Organizational Structures

Organizational Structures BOH4M

Which structure is it? • Where you work • The school • This class/Your event planning project Draw an organization chart to illustrate your chosen structure.

Organizing • Deciding how best to group organizational activities and resources

Formal vs. Informal • Formal Structure • The way that the organization if configured • Defines hierarchy, chain of command, work groups, etc. • Informal Structure • The unofficial working relationships within the organization • i.e. who hangs out with who

Functional Structure • The most common structure • Jobs are grouped together that involve the same type of activity • Marketing, finance, manufacturing, HR, etc. • Pros: Managers need only be familiar with one set of skills, coordinating departmental activities easy • Cons: Decision making can become slow/bureaucratic in larger organizations, employees may focus too narrowly on their department

CEO Research and Development Sales and Marketing Manufacturing Materials Management Finance Functional Structure A functional structure is the bedrock of horizontal differentiation. It is the first “structure” that organizations adapt as they grow. Functional Structure 4 -

Product Structure • Grouping activities around product groups • Examples • GM, Chevrolet, Cadillac • Coke, Sprite, Dasani • Pros: easy to coordinate all activities associated with a product, quicker decision making easy to assess performace • Cons: too much focus on own product, higher admin costs

CEO Vice President Sales and Marketing Vice President Research and Development Vice President Materials Management Vice President Finance PDM PDM PDM PDM Canned Soups Division Frozen Vegetable Division Frozen Entrees Division Baked Goods Division Centralized support functions Divisions Product Structure 4 - 4-19

Geographical Structure • Grouped based on the area served • Examples: • North America, Europe, Asia, etc. • Ontario, Quebec, Maritimes, etc. • Pros: Can tailor operations to unique demands of each market • Cons: Expensive

Regional Operations CEO Regional Regional Operations Operations Central Support Functions Individual stores Regional Operations Geographic Structure 4-31 4 -

Customer Structure • Grouped based on customer served or distribution channel • Examples: • Industrial Sales, Consumer Sales • Vending machines, retail, restaurants • Pros: can create groups oriented to serving unique needs of specific customers • Cons: Expensive

CEO Central Support Functions Commercial Division Consumer Division Government Division Corporate Division Customer Structure 4 -

Process Structure • Grouped based on work process • Examples: • Purchasing, order fulfillment, customer service • Pros: focused expertise, clear point of responsibility • Cons: duplication of resources, expensive

CEO Central Support Functions Purchasing Customer Service Order fulfillment Inventory Management Process Structure

Matrix Structure • Attempt to avoid the Silo effect by inserting horizontal lines of communication into the structure • Ex: grouping people by function and customer division • Pros: better interdepartmental communication and coordination • Cons: more bosses to report to, requires well organized information systems

Matrix Structure CEO V ice President V ice President V ice President V ice President V ice President Sales and Finance Research and Purchasing Engineering Marketing Development Product A Manager Product Team Product B Manager Product C Manager Product D Manager Two-boss employee 4 -

Which structure would make the most sense? • Where you work • At school • Your event planning project Why?

Organizational Structures