OUTLINE

• Organizational structure
• Organizational theories
• Why organizational structure
• Dimensions of organizational structure
• Success factors
• Types of organizational structure
• Strategies of organizational structure
• Organizational culture & dimensions
 Topics
• Organizational structure
• Organizational theories
• Why organizational structure?
• Dimensions
• Success factors
 ORGANIZATION
An organization is a system of“
consciously coordinated activities or
.”forces of two or more persons
Characteristics common to all
organizations
 Coordination of effort
 Common goal
 Division of labor
 Hierarchy of authority
 ORGANIZATIONAL
STRUCTURE

Organizational structure is the

system of task, reporting, and
authority relationships within which
.the work of organization is done
 Organizational Theories
• Max Weber (1864-1920)
• Henri Fayol (early 1900s)
• Hawthorn Studies (1920-1930)
• Douglas Mc Gregor (1950)
• Open system Theory (1960)
Why
Why Organizational
Organizational
??Structure
Structure
Dimensions
Dimensions Of
Of
Organizational
Organizational
Structure
Structure
 Division of
Labor

Responsibility Departmen-
And Authority talization

Dimensions of
Organizational
structure

Span of
formalization
control

Centralization
And
decentralization
 DIVISION OF LABOR
• Job is broken down into a number of
steps
• Each step is completed by a separate
individual
• Makes efficient use of the diversity
of skills that workers have
DEPARTMENTALIZATI
ON

The manner in which the divided tasks“

are combined and allocated to work
”.groups
Grouping Activities By:

• Function

• Process

• Geography

• Product

• Customer
 :By Business Function

President

Marketing Manufacturing HRM Finance Engineering

 :By Process

Vice President
Manufacturing

Heat treatment
Drill press group Milling group Painting group Assembly group
group
 :By product

Intel

Microprocessor Networking Communications Services

 :By customer

Intel

Mobile Business home Health care International

 :By Geographic

Marketing
division

Eastern Northern Southern

Western International
Sales Sales Sales
Sales group Sales group
group group group
 Matrix Departmentalization
Procter & Gamble

Baby Care, North

Western Asia, India,
Family Care America
Europe Australia

Beauty Care,
Feminine Care Country
Country
Managers
Managersin in
Spain, UAE,
Spain, UAE,
Kenya,
Kenya,etc.
etc.
Fabric & Home
Country
Country
Care
Managers
Managersin in
India,
India,South
SouthKorea,
Korea,
Australia,
Australia, etc.
etc.
Snacks &
Beverages
 SPAN OF CONTROL

The number of people who report to a“

”. manager
Large Span Of Control
Department Head
Department Head

Supervisor
Supervisor Supervisor
Supervisor
 Small Span Of Control
Department Manager
Department Manager

Group Manager
Group Manager Group MANAGER
Group MANAGER

supervisor supervisor supervisor supervisor

 CENTRALIZATION
AND
DECENTRALIZATION
 Degree of Centralization
Lowe Highe
r r
Decentralization

Employee Empowerment
Top Management Control

Centralization
Higher Lower
 FORMALIZATION

It is the degree to which rules and “

procedures shape the jobs and
”.activities of employees
RESPONSIBILITY:
It is an obligation to do something with
the expectation of achieving some act
or output.

AUTHORITY
It is a power that has been legitimized
within a particular social context.
 Success Factors
• Decentralized reporting
• Flat hierarchy
• High transient speed
• High transparency
• Permanent monitoring
• Rapid response
• Shared reliability
Tayyaba
Tayyaba Iqbal
Iqbal
Roll # 108
 Outline
• Theory of Mechanistic & Organic organization
system
• Humanistic organization systems
• Types of Organizational Structures
• Benefits
• Effects of organizational structures on behavior
• Charts (diagrammatical form)
 Theory
Theory ofof
Mechanistic
Mechanistic &
& Organic
Organic
Organization
Organization System
System
 Mechanistic Theory

• By Burns and Stalker (1961)

“A hierarchical, bureaucratic, organizational-structure characterized by 1)

centralization of authority, 2) formalization of procedures and practices
and 3) specialization of functions.

