Professional Documents
Culture Documents
Strategy
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7.
Types of Organization
Structures
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Functional
organizational
structure
Structure
in
which
the
tasks,people,and
technologies
necessary to do the work of the
business are divided into separate
functional
group
(e.g.
marketing,operations,and
finance)
with increasingly formal procedures
for coordinating and integrating their
activities to provide the businesss
products and services.
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CEOEngineering
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Strategic Advantages
Strategic
Disadvantages
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Divisional Structure
When a firm diversifies its product/service
lines, covers broad geographic areas,
utilizes unrelated market channels, or
begins to serve heterogeneous customer
groups, a functional structure rapidly
becomes inadequate.
A divisional organizational structure is one
in which a set of relatively autonomous
units, or divisions, are governed by central
corporate office but where each operation
division has its own functional specialists
who provide products or services different
from those of other divisions.
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A
divisional
structure
allows
corporate management to delegate
authority
for
the
strategic
management of distinct business
entities-the division.
This enables decision making in
response to varied competitive
environments
and
corporate
management to concentrate on
corporate
level
strategic
level
decisions.
The division usually is given profit
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Divisional
Organizational
Structure
Chief Executive
Officer
VP Administrative
Services
General
Manager
Division A/SBU
A
Manager HR
Manager
Account and
Finance
Manager R&D
Manager
Marketing and
Sales
Manager POM
VP Operating
Support
General
Manager
Division B/SBU
B
Person
nel
Accounting
and Control
Division
Plannin
g
Marketi
ng
POM
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General
Manager
Division C/SBU
C
Person
nel
Accounting
and Control
Division
Plannin
g
Marketi
ng
POM
Strategic
disadvantages
Holding Company
Structure in which the corporate
entity is a broad collection of often
unrelated businesses and divisions
such that it (the corporate entity) acts
as financial overseer holding the
ownership interest in the various parts
of the company, but has a little direct
managerial involvement.
It reduces the cost and one of the
drawback of this structure is lack of
control over decisions to make timely
corrections and adjustments.
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Chief Executive
Officer
Project
Manager
A
VP
Engineeri
ng
VP
Productio
n
Engineeri
ng Staff
Productio
n
Staff
Project
Manager
B
Engineeri
ng Staff
Project
Manager
C
Engineeri
ng Staff
VP
Purchasin
g
VP
Administrati
on
Purchasin
g Agent
Administrati
on
Coordinator
Purchasin
g Agent
Administrati
on
Coordinator
Productio
Purchasin
n
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g Agent
Staff
Administrati
on
Coordinator
Productio
n
Staff
Advantages and
Strategic
Disadvantages
Strategic advantages
disadvantages
1. May result is
1. Accommodates a wide
variety of project oriented
business activities
2. Provides good training
ground for strategic
managers
3. Maximizes efficient use of
functional managers
4. Fosters creativity and
multiple sources of
diversity
5. Give middle management
broader exposure to
strategic issues
confusion and
contradictory policies
2. Necessitates
tremendous
horizontal and
vertical coordination
3. Can reproduce
information and
excess reporting
4. Can cause
neighborhood battles
and loss of
accountability
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Chief Executive
Officer
Research
and
Developme
nt
Engineering
Operations
Product
or
Process
Team
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Finance
Sales and
Marketing
Structuring an Effective
Organization
Major efforts to improve traditional
organizational structures seek to
reduce unnecessary control and
focus
on
enhancing
core
competencies, reducing costs, and
opening organizations more fully to
outside involvement and influence.
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Today
and
tomorrow,
organizational
structure reflects an external focus,
flexible interaction,interdepedency, and a
bottom up approach, just to mention a few
characteristics associated with strategy
execution and success.
The fundamental trends are driving
decisions about effective organizational
structures in the twenty first century are
1. Globalization
2. Internet
3. Speed of decision making
4. Match structure
with strategy
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Globalization
The need for global coordination and
innovation
is
forcing
constant
experimentation and adjustment to
get the right mix of local initiative,
information flow, leadership, and
corporate culture.
Global
firms
have
to
locate
operations in numerous countries.
