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Global Management Studies
GMS 200
Bamidele Adekunle

GMS CH 8 – Organization and Structures and Design Organizing as a Management Function Organizing is the process of arranging people and other resources to work together to accomplish a goal. It involves creating a division of labour and then coordinating results to achieve a common purpose. Planning is to set the direction, leading is to inspire effort and controlling is to ensure results Organization structure is a system of tasks, reporting relationships, and communication linkages. Formal Structures: is the official structure of the organization. Sometimes it is in the form of an organization chart—which describes the arrangement of work positions within an organization; identifies various positions and job titles, as well as the lines of authority and communication between them, showing the formal structure. Reading an organization chart, you can learn the basics of an organization’s formal structure, including: 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 Informal Structures: the set of unofficial relationships among an organization’s members. It is a shadow organization made up of the unofficial but often critical, working relationships between organizational members. Social network analysis is one way of identifying informal structures and their embedded social relationships that are active in an organization. However, informal structures can carry inaccurate info, breed resistances to change and even divert work efforts from important objectives. Traditional Organization Structures Departmentalization is the process of grouping people and jobs into work units. These decisions have traditionally resulted in three major types of organizational structures: Functional Structures: it groups together people with similar skills who perform similar tasks; members of a function work within their areas of expertise.Advantages: economies of scale with efficient use of resources, task assignments consistent with expertise and training, high-quality technical problem solving, in-depth training and skill development within functions, and clear career paths within functions. Disadvantages: difficulties in pinpointing responsibilities for things like cost containment, product and service quality, and innovation; a significant concern is with the functional chimneys problem—a lack of communication, coordination, and problem solving across functions. Divisional Structures: it groups together people working on the same product, in the same area, with similar customers, or on the same processes. Product structures group together jobs and activities 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. Geographical structures (area structures) group together jobs and activities being performance in the same location; typically used when there is a need to differentiate products or services in various locations. Customer structures group together jobs and activities that are serving the same customers or clients; the goal is to best serve the special needs of different customer groups. Process structures group jobs and activities that are part of the same processes. Work process is a group of related tasks that collectively creates a valuable work product. Advantages of divisional structures: more flexibility in responding to environmental changes, improved coordination across functional departments, clear points of responsibility for product or service delivery, expertise focused on specific customers, products, and regions and greater ease in changing size by adding or closing down divisions. Disadvantages: they can reduce economies of scale and increase costs through the duplication of resources and efforts across divisions, create unhealthy rivalries as divisions compete for resources and top management attention, and emphasize division needs to the detriment of the goals of the organization as a whole. Matrix Structures: (often called matrix organization) combines the functional and divisional structures approaches to emphasize project or program teams. It is done by using permanent teams that cut across functions to support specific products, projects, or programs. Workers will belong to at least two formal groups at the same time—a functional group and a product, program or project team (reporting on two bosses). They are found in multinational corporations where they offer the flexibility to deal with regional differences as well as multiple product, program, or project needs.Advantages: better cooperation across functions, improved decision-making, increased flexibility in adding, removing or changing operations, better customer service, better performance accountability, and improved strategic management. Disadvantages: the two-boss system is susceptible to power struggles and be frustrating if it creates task confusion and conflicting work priorities, team meetings can take lots of time, and may develop “groupitis”—strong team loyalties that cause a loss of focus on larger organizational goals and the requirement of team leaders can result in higher costs. Horizontal Organization Structures Team Structures: a team structure uses permanent and temporary cross-functional teams to solve problems, complete special projects, and accomplish day-t-day tasks. Often team structures use cross-functional teams composed of members from different areas of
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