Description
It explains various strategies while designing organization structure, advantage of tall and flat organizations.
Prof. S. S. Sharma
STRATEGY & ORGANISATIONAL STRUCTURE
BRIEF INTRODUCTION 2. ORGANISATIONAL STRUCTURE
1.
a) b)
Vertical Growth Horizontal Growth
3.
4. 5.
6.
7.
FUNCTIONAL STRUCTURE PRODUCT DIVISIONAL STRUCTURE GEOGRAPHIC DIVISIONAL STRUCTURE MATRIX STRUCTURE ASSESSMENT OF ORGANISATIONAL STRUCTURE
Security Bank Organisation Chart
Board of Directors President & Chairperson of the Board Vice President Loans Vice President Investments Vice President Trusts Vice President Marketing Vice President Operations
Commercial Loans
Business Customers
Manager Region 1
Consumer Loans
Consumers
Manager Region 2
Real Estate Loans
Manager Region 3
Agricultural Loans
Manager Region 4
Advantages of:
TALL ORGANISATION
More Centralisation fosters more effective coordination & communication of the business mission & goals to all employees. ? Planning & execution relatively easy because all employees are centrally located. ? Best suited for relatively stable & predictable environments. However, a no. of experts suggest that the advantages do not accrue today that they once did.
? ?
FLAT ORGANISATION
Administrative costs are less because fewer hierarchical levels require fewer managers & less support personnel. ? Decentralised decisionmaking gives managers at various levels more authority, increasing their satisfaction & motivation. ? More suited for more dynamic environments. ? Quality tends to improve when decision making is decentralised.
An Illustration of Functional Structure
President
Marketing
Production
Finance
Personnel
Research & Development
FUNCTIONAL STRUCTURE
Advantages:
Improvement in specialisation & productivity. ? Improvements & innovations in functional areas. ? Increase in job satisfaction & lower turnover. ? Fosters economies of scale, thereby, lower costs & better quality.
?
FUNCTIONAL STRUCTURE
Disadvantages:
Difficult to pinpoint responsibility for profits & losses. Tendency to “POINT THE FINGER” at other depts. when firm’s performance declines. ? Prone to inter-departmental conflicts. ? Difficulties in coordination & communication across functional areas.
?
PRODUCT DIVISIONAL STRUCTURE
ADVANTAGES:
Clear focus on each product category & a greater orientation towards customer service. ? Pinpointing the responsibility for profits & losses becomes easier. ? Ideal for training & developing managers in general management skills.
?
PRODUCT DIVISIONAL STRUCTURE
DISADVANTAGES:
Higher expenditure on personnel. ? More difficulties in coordination by HQs & ensuring consistency among various depts. ? Unhealthy competition among product managers for resources.
?
An Illustration of Geographic Divisional Structure
President
Vice President Operations
Manager Region 1
Manager Region 2
Manager Region 3
Manager Region 4
GEOGRAPHIC DIVISIONAL STRUCTURE
Advantages:
The products & services may be tailored more effectively to the legal, social, technical or climatic differences of specific regions. ? Producing or distribution products in different locations may give the company a competitive advantage.
?
GEOGRAPHIC DIVISIONAL STRUCTURE
Disadvantages:
Higher personnel costs due to duplication of functions. ? Difficulties in coordination of company-wide functions. ? More emphasis by area managers to own geographic regions to the exclusion of a company-wide viewpoint.
?
Matrix Organisational Structure
President
Executive Vice President
Vice President Marketing
Vice President Production
Vice President Finance
Vice President Human Resources
Vice President Research & Development
Manager Product A Manager Product B Manager Product C
MATRIX STRUCTURE
Advantages:
Advantages of both functional & product divisional structure. ? Flexibility in deployment of personnel in different projects. ? Valuable project experience gained by lower level functional employees. ? Top management freed from day-to-day involvement in enterprise management in order to focus on strategic leadership.
?
MATRIX STRUCTURE
Disadvantages:
Considerable time spent in meetings to achieve coordination across functional areas & across projects, thereby growing bureaucracy and raising personnel costs. ? Considerable conflict between project & functional managers over budgets & personnel, and among project managers themselves over similar resources and personnel. ? Reporting to 2 bosses can create role conflict due to conflicting instructions.
?
ASSESSMENT OF ORGANISATIONAL STRUCTURE
Basic Issues:
1. 2. 3. 4.
5.
Compatibility of the existing structure with the corporate profile & corporate strategy. No. of hierarchical levels in the organisation. The extent to which the structure permits the appropriate grouping of activities. The extent to which the structure promotes effective coordination. The extent to which the structure allows for appropriate centralisation or decentralisation of authority.
Partial Example of a Combination Structure
President & Chief Executive Officer
Aircraft Engine Group
Aerospace Group Vice President Group Executive
Appliance & Television Group Vice President Group Executive
Vice President Group Executive
Components & Materials Group Vice President Group Executive
Construction Industries Group Vice President Group Executive
Consumer Products Group Vice President Group Executive
Industrial Group Vice President Group Executive
Information Systems Group Vice President Group Executive
Power Generation Group Vice President Group Executive
Power Transmission & Distribution Group Vice President Group Executive
doc_177602126.pptx
It explains various strategies while designing organization structure, advantage of tall and flat organizations.
