hiring handles the HR managers of
three departments namely-
1. Sales
2. Marketing
3. Media

The structure of the Supply Chain (distribution) department has four major areas which are-
1. Vaccines
2. Dermatology
3. Primary care
4. Respiratory
Each area is headed by a Division manager. The chain of command is as follows-
Division manager Executives Distributors Retailers
Recommendations
These are some of the changes that we discussed as a group:

1. Changes in Medical Structure:

The medical department is responsible for acting as the link between the company
and health care professionals. Also it provides assistance in terms of medical help and
knowledge about its products, which includes legality of its products, to the marketing
department. In GlaxoSmithKline, the medical department follows a wide span of control,
with only a single general manager supervising control over four major departments.
Wide span of control has its advocates such as reduced cost, speed decision making ,
but have certain drawbacks as well . Due to this form of governance, the medical department
is not able to maintain close control. Citing the importance of the medical department, in
supervising whether its patents , claims made in the advertisements of its products and
information conveyed to health care professionals, is legal and backed by its products, any
mistake made from this department can lead to huge losses for GSK in terms of penalties and
affect its reputation. Hence, other major pharmaceutical companies like Johnson & Johnson
have appointed more than three general managers for this department, and so should GSK.

2. Changes in R&D Structure:


GlaxoSmithKline has been developed after the merger of Glaxo and Wellcome and
then the merger of GlaxoSmithKline. Scientists working at the R&D development have
reported that these mergers were constraining forces in their work as they had budgeting
issues during the pre-merger, due diligence and post-merger periods. Their motivation levels
became very low after the announcement for the change. They had an impression that they
were being treated like sales department by raising competition within themselves.
R&D department which, in the eyes of analysts and investors, remains the biggest
blemish on GSK’s performance. The speed at which the company has brought forward new
drugs to rival past blockbusters has been disappointing. GSK needs to use the organizational
developmental theories to manage the smooth transitional period. The change from one R&D
department to seven independent team can only be possible if it is supported by a cultural
change i.e. a transformation of the culture from role to task culture.
These four steps cover the following four points:
1. Make sure that the R&D department and people understand the pressure of change
2. Develop and share a clear vision about where the organization and department is
headed
3. Put in place the individual, departmental and organizational capabilities for
change
4. Have a plan of action that outlines what has to be done to get it all started

3. Introduction of a new department:

Major Competitors of GSK, such as Sanofi and Johnson & Johnson have recognized the
importance of expanding into global markets, especially the emerging markets, aggressively.
Hence they have started a new department known as “China and Emerging Markets” which
specializes in creating high volume-low cost drugs. GSK over the last few years have lost a
significant market share to its competitors especially in the emerging markets and there is a
need for the company to change its organizational structure and introduce this new
department to reap the benefits of a large customer base

Conclusion
In general if we look at the structure of the company it has functional structure right at the top
but after that in some functional groups like sales, medical and supply chain distribution it
follows divisional structure. As it is a very large company with specialized job roles the work
specialization is very extensive and same is the case with departmentalization so to have
common motive for co-ordination becomes a bit difficult. As far as decision making is
concerned it is not concentrated at a single point which helps the company in including
higher number of employees in taking new reforms. Also the chain of command which
dictates who reports to whom is very clear which helps employees to now exactly from
whom to take advice-suggestion also toward whom they are responsible. The span of control
is very wide in some functional groups which has some benefits like reduced cost, speed
decision making but is not able to maintain close control. Looking into the future one area
where the company could focus on is the organizational structure of medical and
Research and Development department. All in all looking at the vast size of the company it
has fairly good structuring along with good culture and policies-practices which helps
company to perform well.
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No. 3 (Jul., 2005), pp.

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Organization Structure, and Strategic Behavior

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Bain & Company, Organizing for a Digital World,

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of effective organizational structures in the battle for competitiveness
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Education · January 2015, Organizational Structure affected