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Chapter 8

Chapter 8 - Organization Structures and Design.doc

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Global Management Studies
GMS 200
Sui Sui

C HAPTER 8 – O RGANIZATION STRUCTURES AND DESIGNS O RGANIZING AS A M ANAGEMENT F UNCTION - Organizing: arranges people and resources to work toward a goal - Organizing begins the process of implementation by clarifying jobs and working relationships ⋅ What is Organization Structure? - Organization Structure: is a system of tasks, reporting relationships, and communication linkages - Any structure should both allocate tasks through a division of labour and provide for the coordination of performance results ⋅ Formal Structures - Organization Chart: describes the arrangement of work positions within an organization o Typical chart shows various positions and job titles as well as lines of authority - Formal Structure: is the official structure of the organization - An organization’s formal structure includes the following: o Division of work: positions and titles show work responsibilities o Supervisory relationships: lines show who reports to whom o Communication channels: lines show formal communication flow o Major subunits: positions reporting to a common manager are shown o Levels of management: vertical layers of management are shown ⋅ Informal Structures - Informal Structure: the set of unofficial relationships among an organization’s members - People meeting up without any official work related conversations - Advantage – informal learning: takes place while working and interacting together throughout the workday - Social network analysis – is one way of identifying informal structures and their embedded social relationships o Asks people to identify who they turn to for help most often, and who they communicate regularly, and who energize and de-energizes them TRADITIONAL O RGANIZATION STRUCTURES - Departmentalization: is the process of grouping together people and jobs into work units o Three major result types of organizational structures: 1. Functional 2. Divisional 3. Matrix ⋅ Functional Structures - Functional Structure: groups together people with similar skills who perform similar tasks - Figure 8.2, Functional Structures in a business, pg. 224 - Major advantages of a functional structure include the following: o Economies of scale with efficient use of resources o Task assignments consistent with expertise and training o High-quality technical problem solving o In-depth training and skill development within functions o Clear career paths within functions - Major disadvantages of functional structures: o Difficulties in pinpointing responsibilities such as cost containment, product or service quality, timeliness, and innovation o Functional Chimneys Problem: is a lack of communication and coordination across functions ⋅ Divisional Structures - Divisional Structure: groups together people working on the same product, in the same area, with similar customers, or on the same process - Figure 8,3, Divisional structures, pg. 225 - Advantages of divisional structure: o More flexibility in responding to environmental changes o Improved coordination across functional departments o Clear points of responsibility for product or service delivery o Expertise focused on specific customers, products, and regions o Greater ease in changing size by adding or deleting divisions - Disadvantages of divisional structure: o Can reduce economies of scale o Increase costs through the duplication of resources and efforts across divisions o Create unhealthy rivalries as divisions compete for resources and top- management attention - Product Structures: (sometimes called market structures) groups together people and jobs related to a simple product or service o They clearly identify costs, profits, problems, and successes in a market area with a central point of accountability o Common in large organizations, product structures may even extend into global operations - Geographical Structures: (sometimes called area structures) group together people and jobs performed in the same location o Common in international operations - Customer Structures: (sometimes called market structures or product structures) group together people and jobs that serve the same customers or clients o Common form of structure for complex businesses in the consumer product industries - Process Structures: groups jobs and activities that are part of the same processes o Work process: is a group of tasks related to one another that collectively creates something of value to a customer ⋅ Matrix Structures - Matrix Structure: (often called matrix organization) combines functional and divisional approaches to emphasize project or program teams - Figure 8.4, Matrix Structure, pg. 227 - The main contribution of matrix structures to organizational performance lies with the cross-functional teams whose members work closely together to share expertise and information in a timely manner to solve problems - Advantages of matrix structure: o Better co-operation across functions o Improved decision making as problem solving takes place at the team level, where the best information is available o Increase flexibility in adding, removing, and/or changing operations to meet changing demands o Better customer service, singe there is always a program, product, or project manager informed and available to answer questions o Better performance accountability through the program, product, or project manager o Improved strategic management, since top managers are freed from unnecessary problem solving to focus time on strategic issues - Disadvantages of matrix structure: o The two-boss system  Leaders may fight with one another to exercise authority  It creates task confusion and conflicting work priorities for matrix members o Team meetings are time consuming o Teams may develop “groupitis” or strong team loyalties that cause a loss of focus on larger organizational goals o Requirements of adding the team leaders to a matrix structure can result in increased costs H ORIZONTAL O RGANIZATION S TRUCTURES ⋅ Team Structures - Team Structures: uses permanent and temporary cross-functional teams to improve lateral relations - Cross-functional team: brings together members from different functional departments - Project teams: are convened for a particular task or project and disbanded once it is completed - Figure 8.5, How a team structure uses cross-functional teams, pg. 229 - Advantages of team structures o Help eliminate difficulties with communication and decision making due to the functional chimneys problem o Team assignments help to break down barriers between operating departments as people from different parts of an organization get to know one another o Boost morale o Im
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