• Simple, easy to organize

• Appropriate for stable environment
Mechanistic organizational structure
• Clear, well-defined, centralized, vertical hierarchies of command,
authority, and control
• Highly formalized
• Jobs are designed around the task
• Goals, strategies, policies, and procedures by top-management
• Vertical (Top-down) communication
• Coordination: through the chain of command
• Selection, promotion based on possession of skills for specific task
:Criticism on Mechanistic theory

• Focused on efficiency &

standardization
• Ignored human needs & dynamics
• Restrictions on creativity &
innovation
• difficult to cope with the rapid
change
 Organic organizational structure

“Organizational structure characterized by (1) Flatness:

communications and interactions are horizontal, (2) Low
specialization: knowledge resides wherever it is most useful,
and (3) Decentralization: great deal of formal and informal
participation in decision making.”

• Also called open organization

• more complex and harder to form
• designed to promote flexibility so that employees can initiate change
and adapt quickly to changing conditions
 Humanistic organizational theory
“An organizational structure characterized by: 1) less formal,
less control 2) more participation in decision making with
decision authority at the point of service, 3) results in a
flat structure developed along horizontal lines with fewer
levels of management, 4) communication is enhanced.”

• Motivation and growth of the qualifications of the personnel

• integrating humanistic values such as well-being and personal growth
with management goals
Types
Types &
& Benefits
Benefits
Of
Organizational Structures
 Types of organizational structures

• Pre-bureaucratic • Hierarchical / Tall

• Bureaucratic • Horizontal / Flat
• Post-bureaucratic • Team
• Functional • Network
• Divisional • Boundary less

• Matrix • Virtual
Types of Organizational Structures

 Pre-bureaucratic:
• Common in smaller organizations
• centralized
• Strategic manager makes all key decisions
• Useful for new business
• No standardization
Types of Organizational Structures
 Bureaucratic:
• Having certain degree of standardization
• for more complex or large organizations
• Adopt tall structure
• Downward communication & authority

Benefits
• Implementing a tightly focused set of policies and guidelines
• Supervising activities for a specific and predictable outcome.
 .. Types Contd

 Post-bureaucratic:
• Weber's ideal type bureaucracy (since 1980s)
• Charles Heckscher theory:
– decisions are based on dialogue and consensus
– organization is a network
 .. Types Contd
 Functional:
• classifies people by the functions they perform
• operational efficiencies within that group
• Coordination and specialization of tasks are centralized in a
functional structure,
• Best for large volume, low cost goods producer

Benefits:
• best utilization of employees talent
• Better communication between specialists,
• Increased teamwork and shared knowledge,
• quick decision making
Functional Organizational Structure
 .. Types Contd
 Divisional / Product:
• groups each organizational function into divisions
• contains all the necessary resources and functions within it.
• Can be categorized on geographical or product/ services basis
• have its own sales, engineering and marketing departments.

Benefits:
• Higher quality products and customer service
• Facilitates communication and teamwork
• easier for upper management to evaluate and reward employees
• Encourage hands-on problem solving
Divisional Organizational Structure
 .. Types Contd
 Matrix:
• groups employees by both function and division
• employees having multiple bosses
• uses teams of employees to accomplish work
• a simple network

Benefits:
• Recruiting and isolating talent into particular groups
• innovation and creativity
• Improves communication and teamwork
• Increases responsibility and freedom of employees
Matrix Organizational Structure
 .. Types Contd
 Horizontal:
• with few or no levels of intervening management
• common for smaller, start-up companies
• focused on creativity and innovation
• But can be more time-consuming to built

Benefits:
• promotes employee involvement
• Communication and decision making is more efficient and quicker
• greater job responsibility and motivation
Horizontal Organizational Structure
 .. Types Contd
Team:
• developed in the 20th century
• small businesses, can define the entire organization
• Xerox, Motorola, and DaimlerChrysler are all among the
companies that actively use teams to perform tasks.

