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Chapter 8

Chapter #8 - Organizing.docx

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Ryerson University
Global Management Studies
GMS 200
Ricardo Reyes

Chapter #8 - Organizing Organizing as a management function - Organizing: The process of arranging people and other resources to work together to accomplish a goal - Organization structure: The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups Organizing - Formal Structures o The structure of the organization in its official state o An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization o An organization chart identifies the following aspects of formal structure:  The division of work – positions and titles show work responsibilities  Supervisory relationships – lines show who reports to whom  Communication channels – lines show formal communication flows  Major subunits – positions reporting to a common manager are shown  Levels of management- vertical layers of management are shown Different Types of Formal Structures - Departmentalization – is the process of grouping people and jobs into work units CEO V.P. Marketing V.P. Finance V.P. Human Resources GM Sales GM Advertising GM Products Manager Sales Assistant Manager 1. Functional Structures – groups together with similar skills who perform similar tasks o They share technical expertise, interests, and responsibilities o If each function does its work properly, the expectation is that the business as a whole will operate successfully o Are not limited to businesses. o Work well for small organizations producing few products or services. o Potential advantages of functional structures:  Job Specialization  High-Quality Technical problem solving skills  In-depth training and skill development  Clear career paths within functions  Economies of scale.  Task assignments consistent with expertise and training o Potential disadvantages of Functional Structures:  Difficulties in pinpointing responsibilities.  Functional chimneys problem – is a lack of communication and coordination across functions  Sense of cooperation and common purpose break down.  Narrow view of performance objectives.  Excessive upward referral of decisions.  Rigid Structures  Cannot move from one department to another  They are highly specialized and skilled in a particular department and will not be able to adjust in other departments  Lack of coordination between different functions  They all have unique cultures  Delay in turnaround 2. Divisional Structures – Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region. o Common in complex organizations. o Avoid problems associated with functional structures. o Types of divisional structures and how they group job and activities:  Product structures focus on a single product or service.  Geographical structures focus on the same location or geographical region.  Customer structures focus on the same customers or clients.  Process structures focus on the same processes. o Product – groups together people and jobs focused on a single product or service  They clearly identify costs, profits, problems, and successes in a market area with a central point of accountability  This prompts managers to be responsive to changing market demands and customer tastes o Geography – groups together people and jobs performed in the same location  Deutsche Post World Net CEO  Global logistics services provider  500 000 employees in over 220 countries  Structured into five divisions (divided into type of products) o Mail Asian Division North American Europe o Express – DHL o Logistics VP Marketing o Financial Services o Services Manager Sales  Potential Advantages of divisional structures  Improved coordination Assistant  Expertise focused on specific Manager customers, products, and regions  More flexibility in responding to environmental changes.  Clear points of responsibility.  Greater ease in restructuring.  Potential Disadvantages of divisional structures  Among divisions there is a lot of competition o If one division develops a good product, they will not share the products with other divisions  Differences of culture among the different division  Duplication of resources  Competition and poor coordination across divisions  Emphasis on divisional goals at expense of organizational goals o Customer Structures  Groups together people and jobs that serve the same customers or clients  Goal is to best serve the special needs of the different customer groups o Process structures  Groups jobs and activities that are part of the same processes  Work Process – is a group related tasks that collectively creates a valuable work product 3. Matrix Structures o Combines functional and divisional structures to gain advantages and minimize disadvantages of each. GM Marketing Finance IT Project A Manager Manager Manager (Asian Clients) Project B (Europe Clients) o Used in:  Manufacturing  Service industries  Professional fields  Non-profit sector  Multi-national corporations o Potential advantages of matrix structures:  Better cooperation across functions.  Improved decision making; problem solving takes place at the team level where the best information is available  Increased flexibility in restructuring, adding, removing, or changing operations to meet changing demands  Better customer service; there is always program, product, or project manager informed and available to answer questions  Better performance accountability through the program, product, or project managers  Improved strategic management; top managers are freed from lower-level problem solving to focus more time on strategic issues o Potential disadvantages of matrix structures:  Two-boss system is susceptible to power struggles.  Two-boss system can create task confusion and conflict in work priorities.  Team meetings are time consuming.  Team may develop “groupitis.”  Increased costs due to adding team leers to structure.  Balance between the projects  Managers might be over loaded with work  Creates a lot of conflict because they have more than one manager to report to o Which project gets the most priority 4. Team structures o Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. o Often use cross-functional teams composed of members from different functional departments. o Project teams are convened for a specific task or project and disbanded once completed. o Potential advantages of team structures:  Eliminates difficulties with communication and decision making.  Eliminates barriers between operating departments.  Improved morale.  Greater sense of involvement and identification.  Increased enthusiasm for work.  Improved quality and speed of decision making. o Potential disadvantages of team structures:  Conflicting loyalties among members.  Excessive time spent in meetings.  Effective use of time depends on quality of interpersonal relations, group dynamics, and Design team management 5. Network Structures o A central core that is linked Business Core Accounting and Manufacturing Financial through networks of and Packaging (Garment Marketing) Planning relationships with outside contractors and suppliers of essential services o Own only core components and use strategic Technology Warehousing and alliances or outsourcing to provide other components o Potential advantages of network structures: Shipping  Firms can operate with fewer full-time employees and less complex internal systems.  Reduced overhead costs and increased operating efficiency.  Permits operations across great distances. o Potential disadvantages of network structures:  Control and coordination problems may arise from network complexity.  Potential loss of control over outsourced activities.  Potential lack of loyalty among infrequently used contractors.  Excessively aggressive outsourcing can be dangerousQuality control  Who are you going to report to? Who gets the first priority  All contracts have a high transaction cost 6. Boundaryless organizations o Eliminate interna
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