MBA 5102

LOC XUAN PHAN

Week 5 Assignment

Analyses of Organizational Structures, Teams, and Stakeholders

1/29/2017
 Introduction

There are many business organizational structures with different advantages and

disadvantages that a business entity could fit within to perform its operations. It is not a big

deal what kind of organizational structure the business owner chooses. It is important that the

structure work for the company and the owner understand the advantages and disadvantages

associated with the structure. Significant improvements in technology made other forms of

employment possible such as the virtual employee, and there are pros and cons related to that.

The Systems Theory introduces another way of thinking about how things work

together. That is when considering the concept of functionality, it should be all together and

not to individual components.

Three Organizational Structures

The organizational structure of a business entity is a hierarchical pyramid working

relationship between everyone, the chain of command, communication and control in the

company. However, for simplicity and ease of communication, it has less detail and focuses

more on the senior management level. The particular organizational structure defines the roles

and responsibilities of everyone, how each one interacts and does business. In an ideal case,

the organizational structure promotes an overall effectiveness of everyone working side by side

with one another to make the company successful (Shaw, 2011).

There are three types of organizational management structures:

(1) the Project-Based Structure,
(2) the Functional Structure, and
(3) the Matrix Structure.
Project-Based Structure

A project under this organizational model has an independent project team. The team

would be made up complete with expertise from all the required functional areas. The team

members report to one project manager avoiding all internal politics of a large company. All

resources are available to the team and decisions are made internal to the team rapidly. They

work independently toward the project completion in the shortest amount of time. This

organizational structure has several advantages – reliable, fast & highly focused. The team

members are loyal to one another because they trust each other avoiding situations found with

big corporations.

A Project-Based Organization model calls for each project to have an independent

project team. A project team separately for each project means that there would be many

redundancies if an organization simultaneously execute more than one project. This

redundancy is not good because the corporation loses the advantage of economy of scale.

Another negative about this structural model of business is the high level of expenses that each

project team would incur given the fact that there would be no one on each team specifically

work for resource conservation. Resource wastefulness would be problematic with this

organization structure (Alhindawi, 2015).

Functional Structure

Under this format, the business entity forms all the needed functional departments at a

high level of expertise in their respective fields. Thus, each functional department is

extremely efficient and effective at that particular functionality. Most corporate businesses

today use the Functional-Structural management model to operate their firms. Some examples

of functional departments are the Accounting Department, the Sales, and Marketing
Department, the R&D Department, the Quality Department, the Manufacturing Department

and the Shipping & Receiving Department. Following is an example of how the various

functional departments work together. The Accounting Department informed management that

the sales revenue for a particular product was lower than expected. Management assigns the

project to the Sales and Marketing Department because this is their area of expertise. They

would execute an effective sales and marketing campaign to bring up the sales revenue

(Aronson, 1956).

The member of any functional department is highly skilled at his or her job which is an

advantage of a Functional business model. An individual within these functional departments

can handle multiple projects. This structure is often a career path for any technical

professional.

However, these individual lacks the needed focus to finish any project on time which is

the biggest drawback of the Functional model. The various departments and their members in

this structure would often have no sense of unity and forget that they all are working for the

same business entity. This structure model is often full of inter-office politics. Each functional

department cares more about their career mobility than about the timely completion of a

particular project.

Matrix Structure with positive and negative attributes

Just as the name indicates, the matrix organization structure is a product mixture result

of the previous two.

For example:
 1. Functional Matrix

2. Project Matrix

3. Balanced Matrix

Each would place more emphasis on whatever the name in the title implies. Functional

Matrix structure, for example, would have more emphasis on the functional aspect of the

organizational structure model (Alhindawi, 2015). A project functioning under a matrix

structure has all the advantages and disadvantages of both systems. For example, the factor

regarding being highly focused on finishing the project is still a high priority item. In some

cases, a disadvantage in one structure is an advantage in another. For example, a simple

Project-Based structure could be resource wasteful because of certain roles and functions being

redundant across multiple projects. In a Functional Structure has subject matter experts that

could be efficient and effective thus allowing the sharing of resources creating the opportunity

to have the best of both structures. Furthermore, resources not only could be shared but might

also be adjusted to compensate for varying demand periods.

Most of the disadvantages of this business structure have to do with the personal

conflicts and tensions between the people involve. On the one hand, the project manager has

the responsibility of coordinating the labor and the equipment required to finish a project.

However, he does not have total control over all of these resources. The functional manager

has control of most of the resources, and he could make the project manager’s job very tough.

Another disadvantage with a Matrix Structure if managed poorly is when communication

between two managers to the individual group members is not coordinated causing frustrations,

low moral, unenthusiastic employee performances. All of these would lead to high employee

turnover.
 This business organization structure works best; however, the potential of failing is

high because of the sensitive nature people management. A project has the greatest chance for

success from a technical preparedness point of view, and under this governance structure if all

the resources controllable is made available to the project manager (Shaw, 2011). The

functional manager must be a resource to the project manager also otherwise there is sure to be

tension.

