1. Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

2. 10-2 Designing Organizational Structure Organizing –The process by which managers establish working relationships among employees to achieve goals.

3. © 2007 Prentice Hall, Inc. All rights reserved. 10–3 Departmentalization by Type Functional –Grouping jobs by functions performed Geographical –Grouping jobs on the basis of territory or geography Product –Grouping jobs by product line Customer –Grouping jobs by type of customer and needs

4. 10-4 Grouping Jobs into Functions Function –Groups of people, working together, who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs

5. © 2007 Prentice Hall, Inc. All rights reserved. 10–5 Functional Departmentalization

6. © 2007 Prentice Hall, Inc. All rights reserved. 10–6 Functional Departmentalization Advantages Efficiencies from putting together people with common skills and knowledge, Good coordination within functional area

7. © 2007 Prentice Hall, Inc. All rights reserved. 10–7 Functional Departmentalization Advantages Efficiencies from putting together people with common skills and knowledge, Good coordination within functional area Disadvantages Poor communication across functional areas Less focus on organizational goals

8. © 2007 Prentice Hall, Inc. All rights reserved. 10–8 Geographical Departmentalization

9. © 2007 Prentice Hall, Inc. All rights reserved. 10–9 Geographical Departmentalization Advantages More effective handling of specific regional issues that arise Serve needs of unique geographic markets better

10. © 2007 Prentice Hall, Inc. All rights reserved. 10–10 Geographical Departmentalization Advantages More effective handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions

11. Ex. Of Organization by Geography Hewlett-Packard’s Headquarters Worldwide Americas Houston, Texas Europe, Middle East, Africa Geneva, Switzerland Asia Pacific Hong Kong Hewlett Packard

12. © 2007 Prentice Hall, Inc. All rights reserved. 10–12 Product Departmentalization

13. © 2007 Prentice Hall, Inc. All rights reserved. 10–13 Product Departmentalization +Allows specialization in particular products and services +Managers can become experts in their industry +Closer to customers

14. © 2007 Prentice Hall, Inc. All rights reserved. 10–14 Product Departmentalization +Allows specialization in particular products and services +Managers can become experts in their industry +Closer to customers –Duplication of functions –Limited view of organizational goals

15. An Example of Organization by Product Imaging and Printing Group Personal Systems Group Enterprise Systems Group HP Services HP Financial Services Hewlett Packard

16. © 2007 Prentice Hall, Inc. All rights reserved. 10–16 Customer Departmentalization

17. © 2007 Prentice Hall, Inc. All rights reserved. 10–17 Customer Departmentalization + Customers’ needs and problems can be met by specialists

18. © 2007 Prentice Hall, Inc. All rights reserved. 10–18 Customer Departmentalization + Customers’ needs and problems can be met by specialists - Duplication of functions - Limited view of organizational goals

19. © 2007 Prentice Hall, Inc. All rights reserved. 10–19 Removing External Boundaries Virtual Organization –An organization that consists of a small core of full-time employees and that temporarily hires specialists to work on opportunities that arise. Network Organization –A small core organization that outsources some of its major business functions (e.g., manufacturing) in order to concentrate what it does best. Modular Organization –A manufacturing organization that uses outside suppliers to provide product components for its final assembly operations.

20. 10-20 Example of Network Structure Marketing Research Consultants Interviewing Company Coding & Data Tabulation Firm Printing Company