DaimlerChrysler Motorola
 .. Types Contd
Network:
• contract out any business function, which can be done better or
more cheaply
• managers spend most of their time coordinating and controlling
external relations, by electronic means
• H&M is outsourcing its clothing to a network of 700 suppliers
 .. Types Contd
Boundaryless:
• overcomes traditional boundaries between layers of
management functional areas, as well as geographic
boundaries.
• combination of team and network structures
• Ikea, the world's largest furniture manufacture,

Virtual:
• works in a network of external alliances
• using the Internet.
• Amazon.com
Effect of Organizational Structure on
Behavior

• High decisions; Low morale of employees

• Rigid policies; Careless performance
• Unfair treatment; Decreased loyalty
 CHARTS
CHARTS
OF
Organizational Structures
A typical organizational structure
Zahnain Ayesha
Roll#124
 Strategies for
organizational structure
 Types of strategies
• Functional-Level strategy
• Business-Level Strategy
• Corporate-Level Strategy
 Functional-Level
Functional-Level
strategy
strategy
It is a plan of action to strengthen an
organization’s functional and
organizational resources, as well as
its coordination abilities, in order to
create core competences
Functional-level strategy

• Wal-Mart’s Functional Level Strategy

 How can build competitive
advantage through
functional-level strategy
• Increasing efficiency
• Improving quality
• Sustaining innovation
• improving customer responsiveness
 Business-Level
Business-Level Strategy
Strategy
Business-level strategists combine functional core
competences to seek environmental opportunities.
They choose and manage the domain in which the
company uses its core competences for a
competitive advantage, which in turn allows the firm
.to protect and enlarge its domain
 Business-Level Strategy

• Companies pursue a low-cost

strategy
• Companies pursue a differentiation
strategy
• Amazon business level strategy
 Business-Level Strategy

• Business-Level Strategy and Structure

• Business Level Strategy &Culture
 Corporate-Level
Corporate-Level
Strategy
Strategy
Corporate-level strategy searches for new
domains to use low-cost or differentiation
.core competences
 Corporate-Level Strategy
• Corporate-Level Strategy and
Structure
• E-bay corporate level strategy
• wall-mart corporate level strategy
Noor-ul-ain
ROLL#116
 IMPACT OF
GLOBALIZATION ON
ORGANIZATIONAL
STRUCTURE
 Modes of foreign market
entry

• Exporting
• Licensing (includes franchising)
• Joint Venture
• Foreign Direct Investment
 Types of International
:Strategy
• Multi-domestic
• Global
 Multi-domestic Strategy

• Product customized for each market

• Decentralized control - local decision making
• Effective when large differences exist
between countries
• Advantages: product differentiation, local
responsiveness, minimized exchange rate
risk
 Philips
Positive results:
• Innovation from local R&D
• Products tailored to individual countries
• High quality due to backward integration
challenges:
• High costs due to tailored products
• The innovation from the local R&D groups
resulted in more specific research according
to each country
 Global Strategy

• Product is the same in all countries.

• Centralized control - little decision-making
authority on the local level
• Effective when differences between
countries are small
• Advantages: cost, coordinated activities,
faster product development
 COCA COLA
Positive results:

 Strong global distribution network

 Company-wide mission statement that was followed closely
 Financial control
 More applied R&D
challenge:

 Too much dependency on one product

 Emergence of new
Concepts

o HRM
o CRM
o TQM
o MIS
o KNOWLEDGE MANAGEMENT
o SOCIETAL MANAGEMENT
 Human Resource
Management
It has led homogenization and
convergence in
 organization strategies
 structures
 processes
 consumer choice.
HR development
People Excellence
• achieving a high performance culture
• increasing the global talent pool
• strengthening expert careers
• Siemens Leadership Excellence Programme (SLE).
Talent management
• job enrichment
• job enlargement
 Customer Relationship
Management

