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Presented by:
Princy
Shirin
Radhika
Swati
What is an Organization Structure ?
Acc. To Chandler,
Structure & Strategy have a two way, reciprocal relationship.
The strategy changes require structure changes to acquire
economic efficiency.
The structure flows from the strategy. Once in a place, the
structure tends to influence, how present strategies are
implemented and also how future strategies would be
formulated.
It is the continual process of matching the structure of an org.
with its chosen strategy.
Stages of Development
Stage1
Small scale enterprises, managed by single person,
Entrepreneur-owner-manager.
Characteristics:- Simplicity of objectives, operations and
management.
Stage 2
Bigger than stage 1 in terms of size and operations.
Characteristics:- Functional specialization or process
orientation.
Contd….
Stage 3
Large and widely scattered organization generally having units or
plants at different places.
Characteristics:- Semi autonomous and linked to the headquarters
but functionally independent.
Stages 4
Most complex form, large multiplant, multiproduct organizations
that results from the related and unrelated diversification
strategies.
Characteristics:- The corporate head quarters assume the
responsibility of providing strategic direction and policy
guidelines.
Types of Organizational Structure
Entrepreneurial Structure
Functional Structure
Divisional Structure
SBU Structure
Matrix Structure
Network Structure
Entrepreneurial Structure
OWNER-
MANAGER
EMPLOYEES
Entrepreneurial Structure is the most elementary form of
structure and is appropriate for an organization that is owned
and managed by one person.
A small-scale industrial unit, a small proprietary concern, or
mini-service outlet may exhibit the characteristics of
Organizations which are based on an entrepreneurial structure.
Typically, these organizations are single-business, product or
service firms that serve local markets.
The owner-manager looks after all decisions, whether they are
day-to-day operational matters or of a strategic nature.
Advantages:
Disadvantages:
Chief Executive
Officer
Public Relation
Finance
Marketing
HRM
Production
Legal
Need arises for specialized skills and delegation of authority
to managers who can look after different functional area. The
Functional structure seeks to distribute decision-making and
operational authority along functional lines.
Advantages :-
1) Efficient distribution of work through specialization
2) Delegation of day-to-day operational functions
3) Providing time for the top management to focus on strategic
decisions.
Disadvantages:-
1) Creates difficulty in coordination among different functional
areas.
2) Creates specialists which results in narrow specialization,
often at the cost
LEGAL
FINANCE
GM
GM
MARKETING MARKETING
OPERATIONS OPERATIONS
DIVISION A DIVISION B
When growth and increasing complexity in terms of
geographic expansion market segmentation, and
diversification make. the functional structure inadequate. Some
form of divisional structure is necessary to deal with.
Advantage:-
Enable grouping of functions required for the performance of
activities related to a division.
Generate quick response to environmental changes.
Enable the top management to focus on strategic matters.
Disadvantage:-
Problem in the allocation of resources and corporate overhead
cost.
Inconsistency arising from the sharing of authority between
the corporate and divisional levels.
Policy inconsistency with different divisions.
Matrix structure
CEO
PM - A
Functional
Specialist
PM - B
PM - C
When a need to work on major products or projects each of
which is strategically significant.
For the duration of the project, the specialists from different
areas from a group or team and report to a team leader.
They also may work in heir respective department
simultaneously.
Once the project is completed the team members revert to the
parent departments.
Advantages
Disadvantages
Dual accountability creates confusion and difficulty for
individual team members.
Requires a high level of vertical and horizontal combination.
Shared authority may create communication problem.
Network Organizational Structure
Project
Group M
Structure
Function
Region A
X
Structure
Structure
Corporate
Headquarter
Function
Region B
Y
Structure
Structure
Project
Group N
Structure
The increasing volatility of the environment, coupled with the
emergency of knowledge based industries, has led to the
creation of a network structure.
Also known as spider’s web structure or the virtual
organization.
Advantages
Permits concentration on core competencies of the firm.
CEO
Structural Contextual
Dimensions Dimensions
Formalization Environment
Hierarchy of
Authority Culture
Centralization Technology
Professionalism Size
Personnel
Ratios
Structural Dimensions
Formalization
It is the amount of written documentation, including procedures, job
descriptions, regulations and policy manuals.
Specialization
It is the degree to which organizational tasks are sub-divided into separate
jobs.
Hierarchy of Authority
It describes who reports to whom and the span of control for each
manager. Span of control is the number of subordinates reporting to a
superior.
Centralization
It is the extent to which decision-making is done by the top management.
Decentralization is the extent to which authority to make decision is
delegated to lower levels of management.
Cont…
Professionalism
It is the level of formal education and training of employees.
Personnel Ratios
It refers to deployment of people to various functions and departments.
There could be an administration ratio, clerical ratio or ratio of indirect to
direct labour employees.
Contextual Dimensions
Environment
Goals & Strategy
Culture
Technology
Size
Development of Organization Design