It facilitates strategy implementation by improving coordination between similar divisions and making accountability to different business units. The basic forms of organization structure are simple or entrepreneurial, functional, divisional, and matrix. The basic reason behind creating a virtual organization is to generate synergy through temporary alliances. Vertical communication between superior and subordinate is the tendency in mechanistic structure. As the environment changes due to factors such as globalization, career contexts have changed along. Copyright 10. For example – a large company having business throughout India may departmentalise its business by the major geographical regions (Example – Southern India, Northern India, Western India, Eastern India and Central India). Informal communication plays a bigger role. It is a set of planned relationships between groups of related functions and between physical factors and personnel required for the achievement of organisational goals. It may take the form of combining product and geographical divisions or functional and divisional structures, operating in tandem. These organizations may take the form of a modular organization, strategic alliance, or self-managing teams. Disclaimer 8. I try to use material not subjected to any copyright laws. Account Disable 12. An organisations growth makes structure complex. As said above, product based structure is suitable only for fairly large organisations having multi-product lines and which can appoint top managerial personnel to handle semi-autonomous product divisions. A functional design may be effective when an organization has a narrow product line, competes in a stable environment, pursues a low-cost or focused business strategy, and does not have to respond to the pressures of serving difficult types of customers. iii. iv. iv. Maintenance of economical central services is sometimes very difficult. … (vi) Since each product manager is required to supervise the diverse functions of production, sales and finance with respect to a particular product line, there is a wide scope for the training and development of all round executives. organizations, along with its pros and cons ; Explain what is meant by boundaryless organizations and why they are important ; Explain the dimensions of restructuring ; 3 Traditional Organizational Structures. iii. iii. Complex and markedly different activities require faster decision making because time factor is of prime importance. In India, several companies like DCM, Gwalior Rayons, Century Mills and Voltas follow divisional structure to organise their operations. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. 5. For example, for new product development, no functional department is created but a multidisciplinary team is created that works on a single process. Berlin, Germany Kiev, Ukraine - Programming Los Angeles, USA - Marketing Culture Ethics Decision Making Current Conflicts Goal Setting Skill variety Task Identity Task Significance Autonomy Feedback Time Implementation Nerve Center - Organizational Strategy - Design & Product For example, GEC was earlier having nine product groups and forty-eight divisions which were reorganised into forty- three strategic business units, many of which crossed group, division, and profit centre lines. For example, Life Insurance Corporation of India runs its life insurance business on the basis of territorial divisionalisation in which the entire geographical area of the country has been divided into five zones—eastern, central, northern, southern, and western. (vii) It is also beneficial from the point of view of country’s economic development. Virtual or Network Organisation 14. It is very useful where proximity to the local market can result in cost reduction. I enjoy writing and although English is not my mother tongue, I decided to write in English to get a wider audience. As with any theories, they may not reflect the culture of an organization which can be affected by social and psychologic conditions of the members of the organization. For instance, if an undertaking is in production line, the dominant element in its organisation chart would be manufacturing and assembling. However, virtual organisations may suffer from two problems. H&M has outsourced the production and processing of their goods to different countries majorly Asian and South East Asian countries.The figure above explains the fundamentals of a network organizational structure. An organisation structure shows the authority and responsibility relationships between the various positions in the organisation by showing who reports to whom. Two complementary structures—pure project structure and functional structure—are merged together to create matrix structure. Nike’s organizational structure is worthy of study due to the fact that it has been a successful organization since its inception. Identify five traditional organizational structures and the pros and cons of each Explain the product-team structure and how it is a prototype of more open/agile structures. Thus, there is duplication or triplication of activities, personnel and equipment. It facilitates measurement of unit performance. It helps to maintain the power and prestige of the major functions. May divert the owner from strategic decisions to day-to-day operating decisions. The advantages of product based structure are as follows: (i) Product departmentation can reduce the coordination problems which are created under functional departmentation. Sharply focuses on accountability for performance. It places attention and efforts on product lines and fixes responsibility for profits at the division level. iii. They have the ability to … The top management can easily evaluate the performance of different product divisions and pay greater attention to the product line which is less profitable as compared to others. Expert Answer . They also learned from a panel of IMD alumni and an Indian entrepreneur about experiences in their organizations. The examples of organic structures include project structure, matrix structure and network structure. The cons of management using the knowledge curve are: These cause price decreases. In a mechanistic organisation structure, there are rigid authority responsibility relationships, formal chain of command and fixed patterns of communication. ii. The disadvantages of functional structure are as under: (i) Each department concentrates on a narrow range of activities relating to its function only. There is no potential for future development. Not because the job does not interest you or you do not give your best shot, but there are other interesting things to do and to learn; so after a few years it is time for a change. In this way, advantages of specialisation can be taken as manager’s work in a functional area and they become quite efficient in