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Organizational Structure

Organizational Structure. Need to create division of labor Need to integrate these groups to ensure organizational effectiveness Dimensions of Structure. Horizontal differentiation Vertical differentiation Spacial dispersion Degree of formalization Degree of centralization.

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Organizational Structure

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  1. Organizational Structure • Need to create division of labor • Need to integrate these groups to ensure organizational effectiveness • Dimensions of Structure • Horizontal differentiation • Vertical differentiation • Spacial dispersion • Degree of formalization • Degree of centralization

  2. Firm Growth as Evolutionary Process Single Business Product Diversification (Product Diversity) Geographic Diversification (Foreign Sales as %Total Sales) Product and Geographic Diversification

  3. Horizontal Differentiation • degree to which tasks are divided into distinct homogeneous groups • function-wise • geographic-wise • product-wise • production stage-wise

  4. Vertical Differentiation • Number of levels within the organization

  5. Spacial Dispersion • Degree to which activities are located in different areas

  6. Structure Follows Strategy High Horizontal Differentiation? Pressures for Global Efficiency and Centralization Vertical Differentiation? Spacial Dispersion Low Low High Pressures for Local Responsiveness and Decentralization

  7. Export Germany U.S. Mexico Malaysia

  8. Functional Structurew/ International Sales Division

  9. Multidomestic Germany U.S. Mexico Malaysia

  10. Geographic Structure

  11. Pure Global Germany U.S. Mexico Malaysia

  12. Global Functional StructureFor Single-business Firms

  13. Product Division StructureFor Product-diversified Firms

  14. Transnational (1) Germany U.S. Mexico Malaysia

  15. Matrix Structure (A)

  16. Matrix Structure (B)

  17. Transnational (2) Germany Engines U.S. Steel Mexico Final Assembly Malaysia Trim, seats, glass

  18. Matrix Structure (B)

  19. Mixed Structure

  20. Stopford-Wells Structure Model Hi Product Divisions Mixed / Matrix / Network Product Diversity Intl. Division Geographic Divisions Lo 0% 100% Foreign Sales as % of Total Sales

  21. Kimberly-Clark’s Old Structure

  22. Kimberly-Clark’s New Structure

  23. Kimberly-Clark’s New Structure

  24. Formalization • Degree to which rules, procedure, lines of authority/responsibility are enunciated or specified • More formality: eliminates confusion and uncertainty, limits creativity and innovation • Less formality: imbues flexibility, creative solutions.

  25. Centralization • Degree to which authority and decision making is at higher levels of the organization • Centralized: tight org control, managers are order-takers • Decentralized: managers closest to product and/or customer able to make decisions

  26. Data Management Control Mechanisms • Information systems • Measurement systems • Resource allocation procedures • Strategic planning • Budgeting processes

  27. Managers’ Management Control Mechanisms • Choice/selection of key managers • Career paths • Rewards and punishment systems • Management development • Patterns of socialization

  28. Organizational Learning/Conflict Resolution Control Mechanisms • Decision responsibility assignments • Integrators • Transnational teams • Coordination committees • Task forces

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