UNIT 1- Organizational structures of multinationals Flashcards
What is an organizational structure?
“Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed, and its goals can be met…”
4 decisions to be made in the organization development:
1.Division of labor- The organization’s work must be divided into specific jobs.
2.Departmentalization- The jobs must be grouped in some way
3.Decide the number of people and jobs that are to be grouped together- The number of employees reporting to a single manager and the span of control
4.Determine the way decision-making authority is to be distributed
Benefits to designing an organizational chart for your organization
- Helps potential investors/shareholders understand who is steering the ship
- Helps the entire organization understand the chain of command
- Helps new hires get to know fellow employees
- Helps people understand how changes within a company impacts them
- An organizational chart is a great way to communicate your brand
Traditional structure
- hierarchical or pyramid structure
- president or other executive at the top
- a small number of vice presidents or senior managers under the president
- several layers of management below this, with the majority of employees at the bottom of the pyramid
- the number of management layers depends largely on the size of the organization
Matrix structure
- the combination of two or more structures
- functional departmentalization commonly is combined with product groups on a project basis
Example: a project group wants to develop a new addition to its line; for this project it obtains personnel from functional apartments such as research, engineering, production, and marketing
Strategic business units
One approach to encourage new ways of thinking and acting is to reorganize parts of the company into largely autonomous groups
Basis for departmentalization
- Functional departmentalization
- Geographic departmentalization
- Product departmentalization
- Customer/market departmentalization
Functional departmentalization
- grouping jobs that require the same knowledge, skills, and resources
- efficient and promote the development of greater expertise
Disadvantage:
- may develop a narrow departmental focus
- difficulty appreciating any other view of what is important to the organization
Geographic departmentalization
- for organizations that are spread over a wide area
- all the activities performed in a region are managed together
- promotes local focus
Example: The marketing of a product can be very different in Western Europe and Southeast Asia
- companies that market products globally sometimes adopt a geographic structure
Product departmentalization
- large, diversified companies are often organized according to product
- all activités necessary to produce one/similar products are grouped together
- top manager of the product group has considerable autonomy over the operation
- each product group requires most of the functional areas (finance, marketing, production ++)
Customer/market departmentalization
- organize according to the types of customers it serves
Example: a distribution company that sells to consumers, government clients, large businesses and small businesses
Getting organizational redesign right- McKinsey article
Nine golden rules:
- Focus first on the longer-term strategic aspirations
- Take time to survey the scene
- Be structured about selecting the right blueprint
- Go beyond lines and boxes
- Be rigorous about drafting in talent
- Identify the necessary mind-set shifts- and change those mind-sets
- Establish metrics that measure short- and long-term success
- Make sure business leaders communicate
- Manage the transitional risks
What is a strategy?
According to chandler (1962) “strategy is the determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of the resources necessary for carrying out these goals”
What is organizational design?
The Star model:
Strategy:
- defined goal
- the path to get there
- how we compete in our markets
- how we will grow
- what we do/what we don’t do
Capabilities:
- what are our unique differentiators
- what do we do better than our competitors
- Structure:
- how should we organize?
- what are the key roles?
- how should power be allocated?
- what kind of structure should we use as our primary architecture?
- powerful but blunt instrument–> not enough alone - Process:
- ways to knit the organization together
- management processes
- how decisions are made - Metrics and rewards
- how they’ll know wether they are successful
- how to measure success - People practices
- what talent profiles are needed
- what competences do we need to execute this strategy?
- what HR processes/routines will build these capabilities and competences?
How do we create organizational design?
The 5 milestone organization design process:
Understanding the current strategy:
- Business case and discovery
- Strategic grouping an integration work
- Evaluate
- Talent and leadership
- Transition from current state to future state
