Reminders n C & C Grocery case will be in your mail files by the end of the week. n University Art Museum revisions are due by 2:00 PM on Monday. n Aquarius Advertising case is due by 2:00 PM on Monday. Think carefully about possible structural changes. Don’t jump to conclusions about appropriate structures simply as a function of what you have read most recently.

Review of last week n What is structure? n What influences the structure chosen? n What are the options for structuring work? –Functional Structures –Task forces and task teams for coordination –Divisional Structures n What are the characteristics, advantages and disadvantages of functional/divisional structures? n Questions?

Understanding and Managing Organizational Structure: B BA 152

From last week’s discussion n Functional structures work well when the environment demands efficiency. n Divisional structures work well when the environment demands responsiveness.

But what happens if... n The environment demands both efficiency and responsiveness?

Other approaches to putting organizations together n Hybrid Structures n Matrix Structures n Horizontal/Team Structures n Network/Network/Virtual Structures

A Hybrid Organization President International Sales Domestic Sales Vice-President Manufacturing Vice-President Engineering Vice-President Research & Dev. Vice-President Finance & Acct. Director Manufacturing Domestic Manufacturing International Manufacturing

President Finance & Accounting Personnel Vice-President Eastern Region Vice-President Southern Region Vice-President Northern Region Vice-President Western Region Director R & D Director Manufacturing Director Marketing Same as East Building a Hybrid Organization

CEO A Matrix Organization Prod. A Prod. B Prod. C MFGENGMKTF&AProd. Director

Characteristics of Matrix Structures 1.Individuals or work units can have a combination of functional and divisional assignments. 2.Methods and procedures will change by assignment.

3.Shared control and decision making between functional and divisional leaders 4.Dual reporting relationships and balance of power needed for success Characteristics of Matrix Structures

5. Competitive in dynamic environments requiring responsiveness and efficiency Characteristics of Matrix Structures

A Matrix Organization-NASA Shuttle Mars Space Station CEO Propulsion Engineer. Flight Cont.OperationsProgram Director

CEO A Matrix Organization Prog. A Prog. B Prog. C MFGENGMKTF&AProgram Director

CEO A Matrix Organization USA Canada Mexico MFGENGMKTF&ACountry Director

DEAN UDG MBA PhD Exec. Ed. MAC ManagementAccountingFinanceOperationsMarketing DB DB DB DB Kenan-Flagler Business School Matrix Structure

Can you imagine a 3-D Matrix Organization? Country Product Function

Matrix Structures Advantages & Disadvantages n Advantages –Can meet dual environmental demands –Flexible use of resources –Relatively quick reaction times –Good training for both generalists and specialists n Disadvantages –Lose some economies of scale –Difficult to maintain balance of power –Having two bosses can be stressful –Conflict resolution can be time-consuming –Requires talented management

CEO MFG ENGMKTF&A Matrix Structure What happens when the economy goes bad?

CEO Proj. A Proj. B Proj. C Project. Director Matrix Structure What happens when the economy looks good?

NEW PRODUCT DEVELOPMENT Process Owner Research Product Planning Testing Process Owner Purchasing Material Flow Distribution SUPPLY CHAIN MANAGEMENT MERGERS & ACQUISTIONS Process Owner ExecutionIntegration Horizontal/Team Structures Top Management Team Identification

Characteristics of Horizontal/Team Structures 1. Organized around cross-functional core processes 2. Self-directed teams are the basis for the design of the organization. 3. Focus must be on the “customer” of the process. 4. Requires non-traditional organizational culture.

Horizontal/Team Structures Advantages 1. Rapid response to changes in customer demands 2. Focus is on delivering value to the customer. 3. Employees have a broader view of organizational goals. 4. Promotes focus on teamwork/collaboration 5. Improves quality of work-life for employees

Horizontal/Team Structures Disadvantages 1. Identifying core processes can be difficult. 2. Requires major changes in most organizational systems and culture. 3. Requires managers to give up power/authority. 4. Requires significant training for employees. 5. Can limit in-depth skill development

Kenan-Flagler Business School Horizontal/Team Structure ADMISSIONS & PLACEMENT Process Owner AdmissionsInternshipsPlacement Process Owner Research Support Service Support Teaching Support FACULTY DEVELOPMENT CURRICULUM DEVELOPMENT Process Owner MBAPHD DEAN BSBA

Corporate Headquarters Designers Suppliers Producers Distributors A Modular/Network/Virtual/ Structure

DEAN’S OFFICE Placement Facilities Admissions Faculty Kenan-Flagler Business School Modular/Network/Virtual Structure

A Modular/Network/Virtual Structure: Advantages 1.Small organizations can obtain talent and assistance from anywhere. 2.Organization can “ramp up” without huge investments in facilities. 3.Increases organization flexibility and responsiveness. 4.Reduces administrative overhead costs.

A Modular/Network/Virtual/ Structure: Disadvantages n Little hands-on control of “partners” n Expenses of establishing monitoring systems n Reduced partner-employee loyalty n Weakened corporate culture, if you can talk about a corporate culture at all.

Is It the Wrong Structure? How can you tell? 1) 1)If we replaced the people, would the problems remain? 2) 2)Is the firm inefficient or inflexible? 3) 3)Are decisions made too late? 4) 4)Are decisions of poor quality? 5) 5)Is there too much conflict between units?

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