Organizational Structure

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Presentation transcript:

Organizational Structure Need to create division of labor Need to integrate these groups to ensure organizational effectiveness Dimensions of Structure Horizontal differentiation Vertical differentiation Spacial dispersion Degree of formalization Degree of centralization

Firm Growth as Evolutionary Process Single Business Product Diversification (Product Diversity) Geographic Diversification (Foreign Sales as %Total Sales) Product and Geographic Diversification

Horizontal Differentiation degree to which tasks are divided into distinct homogeneous groups function-wise geographic-wise product-wise production stage-wise

Vertical Differentiation Number of levels within the organization

Spacial Dispersion Degree to which activities are located in different areas

Pressures for Global Efficiency Structure Follows Strategy High Horizontal Differentiation? Pressures for Global Efficiency and Centralization Vertical Differentiation? Spacial Dispersion Low Low High Pressures for Local Responsiveness and Decentralization

Export Germany U.S. Mexico Malaysia

Functional Structure w/ International Sales Division

Multidomestic Germany U.S. Mexico Malaysia

Geographic Structure

Pure Global Germany U.S. Mexico Malaysia

Global Functional Structure For Single-business Firms

Product Division Structure For Product-diversified Firms

Transnational (1) Germany U.S. Mexico Malaysia

Matrix Structure (A)

Matrix Structure (B)

Transnational (2) Germany U.S. Mexico Malaysia Engines Steel Final Assembly Malaysia Trim, seats, glass

Matrix Structure (B)

Mixed Structure

Stopford-Wells Structure Model Hi Product Divisions Mixed / Matrix / Network Product Diversity Intl. Division Geographic Divisions Lo 0% 100% Foreign Sales as % of Total Sales

Kimberly-Clark’s Old Structure

Kimberly-Clark’s New Structure

Kimberly-Clark’s New Structure

Formalization Degree to which rules, procedure, lines of authority/responsibility are enunciated or specified More formality: eliminates confusion and uncertainty, limits creativity and innovation Less formality: imbues flexibility, creative solutions.

Centralization Degree to which authority and decision making is at higher levels of the organization Centralized: tight org control, managers are order-takers Decentralized: managers closest to product and/or customer able to make decisions

Data Management Control Mechanisms Information systems Measurement systems Resource allocation procedures Strategic planning Budgeting processes

Managers’ Management Control Mechanisms Choice/selection of key managers Career paths Rewards and punishment systems Management development Patterns of socialization

Organizational Learning/ Conflict Resolution Control Mechanisms Decision responsibility assignments Integrators Transnational teams Coordination committees Task forces

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