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Chapter 8

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Global Management Studies
GMS 200
Masoomeh Moharrer

What is organizing as a management function? 4/11/2013 8:03:00 PM ORGANIZATION STRUCTURE 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. Figure 8.1 Organizing viewed in relationship with the other management functions. FORMAL STRUCTURES Formal structure the structure of the organization in its official state.  organization chart describes arrangement of work position within an org 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 comm. flows  Major subunits - positions reporting to common manager shown  Levels of management – vertical layers of management shown INFORMAL STRUCTURES A “shadow” organization made up of the unofficial, but often critical, working relationships between organization members.  Social network analysis identifies informal structures and their embedded social relationships that are active in an org. Informal learning is learning that takes place as people interact informally throughout the workday and in a wide variety of unstructured situations. Advantages Disadvantages  Helping people accomplish their work.  May work against best interests of entire  Overcoming limits of formal structure. organization.  Gaining access to interpersonal networks.  Susceptibility to rumor.  Informal learning.  May carry inaccurate information.  May breed resistance to change.  Diversion of work efforts from important objectives.  Feeling of alienation by outsiders. What are the traditional types of organization structures? 4/11/2013 8:03:00 PM departmentalization––the process of grouping together people and jobs into work units. FUNCTIONAL STRUCTURES People with similar skills and performing similar tasks are grouped together into formal work units.  Members work in their functional areas of expertise.  Are not limited to businesses.  Work well for small organizations producing few products or services.  Functional chimney problem – lack of communication and coordination across functions Figure 8.2 Functional structures in a business, branch bank, and community hospital. Advantages Disadvantages  Economies of scale.  Difficulties in pinpointing responsibilities.  Task assignments consistent with  Functional chimneys problem. expertise and training.  Sense of cooperation and common  High-quality technical problem solving, purpose break down.  In-depth training and skill development.  Narrow view of performance objectives.  Clear career paths within functions.  Excessive upward referral of decisions. 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.  Common in complex organizations.  Avoid problems associated with functional structures. Figure 8.3 Divisional structures based on product, geography, customer, and process. Divisional Structure Types: + how they group together people/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. Advantages of divisional Disadvantages of divisional structures: structures:  More flexibility in responding to  Duplication of resources and efforts environmental changes. across divisions.  Improved coordination.  Competition and poor coordination across  Clear points of responsibility. divisions.  Expertise focused on specific customers,  Emphasis on divisional goals at expense products, and regions. of organizational goals.  Greater ease in restructuring. MATRIX STRUCTURE Combines functional and divisional structures to gain advantages and minimize disadvantages of each. Used in:  Manufacturing  Service industries  Professional fields  Non-profit sector  Multi-national corporations Figure 8.4 Matrix structure in a small multi-project business firm. Advantages of matrix structures: Disadvantages of matrix  Better cooperation across functions. structures:  Improved decision making.  Two-boss system is susceptible to power  Increased flexibility in restructuring. struggles.  Better customer service.  Two-boss system can create task  Better performance accountability. confusion and conflict in work priorities.  Improved strategic management.  Team meetings are time consuming.  Team may develop “groupitis.”  Increased costs due to adding team leers to structure. 4/11/2013 8:03:00 PM HORIZONATAL ORGANIZATION STRUCTURES TEAM STRUCTURES Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day-to-day tasks. Often use cross-functional teams composed of members from different functional departments. Project teams are convened for a specific task or project and disbanded once completed. Figure 8.5 How a team structure uses cross-functional teams for improved lateral relations. Advantages Disadvantages  Eliminates difficulties with  Conflicting loyalties among members. communication and decision making.  Excessive time spent in meetings.  Eliminates barriers between operating  Effective use of time depends on quality departments. of interpersonal relations, group  Improved morale. dynamics, and team management.  Greater sense of involvement and identification.  Increased enthusiasm for work.  Improved quality and speed of decision making. NETWORK STRUCTURES Uses IT to link w/ networks of outside suppliers and service contractuers  Own only core components and use strategic alliances or outsourcing to provide other components. Figure 8.6 A network structure for a Web-based retail business. Advantages Disadvantages  Firms can operate with fewer full-time  Control and coordination problems may arise employees and less complex internal systems. from network complexity.  Reduced overhead costs and increased  Potential loss of control
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