ORGANIZATIONAL

STRUCTURE

Francisco Jess Ayala Gil

Carlos Linares Snchez
Tatiana Apud Cceres

INTRODUCTION

We are going to talk about organizational structure that is essential to create a

business hierarchy, and is a very important matter in order to whichever company
when we talk about its performance, to assigns clear roles to departments and
individuals to provide them with a sense of purpose and responsibility, and so forth.
We will contrast the organizational structure of several firms due to each one have a
different organizational structure depending if its large or small, products,
experience, staff, and so forth. We also are going to talk about roles of
organizational structure as such as efficiency, harnessing experience, so forth. We
are going to talk about a very important matter inside the company too, the
decision making where the firm determine the future actions and then success or
failure of company. We are going to differentiate among centralization and
decentralization in a firm which is relative, because a firm cant be totally neither,
and each have it advantages and disadvantages.

INDEX

1. ORGANIZATIONAL STRUCTURE

1.1.

CENTRALIZED STRUCTURE

1.2.

DECENTRALIZED STRUCTURE

1.3.

CENTRALIZATION VS DECENTRALIZATION

1.4.

EMPLOYE EMPLOYEMENT

2. NESTLE

3. NESTLE: AN EXAPLE OF DECENTRALIZATION

3.1 ORGANIZATIONAL STRUCTURE OF NESTLE

3.2 THE SAME PRINCIPLES WORLDWIDE
3.3 ORGANISATIONAL PRINCIPLES OF NESTLE
3.4 A MULTI-CULTURAL BUSINESS

4. CURIOSITIES

5.

CONLUSION

1.

ORGANIZATIONAL STRUCTURE

The organizational structure determines how the roles, power and responsibilities are
assigned, controlled, and coordinated, and how information flows between the
different levels of management. A structure depends on the organization's
objectives and strategy.
We can roughly identify two types of organizational structure: centralized and
decentralized. However, we must keep in mind that the centralizationdecentralization is relative, not absolute. That is, an organization is never completely
centralized or decentralized.

1.1

CENTRALIZED STRUCTURE

Centralization is the degree to which decision making takes place in the upper
levels of the organization. If top managers make key decisions with little input from
below, then the organization is more centralized.
These organizations can be called "unified", which have branches and offices. There
are standards which must be met for the entire company and accepted by all
employees.

1.2

DECENTRALIZED STRUCTURE

Decentralization is the degree to which lower-level employees provide input or

actually make decisions.
In Decentralized organizations are established values and principles of action for the
whole group, where each business division can have an own distinct corporate
philosophy.
Can be classified three forms of Decentralization:

Deconcentration: The weakest form of decentralization. Decision making

authority is redistributed lower or regional levels of the same central
organization.

Delegation: A more extensive form of decentralization. Through delegation

the responsibility for decision-making is a transferred to semi-autonomous
organization not wholly controlled by the central organization, but ultimately
accountable to it.

Devolution: A third type of decentralization is devolution. The authority for

decision-making is transferred completely to autonomous organizational units.

1.3

CENTRALIZATION VS DECENTRALIZATION

MAIN STRENGTHS

CHARACTERISTICS

STRENGHTS OF
CENTRALIZATION

STRENGHTS OF
DECENTRALIZATION

Philosophy/
emphasis on:

Top-down control, leadership,

vision, strategy

Bottom-up, political, cultural

and learning dynamics

Decision-making:

Strong, authoritarian, visionary,

charismatic

Democratic, participative,
detailed

Organizational
change:

Shaped by top, vision of

leader

Emerging from interactions,

Execution:

Decisive, fast, coordinated.

Able to respond quickly to
mayor issues and changes

Evolutionary, emergent.
Flexible o adapt to minor
issues and changes

organizational dynamics

Here are some of the factors affecting the use of a centralized or decentralized
organization:

MORE CENTRALIZATION

MORE DECENTRALIZATION

Environment is stable

Environment is complex, uncertain

Lower-level managers are not as capable

Lower-level managers are capable and

or experienced at making decisions as

experienced at making decisions

upper-level managers
Lower-level managers do not want to say

Lower-level managers want a voice in

in decisions

decisions

Decisions are relatively minor

Decisions are significant
Organization is facing a crisis or the risk of
company failure

Corporate culture is open to allowing

managers a say in what happens

Company is large
Company is geographically dispersed
Effective implementation of company
strategies depends on managers

Effective implementation of company

retaining say over what happens

strategies depends on managers having

involvement and flexibility to make
decisions

1.4

EMPLOYE EMPLOYEMENT

As organizations have become more flexible and responsive to environmental

trends, theres been a district sift toward decentralized decision making. This is also
known as employee empowerment, which is giving employees more authority
(power) to make decision. In large companies especially, lower-level managers are
"closer to the action" and typically have more detailed knowledge about problems
and how best to solve them than do top managers.
At a recent meeting about a new incentive plan for employees, one of the
programmers criticized what the CEO was proposing. After extensive discussion,
meeting attendees voted to handle the incentives differently.

2.

