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ORGANIZATIONAL STRUCTURE

This chapter explores the importance of organizational structure in meeting objectives, factors influencing restructuring, and different structural configurations such as pyramid, circle, and sideways pyramid, as well as hybrid structures. It delves into the illusion of managerial control and top management's response to external powers, with a focus on board and network structures in global firms. The discussion also covers matrix structures and practical examples like Danone Group's organizational model.

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ORGANIZATIONAL STRUCTURE

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  1. ORGANIZATIONAL STRUCTURE Chapter 12 Lecture 1

  2. Every Organization has a Structure But structures can differ Due to choice Due to national laws The words used to describe them also can differ Organization chart, design, structure The way they are drawn can differ pyramid, sideways pyramid, circle

  3. The Structural Configuration • is the skeleton of the organization • reflects corporate governance • is intended to meet organizational objectives • arises out of strategic directions • and causes managers to ask: • what structure will best aid us in meeting our strategy and objectives?

  4. Restructuring Occurs for Many Reasons • Turnover in top management • Competitive positioning • Mergers and/or acquisitions • Cost-savings • Even the illusion of managerial control

  5. The Illusion of Managerial Control “We trained hard—but it seemed that every time we were beginning to form up into teams, we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization.” –Petronius Arbiter, 210 B.C.

  6. Structural Choice is Important Because • it focuses attention on particular areas • shapes how resources will be used • directs communication flows • defines control and other processes • illustrates people’s roles relative to others’ roles

  7. Understand organizational objectives (articulated in the varied levels of strategy) Analyze the structure Assess the match between organizational strategies and structures Your Job

  8. Top Managers Answer to a Power Greater than Themselves • God or conscience in a wholly owned private firm • The family in a family owned firm • The Board in a publicly owned firm: • U.S. boards often are chaired by the CEO • Boards in U.K. usually are chaired by a non executive • European companies often have a two-tier board • In Germany, duties are split between supervisory and management boards • Spain and France often use an executive committee

  9. Beneath the Board are Several Structural Types • Intra and interorganizational networks • Special cases • Functional, divisional, hybrids

  10. Networks Intraorganizational networks internal networks shamrock spiderwebs Interorganizational networks • strategic alliances • joint ventures • partial acquisitions/mergers • cross-sector partnerships

  11. Special Cases • Family structure • Holding companies • Virtual structure

  12. Except for “born globals,” Most Companies Grow into Expansion

  13. Most Common Structural TypesAmong Global Firms are: • Functional structure • Divisional structure • Hybrid structures • Combined functional/divisional structure • Matrix structure

  14. Global Functional Structure

  15. Divisional Structure Can Take Different Forms • Product • Geographic • Customer group served

  16. Global Geographic Division Structure

  17. Global Product Structure

  18. Hybrids Often Emerge to Deal with Problems of Functional and Divisional Forms • Matrix forms are hybrids • Some hybrids combine a mostly functional structure with one or more important products or markets, e.g., North America • Some hybrids combine a mostly divisional structure with one or more important functions, e.g., marketing

  19. We Use a Matrix to Organize Roles and Relationships in Business Education

  20. Global Matrix Structure

  21. Combined Functional and Divisional StructureDanone Group, 2003 Chair and CEO Vice Chair and COO Exec VP, Fresh Dairy Exec VP, Water General Secretary Exec VP, Finance Exec VP, Biscuits and Cereal Snacks Exec VP, Asia-Pacific Exec VP, Intl Strategy

  22. spiderwebs internal networks shamrocks horizontal keiretsu chaebol Intraorganizational Structures

  23. Mitsubishi Group Network

  24. Mitsubishi Village

  25. Strategic alliances Joint ventures Partial acquisitions Interorganizational Structures

  26. Special Cases • Family structures—usually hierarchical with a patriarch/matriarch or a set of family members who divide tasks according to skill or obligation • Structures that arise out of national tradition—German firms always have union representation and two levels of boards • Holding companies • Virtual organizations

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