Today it will call on talents and
resources wherever they can be
found around the globe, just as it
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6. Allow
multiple
structures
to
operate
simultaneously within the organization to
accommodate products, geography, innovation
and customers
. Follow matrix and product team structure
7. Take advantage of being a virtual organization
. This organization structure is primarily formed in a
temporary manner.
. It is defined as a network of independent
companies-suppliers, customers, subcontractors
or even competitors.
. This network links via information technology to
share skills, access to markets, and costs
. Outsourcing and strategic alliances are two major
areas of virtual organization.
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Strategic
Alliances
Saab
io
t
ra
o
b
la
y
l
g
o
o
C on ol
n chn
nt
e
e
t d
on
n
S
p
u
a m pplies
co small c
ars
s
GM
Makes
t
componelln
a
s
sm
lie
p
p
u
S rs
ca
Suzuki
s
ke
Ma
car
Daewoo
M
va ake
n s
Jo
Pr int
od
uc
ti
on
Su
ca pplie
r
ss
tru s,
ma
ll
pa cks
rts an
d
Isuzu
Fiat
Fuji
Toyota
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New
United
Motor
Manufactu
ring
8. Web based
organization
Custo
mer
Driven
Service
Enhanc
ed
Custo
mizatio
n
Virtual
Corporation
extended
Value
Creation
Supplie
r
Driven
Mass
Product
ion
B-Web
Internetw
orked
enterprise
Industrial
Age
Corporation
Vertical
Integrated
Physical
Scarce
Resources
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Digital
Abunda
nt
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and
Organizational Culture
Organizational culture is the set of
important
assumptions
often
unstated that members of an
organization share in common.
It is intangible in nature.
It provides the basic theme as well
as meaning,direction,and the basis
for function.
The organizations shared norms and
values or beliefs can influence
organizations members opinions and
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These
values
aware
the
organizational members and guide
to appropriate behavior in the
organization.
If the actions of the members are
according to the organizational
values the employees get satisfied.
The
organizations
assumptions
become shared assumptions through
internalization
among
an
organization's individual members.
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1.
2.
3.
4.
Techniques to manage
culture
Leaders typically
attempt to manage and
create distinct cultures through a variety
of ways
Some of the common ways are as follows.
Emphasize key themes or dominant
values
Encourage dissemination of stories and
legends about core values
Institutionalize
practices
that
systematically reinforce desired beliefs
and values
Adapt some very common themes in their
own unique ways
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Many
Changes
in key
organizati
onal
factors
that are
necessary
to
implemen
Few
t the new
strategy
Link changes to
basic mission
and
fundamental
organizational
norms
Synergistic
focus on
reinforcing
culture
High
1
2
Reformulate
strategy or
prepare
carefully for
long term,
4 difficult cultural
change
3
Manage around
the culture
Low
Potential compatibility of changes with
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existing culture
Link to mission
A firm in cell 1 requires several changes in
structure,systems,managerial
assignments,
operating procedures or other fundamental
aspects of the firm.
The following considerations are appropriate
a. Key changes should be visible linked to the
basic company mission
b. Emphasis should be placed on the use of
existing personnel
c. Care should be taken if adjustments in the
reward system are needed
d. Key attention should be paid to the changes
that are least compatible with the current
culture
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Maximize synergy
A firm in cell 2 needs only a few
organizational changes to implement its
new strategy, and those changes are
potentially quite compatible with its
current culture
The firm can apply two broad themes
a. Take advantage of the situation to
reinforce and solidify the current culture
b. Use this time of relative stability to
remove organizational road blocks to
the desired culture
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Organizational
Leadership
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Organizational
leadership
is
concerned
with
providing
the
direction to the followers.
It is cope with change
It guides the organization to deal
with constant change
It clarifies the strategic intent and
shape
the
culture
to
fit
organizational
opportunities
and
challenges change affords.
It identifies and supplies the
organization
with
operating
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The required
competencies of
business leaders
Build literacy
Creativity
Cross cultural
effectiveness
Empathy/understandin
g
Flexibility
Proactively
Problem solving
Relation building
Teamwork
vision
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Building Resource
Strengths and
Organizational
Capabilities
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Installing support
system and supportive
reward system
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The End
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