Prof. S. S. Sharma
STRATEGY & ORGANISATIONAL STRUCTURE
BRIEF INTRODUCTION 2. ORGANISATIONAL STRUCTURE
1.
a) b)
Vertical Growth Horizontal Growth
3.
4. 5.
6.
7.
FUNCTIONAL STRUCTURE PRODUCT DIVISIONAL STRUCTURE GEOGRAPHIC DIVISIONAL STRUCTURE MATRIX STRUCTURE ASSESSMENT OF ORGANISATIONAL STRUCTURE
Security Bank Organisation Chart
Board of Directors President & Chairperson of the Board Vice President Loans Vice President Investments Vice President Trusts Vice President Marketing Vice President Operations
Commercial Loans
Business Customers
Manager Region 1
Consumer Loans
Consumers
Manager Region 2
Real Estate Loans
Manager Region 3
Agricultural Loans
Manager Region 4
Advantages of:
TALL ORGANISATION
More Centralisation fosters more effective coordination & communication of the business mission & goals to all employees. ? Planning & execution relatively easy because all employees are centrally located. ? Best suited for relatively stable & predictable environments. However, a no. of experts suggest that the advantages do not accrue today that they once did.
? ?
FLAT ORGANISATION
Administrative costs are less because fewer hierarchical levels require fewer managers & less support personnel. ? Decentralised decisionmaking gives managers at various levels more authority, increasing their satisfaction & motivation. ? More suited for more dynamic environments. ? Quality tends to improve when decision making is decentralised.
An Illustration of Functional Structure
President
Marketing
Production
Finance
Personnel
Research & Development
FUNCTIONAL STRUCTURE
Advantages:
Improvement in specialisation & productivity. ? Improvements & innovations in functional areas. ? Increase in job satisfaction & lower turnover. ? Fosters economies of scale, thereby, lower costs & better quality.
?
FUNCTIONAL STRUCTURE
Disadvantages:
Difficult to pinpoint responsibility for profits & losses. Tendency to “POINT THE FINGER” at other depts. when firm’s performance declines. ? Prone to inter-departmental conflicts. ? Difficulties in coordination & communication across functional areas.
?
PRODUCT DIVISIONAL STRUCTURE
ADVANTAGES:
Clear focus on each product category & a greater orientation towards customer service. ? Pinpointing the responsibility for profits & losses becomes easier. ? Ideal for training & developing managers in general management skills.
?
PRODUCT DIVISIONAL STRUCTURE
DISADVANTAGES:
Higher expenditure on personnel. ? More difficulties in coordination by HQs & ensuring consistency among various depts. ? Unhealthy competition among product managers for resources.
?
An Illustration of Geographic Divisional Structure
President
Vice President Operations
Manager Region 1
Manager Region 2
Manager Region 3
Manager Region 4
GEOGRAPHIC DIVISIONAL STRUCTURE
Advantages:
The products & services may be tailored more effectively to the legal, social, technical or climatic differences of specific regions. ? Producing or distribution products in different locations may give the company a competitive advantage.
?
GEOGRAPHIC DIVISIONAL STRUCTURE
Disadvantages:
Higher personnel costs due to duplication of functions. ? Difficulties in coordination of company-wide functions. ? More emphasis by area managers to own geographic regions to the exclusion of a company-wide viewpoint.
?
Matrix Organisational Structure
President
Executive Vice President
Vice President Marketing
Vice President Production
Vice President Finance
Vice President Human Resources
Vice President Research & Development
Manager Product A Manager Product B Manager Product C
MATRIX STRUCTURE
Advantages:
Advantages of both functional & product divisional structure. ? Flexibility in deployment of personnel in different projects. ? Valuable project experience gained by lower level functional employees. ? Top management freed from day-to-day involvement in enterprise management in order to focus on strategic leadership.
?
MATRIX STRUCTURE
Disadvantages:
Considerable time spent in meetings to achieve coordination across functional areas & across projects, thereby growing bureaucracy and raising personnel costs. ? Considerable conflict between project & functional managers over budgets & personnel, and among project managers themselves over similar resources and personnel. ? Reporting to 2 bosses can create role conflict due to conflicting instructions.
?
ASSESSMENT OF ORGANISATIONAL STRUCTURE
Basic Issues:
1. 2. 3. 4.
5.
Compatibility of the existing structure with the corporate profile & corporate strategy. No. of hierarchical levels in the organisation. The extent to which the structure permits the appropriate grouping of activities. The extent to which the structure promotes effective coordination. The extent to which the structure allows for appropriate centralisation or decentralisation of authority.
Partial Example of a Combination Structure
President & Chief Executive Officer
Aircraft Engine Group
Aerospace Group Vice President Group Executive
Appliance & Television Group Vice President Group Executive
Vice President Group Executive
Components & Materials Group Vice President Group Executive
Construction Industries Group Vice President Group Executive
Consumer Products Group Vice President Group Executive
Industrial Group Vice President Group Executive
Information Systems Group Vice President Group Executive
Power Generation Group Vice President Group Executive
Power Transmission & Distribution Group Vice President Group Executive
doc_177602126.pptx