University:
Massachusetts Institute of Technology
Course:
15.992 | S-Lab: Laboratory for Sustainable Business
Academic year:

2023
Views:

237

Pages:

35
Author:

Payton Harper

Chapter 11 Organizational Structures and Processes What Would You Do?     Exide Technologies is currently organized geographically Share prices are decreasing Debt load is increasing Which organizational structure should Exide have? Learning Objectives: Designing Organizational Structures After reading these next three sections, you’ll have a better understanding of the importance of organizational structure because you should be able to: 1. describe the departmentalization approach to organizational structure 2. explain organizational authority 3. discuss the different methods for job design Departmentalization      Functional Product Customer Geographic Matrix Functional Departmentalization Functional Departmentalization Advantages    creates highly skilled specialists lowers costs through reduced duplication communication and coordination problems are lessened Disadvantages    cross-department coordination can be difficult may lead to slower decision making produces managers with narrow experiences Product Departmentalization Easy Food Market Cheese Milk Ice cream Product Departmentalization Advantages    managers specialize but have broader experience easier to assess work-unit performance decision making is faster Disadvantages   duplication often increases costs difficult to coordinate across departments Customer Departmentalization American Express Cards Travel Financial Services Business Services Customer Departmentalization Advantages   focuses on customer needs products and services tailored to specific customers Disadvantages    duplication of resources difficult to achieve coordination across departments decisions that please the company but may hurt the company Geographic Departmentalization Coca-Cola Enterprises Central North America Eastern North America Western North America Europe Geographic Departmentalization Advantages   responsive to demand of different markets reduce costs by locating resources close to customers Disadvantages   duplication of resources difficult to coordinate across departments Matrix Departmentalization A hybrid structure in which two or more forms of departmentalization are used together     most common forms combine product and functional employees report to two bosses increased cross-functional interaction significant interaction between functional and project managers required Matrix Departmentalization Advantages   efficiently manage large, complex tasks effectively manage large, complex tasks Disadvantages    requires high levels of coordination increased conflict levels requires high level of management skills Organizational Authority     Chain of command Line versus staff authority Delegation of authority Degree of centralization Chain of Command  The vertical line of authority in an organization   Unity of command    clarifies who reports to whom workers report to only one boss violated by matrix structure Span of control  Number of people reporting to a specific supervisor Line Versus Staff Authority  Line authority-function    the right to command immediate subordinates in the chain of command an activity that contributes directly to creating or selling a company’s products Staff authority-function   the right to advise but not command others an activity that supports line activities Delegation of Authority The assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible  Three transfers from manager to subordinate    transfer of full responsibility of assignment transfer of authority over required resources transfer of accountability How to Be a More Effective Delegator 1. 2. 3. 4. 5. Trust your staff to do a good job Avoid seeking perfection Give effective instructions Know your true interests Follow up on progress How to Be a More Effective Delegator 6. Praise the efforts of your staff 7. Don’t wait until the last minute to delegate 8. Ask questions, expect answers and assist employees 9. Provide sufficient resources 10. Delegate to the lowest possible level Degree of Centralization  Centralization of authority   Decentralization   most authority is held at the upper levels of the organization significant authority is found in lower levels of the organization Standardization  Solving problems by applying rules, procedures, and processes Job Design     Job Job Job Job specialization rotation enlargement enrichment Job Design  Job specialization     breaking jobs into smaller tasks simple, easy-to-learn, and economical can lead to low job satisfaction, high absenteeism, and turnover Job rotation  periodically moving workers from one job to another Job Design  Job enlargement   increasing the number of tasks performed by a worker Job enrichment  adding more tasks and authority to a worker’s job Learning Objectives: Designing Organizational Processes After reading these next two sections, you should be able to: 4. explain the methods that companies are using to redesign internal organizational processes (i.e., intraorganizational processes) 5. describe the methods that companies are using to redesign external organizational processes (i.e., interorganizational processes) Intraorganizational Processes  Reengineering  Empowerment  Behavioural informality Reengineering     Fundamental rethinking of business processes Intended to achieve dramatic improvements in performance Changes the organization’s orientation form vertical to horizontal Changes task interdependence Task Interdependence   The extent to which collective action is required to complete an entire piece of work Three types    pooled sequential reciprocal Empowerment  Permanently passing decision-making authority and responsibility from managers to workers   workers need information and resources to make good decisions workers should be rewarded for taking initiative Behavioural Informality Behavioural informality    spontaneity casualness interpersonal familiarity Behavioural formality    routine and regimen specific rules impersonal detachment Interorganizational Processes  Modular organizations  Virtual organizations  Boundaryless organizations Modular Organization Virtual Organization Boundaryless Organization What Really Happened?    Exide Technologies implemented a product structure around global business units Problems associated with product structure caused a return to a geographic structure Exide is still searching for the proper structure