General Systems Thinking and Boundary-Less Organizations

The General Systems Theory suggested that things worked together as a whole and

separated the function is no longer the same. It is an abstract concept that the components of a

system interact amongst themselves to produce and output. The output relationship to the input

does not have to be linear; it could be whatever. Although there is a Systems Theory that is

applicable for scientific use, it is still qualitative (Mass Communication Theory, n.d.). The

rigor requirement for the Systems Theory is different from that for the standard scientific

process. Current applications of the Systems Theory are Systems Biology, Systems Ecology;

and Systems Psychology. All those applications have its roots in the scientific process;

however, the scientific method has limitations. The Systems Theory looks outward recursively

for relationships between variables much more holistically.

For example, from the time we were little; we were taught to analyze and learn

everything by the process of separating things into components. Then, one at a time study

them, apply a stimulus then look for a response. In the real world, things happen every which

way, sometimes in ways that are totally unexpected. Furthermore, the variables affecting the

outcome will often interact at multiple levels. Take, for example; there are X, Y and Z

variables. X being the predictor variable, Z being the covariate variable, and Y is the response
variable. By simply varying the X and Z and there would be five different relationships as a

result, and they do not have to affect the response variable directly (Human Supervisory

Control, 2004). In a complex way, the key to understanding how the world works is to

understand the interactions of the variables at all levels. Besides the Systems Theory and all its

abstract processes, another way is to use Design of Experiments (DOE), the Fisher’s

Principles (Fisher, 1937, p. xx).

Boundaryless Organization

In principle, a boundary-less organization is one that has no limitations keeping its

employees, stockholders, stakeholders, suppliers and customers from communicating with each

other to positively impact the profitability of the corporation (Hirschhorn, n.d.). The

horizontal boundary represents the suppliers, the customers, and stakeholders external to the

corporation. To remove this boundary all those people from the outside may be able to be in

touch with the corporation to have more input on the current products and the future products.

What better way to develop products than to have the customers there to express exactly the

features and benefits that they want (Griffin, n.d.).

The verticle boundary represents the hierarchical management layer within the

company. To remove this boundary means de-emphasizing titles and statuses so that

management and workers will be working alongside each other to advance the business

forward to improve profitability (Hirschhorn, n.d.). Everyone will have to same mission and

goal of making the company successful.

In regards to Systems Thinking in the case of business in the process of implementing

boundary-less structure, it would be along the line of monitoring and collect data to see the

effect that boundary-less structure has on the corporation. Many months before the launch of
this process collect the background and baseline data. Predetermining the data collection, and

analysis processes are necessary. The Systems Theory and Systems Thinking processes fit the

management of business synergistically because they both involve parts of the sciences that

humans still have so much to learn.

Virtual and Traditional Teams

The untouchable price of real estate and the high cost of living in the city makes it a

necessity that corporations shift away from the traditional employer/employee/team approaches

and accept people working virtually more and more. Also, with the advance of communication

technology such as the Internet and the cellular phone, working virtual is very much easier.

Other challenges exist in building a virtual team besides the expected competencies

required for anyone to do the job. For example, the virtual team member being at a distance

would have to communicate much more often or at least until a trust had been built up between

the virtual employee and employer. There are many reasons, and one is lost of time if a

process needed to restart because of a misunderstanding. Another reason for more often

communication is the work ethics of the virtual team member is still an unknown to the team

leader.

The Pros and Cons of virtual and traditional teams

The biggest reason for having a virtual team is the ability to access a larger pool of

talent at a reasonable price. Furthermore, the speed at which a virtual team member completes

his assigned work is fast. The reason is the virtual team members are much more focused and

would not be bothered by interoffice politics (Safetec.Net, n.d.). It might not seem apparent

immediately, but not having to drive to the office is a big plus for the environment, the team
member from the point of transportation hassle, and the employer from the point of “corporate

social responsibility.”

The fact that the team members are not together at one location is a minus for the team

because it is a barrier to information sharing because of a lack of trust. Miscommunication

between the virtual team member and the team leader or other team members are the leading

cause of virtual employee failure. The comparison table below shows the pros and cons of the

virtual team and the traditional team.

Comparison Table: The Pros and Cons of

Virtual and Traditional Team
Team
Structure Pros Cons
o Cost savings o Unable to build trust
Virtual Team o Fast turn-around o Unclear goals & objectives
o Larger pool of talents o Poor cohesiveness
o CSR-Friendly o Social isolation
Traditional o Cohesive built group o Interoffice politics
Team o Loyal to one another o Limited talent pool
o Employer monitor o Polluting due to driving

Emergence Stakeholders

A shareholder is someone owns a part of the corporation. A stakeholder is someone

who has an interest in the company for its existence. The stakeholder is a new individual on

the corporate business scene (Corplaw, 2013). The stakeholder did not exist then because it

was not necessary. Over time throughout history, the corporation was focused on making

money, enriching the shareholders while neglecting and destroying the environment. It is true

that corporation’s responsibility to its shareholders. However, it cannot enrich it shareholders

at the expense of the community. If somehow the corporation damaged the community, it has
to pay to put the environment at the community back to the previous pristine conditions. The

corporation also needs to pay for all the property damages that its actions caused. It has to pay

for the long-term damage although it might be difficult to detect.