managing and nurturing a company’s

interactions with
 customers
 sales prospects
 BENEFITS OF CRM
-Reduced operational costs
- Increase customer satisfaction and the service
encounter
- Expand the target market and attract new partners
- Increase the number of opportunities and develop
additional streams of revenue
- Acquire a greater degree of information about the
market and competitors
- Long-terms gains of profitability and sustainable
income
- Provides additional room for an organization to move
forward and innovate new ideas and concepts
Total Quality Management

manage and gain competency by controlling

all the activities involved in continuous
improvement in quality by
• Products
• Processes
• Projects
 Management Information
System
A computer based system, which helps to
bring together key roles within the
organization to share information on
. how the business performs
MIS contains:
• Recording of data related to the support
functions
• Sales data and sales orders
• Purchasing information
• Accounts and payroll information
• Information regarding the business plans, risk
registers etc
• Client information often linked to a Customer
Relationship Management CRM module
 Knowledge Management

A range of strategies and practices used in an

organization to
Identify
 create
 represent
 distribute,
 enable
adoption of insights and experiences.
 Societal Management

Case Studies
• SHELL

• Vodafone
 SHELL
Balancing stakeholders and resolving
conflicts

• Economic impact – shareholders

• Social impact – employees, communities
• Environmental impact – the planet
These are the minimum levels that must be
met for all three areas before a major
.decision is made
 Vodafone-Using technology to
improve economies
Creation of partnership with Safaricom, set up M-
PESA. This provides a safe and secures transfer
system to improve the movement of money.
M-PESA has:
• Helped small businesses become more financially
secure
• Provided a safe way for wage earners to send
money home
• Solved the problem of carrying large amounts of
money around
Asima majeed
Roll #117
Organizational culture
& its dimensions
 ??WHAT
WHAT Is
Is CULTURE
CULTURE
Culture is comprised of the
assumptions, values, norms
and tangible signs of
organization members and
. their behaviors
 Organizational culture
“It describes the psychology, attitudes,
experiences, beliefs, and values (personal and
cultural values) of an organization. It has been
defined as "the specific collection of values
and norms that are shared by people and
groups in an organization and that control the
way they interact with each other and with
.”stakeholders outside the organization
 Difference
Difference Between
Between
Corporate
Corporate && Organizational
Organizational
Culture
Culture
Corporate culture total sum of the values, customs,
traditions and meanings that make a company
unique. it embodies the vision of the company’s
. founders
Organizational culture is not the same
as corporate culture. It is wider and deeper
concepts; something that an organization 'is' rather
:than what it 'has' Organizational behavior
 Elements Of
Organizational Culture
• The Paradigm
• Control Systems
• Organizational Structures
• Power Structures
• Symbols
• Rituals and Routines
• Stories and Myths
Strong Or/Weak Culture
• Strong culture
It is said to exist where staff respond to stimulus
because of their alignment to organizational
values.
• Weak culture
Where there is little alignment with
organizational values and control must be
exercised through extensive procedures and
bureaucracy.
 Dimensions of
Organizational Culture
• Individual Autonomy
• Position Structure
• Reward Orientation
• Consideration, Warmth and Support
• Conflict
• Progressiveness and Development
• Risk Taking
• Control
Mergers, Organizational Culture, And
Cultural Leadership

One of the biggest obstacles in the way of the merging of

two organizations is organizational culture. Each
organization has its own unique culture and most often,
when brought together, these cultures clash. One way to
combat such difficulties is through cultural leadership.
Organizational leaders must also be cultural leaders and
help facilitate the change from the two old cultures into the
one new culture. This is done through cultural innovation
followed by cultural maintenance.
Cultural innovation includes:
• Creating a new culture: recognizing
past cultural differences and setting realistic
expectations for change
• Changing the culture: weakening and
replacing the old cultures
•
Cultural maintenance includes:

• Integrating the new culture:

reconciling the differences between the old
cultures and the new one
• Embodying the new culture:
Establishing, affirming, and keeping the
new culture.
Conclusion;
change is inevitable. In the rapidly changing business
environment an organization can not save its future until it
makes itself appropriately matched with its environment. To
adopt any technological & development
change,organizationa’s structure & strategies are to be
changed. There must be a strategy supportive culture to
make organization successful!