NESTL

Nestl S.A. is a Swiss multinational nutritional and health-related consumer goods

company headquartered in Vevey, Switzerland. It is the largest food company in the
world measured by revenues.
In 1866, while the brothers Page founded the first factory of condensed milk (AngloSwiss Condensed Milk Company), Henri Nestl developed his baby food with milk,
cereals and carbohydrates Lactous Farina Nestl, marketed in 1867. The two
companies merged in 1905 to become Nestl & Anglo-Swiss Condensed Milk Co.
Nestl's products include baby food, bottled water, breakfast cereals, coffee,
confectionery, dairy products, ice cream, pet foods and snacks. Already in the
1900s, the company had several factories in Europe and North America, particularly
in the U.S., Britain, Germany and Spain. Nestl is currently present in more than 100
countries worldwide.
Nestl has grown through acquisitions that have opened doors to new areas such as
frozen products, mineral water, pet food, etc..
In 2004, Nestl was the world's leading food company, with 247,000 employees
worldwide and headquarters always located in Vevey (Switzerland). Nestl realized
98% of its sales abroad.

3.

NESTL: AN EXAPLE OF DECENTRALIZATION

The Socit des Produits Nestl SA, known internationally as Nestl is the largest food
processing company in the world. Nestle is present in many countries, but this does
not mean that each of them have the same products and it is certainly one way of
doing things as it is very important to respect the personality of each product and
especially dependent the country where it is located. That is why Nestle is an
example of Decentralized Corporate Philosophy.

3.1

ORGANIZATIONAL STRUCTURE OF NESTLE

The Nestl management culture was always basically decentralized, as delegated

much of the responsibility and powers to the directors of operating companies. The
group promoted an organization as decentralized as possible, within the limits
established by the policies and strategies set by the International Centre in Vevey
(Switzerland), and operating companies put into service according to your specific
situation and local conditions. It was a good application: "Thought and global
strategy, action and local commitments".

3.2

THE SAME PRINCIPLES WORLDWIDE

Two key documents (The Nestl Corporate Business Principles and the Nestl
Management and Leadership Principles) set out the principles that permeate entire
Nestl Group. They govern the policies and strategies. They set the tone and style of
approach. They affect everyone working at Nestl.
The Nestl Corporate Business Principles describe the Nestl way of doing business. It
includes sections on Child Health and Nutrition, Human Rights, Child Labour and
protection of the environment, and a set Principles of Consumer Communication.
The Nestl Corporate Business Principles have been translated into more than 40
languages and distributed to management worldwide. They are built on key beliefs
including:

Nestl's business objective is to manufacture and market their products in a

way that creates value that can be sustainable long-term shareholder,
employees, customers, business partners and national economies in which
Nestl operates.

Nestl does not favour short-term profit at the expense the successful
development of long term business.

Nestl recognizes that its consumers have a sincere and legitimate interest in
the behaviour, beliefs and actions the company behind the brands they put
confidence.

3.3

ORGANISATIONAL PRINCIPLES OF NESTL

Being as decentralised as possible to optimally respond to the needs of

consumers, within the framework defined by our fundamental policies,
strategic directions and operational efficiencies. Ensuring collaboration of all
Nestl businesses and compliance with Nestl principles, policies and
standards (Nestl in the Market approach).

Building and maintaining a structure which assures operational speed, with a

strong focus on results and removing unnecessary obstacles.

Establishing flat and flexible organisations with minimal levels of management

and broad spans of control, which also enable people development.

Setting a shared vision and common goals to leverage the strength of people
and organisational alignment.

Defining clear levels of responsibility. Teamwork does not affect the

managers duty towards his/her people and business results. A team must
always have a leader who assumes full responsibility.

3.4

A MULTI-CULTURAL BUSINESS

Nestl embraces cultural and social diversity and does not discriminate on the basis
of origin, nationality, religion, race, gender or age. Nor does Nestl have any
political involvement.
Nestl operates in many countries and in many cultures throughout the world. This
rich diversity is an invaluable source for the leadership, and also for broadening our
employees experiences.
A key theme of the Management and Leadership Principles is that Nestle put priority
on people rather than systems. This results in a structure that is as flat as possible,
rather than hierarchical, and gives individuals plenty of opportunities to advance
their careers.
Harvard Business School Professors Michael Porter and Mark Kramer have stated that
is puts Nestl in the front rank of companies who create real shared value for
themselves and society at every step of their business process or value chain.
Porter and Kramer argue that Nestls approach has already stood the taste of time;
and will continue to do so precisely because there are winners on all sides.

4.

CURIOSITIES

Since his name is German for little nest, Henri Nestl decided to use a birds
nest as his trademark

Maggi soups in Germany, China and Indonesia is the same brand, but the
product is different. Each has its own flavours and textures to satisfy local
tastes

Kit Kat chocolate is the most important brand in Japan. In Britain, the country
of origin, sold about 3 million units per day.

5.

CONCLUSION

Centralization or decentralization is only a matter of degree. Find just over the limit or
agreement that is favourable to the company.

Centralization refers to the degree to which decision making is concentrated in the

high levels of an organization and decentralization is the division or transfer of
decision power from higher levels to lower levels of an organization.

It could work in the study of centralization and decentralization, which, although not
currently used, can be observed philosophies and their influence is still felt in current
political philosophies, we study how decentralization changed from a simple quick
solution to be a political trend in itself.