Organizational Structures

ORGANIZATIONAL STRUCTURE By

Sreenath B.

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

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?

Restructuring Occurs for Many Reasons • • • • •

Turnover in top management Competitive positioning Mergers and/or acquisitions Cost-savings Even the illusion of managerial control

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

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

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

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

Networks Intra organizational networks internal networks shamrock spider webs Inter organizational networks – strategic alliances – joint ventures – partial acquisitions/mergers – cross-sector partnerships

Special Cases • Family structure • Holding companies • Virtual structure

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

Most Common Structural Types Among Global Firms are: • Functional structure • Divisional structure • Hybrid structures – Combined functional/divisional structure – Matrix structure

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

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

Global Matrix Structure

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Combined Functional and Divisional Structure Danone Group, 2003 Chair and CEO

General Secretary Exec VP, Biscuits and Cereal Snacks

Vice Chair and COO

Exec VP, Finance

Exec VP, Fresh Dairy

Exec VP, Asia-Pacific

Exec VP, Water

Exec VP, Intl Strategy

Intraorganizational Structures • • • • • • •

spiderwebs internal networks shamrocks horizontal keiretsu chaebol

Interorganizational Structures • Strategic alliances • Joint ventures • Partial acquisitions

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