dealing with the problems of that area. (v) Excessive specialisation may destroy teamwork in the organisation. The Boundaryless organization: Breaking the chains of organizational structure. As the emphasis under this structure is generally on the total volume of business in the regions, some business lines may not get the required attention. Divisional structure offers many advantages over functioned structure especially in terms of autonomy for efficient management, management development, increasing organizational size up to any limit, and taking into account of specific problems related with each product or territory contributing to the overall objectives of the firm. In this system, an individual’s performance is appraised by his superior, peers, subordinates, and outsiders interacting with him. (iii) It leads to specialisation of physical facilities on the basis of products which results in economy. Enter your email address to follow this blog and receive notifications of new posts by email. Huge Collection of Essays, Research Papers and Articles on Business Management shared by visitors and users like you. In a divisional structure, each division is semi-autonomous and has its own resources and facilities. Under the functional structure, the organisation is designed on the basis of the basic functions, namely, production, finance and accounting, marketing and personnel. One form is the modular organization An organization where all the nonessential functions are outsourced., in which all nonessential functions are outsourced. As such, there is always a lack of proper coordination and control. i. Many of these problems can be overcome through sharp focus on tasks and responsibilities of corporate and divisional management, measurement of performance of divisions, long-term policy for performance and incentives, creating more autonomy and decentralisation of authority, and finally the explicit strategies for both the firm as a whole and its various divisions. So have other companies, such as Hewlett-Packard, AT&T, Motorola, and 3M. Matrix Structure 6. iv. SBU concept was evolved by General Electric Company (GEC) of USA to manage its multi-product business. But in project structure high degree of uncertainty and insecurity is inevitable as the projects are for only specific period of time. From the hierarchal organizational structure to flatter, less bureaucratic structures and the team-oriented matrix, all organizational structures have advantages and disadvantages in key areas. With the '9 -5' no longer being a strict boundary comes a series of pros and cons. Staff report to two managers: On one dimension of the matrix, they report to a profession manager who looks after their skills and methods. i. If both these types of companies put their efforts jointly to undertake any project, their combined strengths could lead to much better results than what individual companies could have achieved separately. 7. The fundamental concept in SBU is to identify the independent product/market segments served by an organization, and creating SBUs accordingly. The organisational structure of an enterprise may undergo changes when there are changes in such factors as the size of the enterprise, nature of business, marketing characteristics, etc. And the territories served by the firm have their unique problems. and wikis and evaluate both the advantages and disadvantages in the field of business. Thus, matrix structure not only employs a multiple command but also related support mechanism and associated organizational culture and behaviour. It represents traditional pyramid shaped organisation which is rigid in nature. (iv) It facilitates the timely completion of a project without disturbing the normal activities of the organisation. Matrix Organizations. When Jack Welch coined this phrase, he was looking to loosen very strong organizational structures in a major corporation. The matrix structure, which is a combination of structures, has, therefore, become popular. This is the reason why more and more organizations are moving towards becoming boundary less organizations. Discuss the different types of boundaryless organizations and the pros and cons of each: barrier-free, modular, and virtual Expert Answer Barrier free organization -Greater level of shared interests and trust, Change in philosophy from executive to organizational development and more use of teams. There is an urge to focus on short-term performance, because divisional performance is measured on ROI and revenue growth. iii. Market-oriented long-range growth-oriented strategies can be planned and implemented. (ii) There may be problems of integration between various regional offices. (iv) There will also be problems in providing centralised services to various departments which are located in different regions. There is a high degree of differentiation of functional tasks. Thus, each functional staff has two bosses—his administrative head and his project manager. v. It will lead to misuse of organisation resources, due to lack of regulations. ii. Skeeter Scruggs owns a small family grocery store in Bug Tussle, Alabama, that employs four people: Skeeter's wife, Winnie Mae; his son, Junior; his daughter, Fannie Mae; and Skeeter himself. Reliance Industries Limited has six product divisions-textiles, polyester, fibre, intermediates, polymers, chemical, and oil and gas. Pros and cons of the protean and boundaryless career concepts The concepts of the boundaryless and protean career certainly have their merits and their uses, but they are problematic in many ways as bases for guiding research and practice. ii. iii. The concept of virtual organization/corporation, also known as networked organization or modular organization along with virtual team and office has entered management field very recently. Each unit is not a separate legal entity; it is still part of the organization. Number of employees in such organizations tends to be quite low. But if a company is providing services in different regions, it would follow geographical or territory based structure. It enables the company to cater to the needs of the different regions more effectively. Taking everything on one’s head has its own risks and disadvantages. It may sometimes cause fragmentation and duplication of functions. They can adapt and respond to the local situations with speed and accuracy. In this form, regional offices are established as separate units. Thus, the members cannot communicate across all levels of the organisation to obtain information. Boundaryless careers. A boundaryless organization is a modern structure that approaches in organization designs. Relevance. Corporate office may become unaware of key developments that could impact on the corporation. Divisions may grow too large impairing managerial efficiency.
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