The stakeholder is everyone collectively that is affected by the result of the carelessness

of the corporation. Technically, the stakeholder also represents the shareholder because the

shareholder benefits from the planet and the environment in which we live. If the given careful

consideration the old-time shareholder theory, would cause irreversible damage to the

environment then the government will cease operation of the business. That is against the

corporation’s mission of sustainability.

Conclusions

Several organizational structures describe the operation of business. There are

advantages and disadvantages associated with each structure. A combination of anyone of

them would work for business. It all depends on the particular need of the firm. Often, the

matrix design works best because it has features from different structures incorporated.

Regardless, a combination approach should work best because every business needs are

different.

Additionally, the Systems Theory might be the best way to organize the structure. The

reason is, other than accounting, often business practices are much more conceptual in nature

which perfectly fits the characters of a Systems Thinking approach. To keep things in the

“clouds” a little longer, the advances of communication technology has made it extremely

convenient for a virtual employment structure.

 The emergence the Stakeholder is a blessing for society because the shareholder for

years has done nothing positive for society. He/she is needed to provide capital to sustain the

business and to keep the people employed, but his greed erased any goodness that his capital

given to the firm. Hopefully, the stakeholder will provide much more needed help to us in the

area of the planet sustainability.

 References

Alhindawi, N. (2015). Project Organization. Retrieved from

http://www.cs.kent.edu/~nalhinda/PM_Just/pmch03.ppt

Aronson, D. (1956). http://www.thinking.net/Systems_Thinking/OverviewSTarticle.pdf.

Retrieved from http://www.thinking.net/Systems_Thinking/OverviewSTarticle.pdf

Aronson, D. (1999). Intro to ST. Retrieved from

http://www.thinking.net/Systems_Thinking/Intro_to_ST/intro_to_st.html

Aronson, D.Retrieved from

http://www.thinking.net/Systems_Thinking/st_innovation_990401.pdf

Corplaw. (2013, July 16). Shareholder & Stakeholder Theories Of Corporate Governance.

Retrieved from http://www.corplaw.ie/blog/bid/317212/Shareholder-Stakeholder-Theories-Of-

Corporate-Governance

Falk, S. (2001, June). Retrieved from http://web.mit.edu/org-

ev/www/documents/samthesis.pdf

Fisher, R. A. (1937). The Design of Experiments. Place of publication not identified:

Oliver & Boyd.

Free Management Library. (n.d.). Systems Thinking, Systems Tools and Chaos Theory.

Retrieved from http://managementhelp.org/systems/

Griffin, D. (n.d.). The Structure of a Boundaryless Organization | Chron.com. Retrieved

from http://smallbusiness.chron.com/structure-boundaryless-organization-2764.html

Hirschhorn, L. (n.d.). The New Boundaries of the “Boundaryless” Company. Retrieved

from https://hbr.org/1992/05/the-new-boundaries-of-the-boundaryless-company
 Human Supervisory Control. (2004). Research Method & Experimental Design. Retrieved

from https://ocw.mit.edu/courses/aeronautics-and-astronautics/16-422-human-supervisory-

control-of-automated-systems-spring-2004/lecture-notes/040604coop_decis.pdf

Mass Communication Theory. (n.d.). Systems Theory | Mass Communication Theory.

Retrieved from https://masscommtheory.com/theory-overviews/systems-theory/

Mele, C., Pels, J., & Polese, F. (2010). A Brief Review of Systems Theories and Their

Managerial Applications. Service Science, 2(1-2), 126-135. doi:10.1287/serv.2.1_2.126

Safetec.Net. (n.d.). Virtual Teams vs Traditional Teams. Retrieved from

http://www.managementstudyguide.com/virtual-teams-and-traditional-teams.htm

Shaw, E. (2011, February 27). Three Types of Project Management Organizations - Project

Smart. Retrieved from https://www.projectsmart.co.uk/forums/viewtopic.php?t=730

Stockholder Management vs. Stakeholder Management. (n.d.). Retrieved from

https://www.managementstudyguide.com/stockholder-management-vs-stakeholder-

management.htm

The Structure of a Boundaryless Organization | Chron.com. (n.d.). Retrieved from

http://smallbusiness.chron.com/structure-boundaryless-organization-2764.html

System Dynamics Society. (n.d.). Retrieved from http://www.systemdynamics.org/