Textbook Notes (369,137)
Canada (162,407)
York University (12,903)
ADMS 4900 (51)
Chapter 9

Chapter 9

6 Pages

Administrative Studies
Course Code
ADMS 4900
Kelly Thomson

This preview shows pages 1 and half of page 2. Sign up to view the full 6 pages of the document.
Feb.06/2014 Lecture 5 Chapter 9—Creating Effective Organizational Designs Traditional Forms of Organizational Structure - organizational structure formalized patterns of interactions that link a firm’s tasks, technologies, and people - duties of structure: ~ helps ensure resources are used effectively ~ means of balancing two conflicting forces: need for division of tasks into meaningful groupings and need to integrate the groupings to ensure efficiency and effectiveness ~ identifies managerial, executives and administrative organization and indicates responsibilities and hierarchical relationships ~ influences flow of information and context and nature of human relationships - type of structure dependent on nature and magnitude of growth Patterns of Growth of Large Corporations: Strategy-Structure Relationships - strategy and structure change with size, diversifies into new product markets, expands geographic scope - simple structure increases sales revenue and volume of outputs over time ~ some vertical integration so secure supply (backward integration) and distribution channels (forward integration) ~ then implements functional structure - functional structure concentrate efforts on increasing efficiency and enhancing operations and products ~ allows firm to group operations in functions, departments, geographic areas - divisional structure strategy of diversification needs to be reorganized around product line and geographic market ~ business expands and growth opportunities seem limited, option to expand into international markets ~ choose from several types of structures: • international division • geographic area • worldwide product division • worldwide functional division • worldwide matrix ~ when choosing structure for international operations depends on: 1. extent of international expansion 2. type of strategy (global, multi-domestic or transnational) 3. degree of product diversity - holding company structure firm acquires assets and competencies because it is more economical then developing internally ~ unrelated strategy requires little integration across business and sharing of resources 1. Simple Structure - most common organizational structure form - small firm, narrow product line where owner-manager makes most of the decisions - owner-manager controls most activities - advantages: ~ informal ~ co-ordination of tasks is accomplished by direct supervisor ~ centralized decision making ~ few rules/regulations ~ informal evaluation and reward system in place - disadvantages: ~ foster creativity and individualism ~ employees may not clearly understand their responsibilities ~ employees take advantage of lack of regulations and act in self-interest ~ limits opportunity for upward mobility ~ recruitment and retaining talent can become difficult due to lack of future advancement 2. Functional Structure - owner-manager not specialized on all areas thus needing to hire specialists in various functional areas (marketing, accounting, engineering etc.) - co-ordination and integration of functional areas becomes central responsibility for chief- executive - found in firms where there is a single closely related product or service, high production volume, some vertical integration - high level of centralization that helps integration and control over related product-market activities or multiple primary activities - advantages: ~ centralized decision making; more control ~ more efficient use of managerial and technical talents ~ career paths and professional developments - disadvantages: ~ difference in value and orientations may impede communication and coordination ~ ‘silos’—departments view themselves as isolated with little need for interaction with other departments ~ short-term thinking ~ fighting for resources ~ difficulty establishing uniform performance standards 3. Divisional Structure - organized around products, projects or markets - each division has its own functional specialists - encompasses set of relatively autonomous unites governed by central corporate office - operating divisions are independent and are made up of product/service that are different from other divisions - top-level managers need to delegate decision making to lower-level managers - divisional executives—help determine product-market and financial objectives for the division as well as their division’s overall contribution to corporate performance - advantages: ~ separation of strategic control and operating control ~ divisional markets can focus on improving operations in the product markets for which they are responsible ~ conflicts regarding sharing resources are minimized because each division has its own functional departments - disadvantages: ~ expensive; same positions, operations and investments in all divisions ~ dysfunctional competition among divisions ~ ‘zero-sum’—discourage sharing ideas and resources among divisions for common good of the corporation ~ difference in image and quality across divisions ~ urge to focus on short-term performance 4. Strategic Business Unit Structure - has dozens of divisions - divisions with similar products, markets, and/or technologies are grouped into homogenous units to achieve some synergy - each SBU in corporation operates as profit center - advantages: ~ planning and control by corporate office if manageable ~ individual businesses can react more quickly - disadvantages: ~ difficult to achieve synergy across SBUs ~ level of management increases number of personnel and overhead expenses ~ corporate office unaware of key developments that could have major impact on corporation 5. Holding Company Structure - variation of divisional structure - used when businesses in corporation’s portfolio do not have much in common ~ potential for synergy is limited - corporate office provides autonomy to operating divisions and relies on financial controls and incentive programs to get high levels of performance - advantages: ~ cost savings because of fewer personnel and lower overhead and fewer hierarchical levels ~ autonomy of holding company increases motivation for level of divisional executives and enables them to react quickly to market opportunities - disadvantages: ~ lack of control at corporate level executives have over divisional executives ~ problems in division could be difficult to turn around because of limited staff support in corporate office 6. Matrix Structure - combination of functional and divisional structure - functional departments are combined with product groups on project basis - in matrix organization there are two managers: project manager and manager of funct
More Less
Unlock Document

Only pages 1 and half of page 2 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.