MHR 301- Ch. 9
Advantage
Advantage or disadvantage? AB InBev company has over 200 brands and most of them are local. The company sells different brands in different countries in order to meet the different demands in different markets.
Advantage
Advantage or disadvantage? In P&G company, each of the four product divisions has a president responsible for reaching out its customers around the global. All products divisions share corporate functions together so that they can have cost efficiency.
Advantage
Advantage or disadvantage? UTC CEO can easily compare the performance of their four product divisions.
Advantage
Advantage or disadvantage? AB InBev company is based in Belgium, and it has operations in 25 countries, including 4 beverage plants in Belgium, and 10 beverage plants in Russia. Building bottling plants in each region is cheaper in the long run and more practical than transporting beer from one location to so many countries in the world.
Disadvantage
Advantage or disadvantage? both Small- and Medium-Sized Enterprises division and Corporate Business division have similar or same activities, such as fixed line & voice, mobile line and voice, Internet & data services, and maintenance & operation of IT infrastructure.
Advantage
Advantage or disadvantage? Managers in the matrix are able to quickly pull in expert help from all the functional areas of the company.
Allow firms to manage large, complex tasks efficiently. The pool of resources available to carry out large tasks.
Advantages of matrix departmentalization?
Allow firms to share costs and combine efforts. Virtual organizations are fast and flexible. May provide better products and services
Advantages of virtual organization?
Virtual organizations
An organization that is part of a network in which many firms share skills, costs, capabilities, markets, and customers to collectively solve customers problems or provide specific products or services.
The high level of coordination is required. Cause confusion and conflict between project bosses in different parts of the matrix.
Disadvantage or advantage of Matrix departmentalization?
Disadvantage
Disadvantage or advantage? previous slide shows, both UTC Building & Industrial Systems division and Pratt & Whitney division have customer service, engineering, human resources, legal, and manufacturing departments. Such resource duplication often results in higher costs.
Difficult to control the quality of work done by partners. Require tremendous managerial skills to make a network work well together.
Disadvantages of virtual organization
Line
For P&G company, manufacturing and marketing departments are what kind of function?
Organic
Google and Facebook are what type of organization?
Selling & Market Operations
In the P&G case, if you are a manager on the Pantene Team responsible for marketing of hair care products, you would report to a boss in the Beauty, Hair, & Personal Care global business unit. You also report to a manager in what type of function?
Mechanistic
Manufacturing companies with assembly lines often use this type of what type of organization?
Modular
Organization depicts how a firm can choose core and noncore business activities
Functional Departmentalization
Organizing work and workers into separate units responsible for particular business functions or areas of expertise
Product departmentalization
Organizing work and workers into separate units responsible for particular products or services.
Product
UTC is a multinational conglomerate and has diversified businesses that provide high tech products and services. _______ departmentalization and is organized along four different product lines:
Virtual
Unlike modular organizations, in which the outside companies are tightly linked to one central company (the outsourcing company), virtual organizations work with some companies in the network alliance, but not with all. So modular organizations is like a puzzle and all pieces have to fit in while a potluck dinner can be used as a metaphor for a virtual organization. All participants bring their finest food dish but eat only what they want.
It allows work done by highly qualified specialists It lowers costs through reducing duplication. Communication and coordination are less problematic.
What are advantages of functional departmentalization?
Cross-department coordination can be difficult. May lead to slower decision making. May produce managers and workers with narrow experience and expertise
What are disadvantages of functional departmentalization?
Most employees report to two bosses, one from each core part of the matrix. Much more cross-functional interaction. Require significant coordination between managers in the different parts of the matrix.
What are the Unique features of matrix structure
Help firms respond to the demands of different markets. Can reduce costs by locating unique org resources closer to customers
What are the advantages of Geographic departmentalization?
It focuses on customer needs. It allows firms to specialize and adapt to customer needs.
What are the advantages of customer departmentalization?
Can cost significantly less to run than traditional firms. Allow firms to focus on core competencies
What are the advantages of modular organization?
It allows managers and workers to develop expertise related to an entire product line and have a broader set of experiences. It is easier for top managers to assess work-unit performance. Decision-making could be faster.
What are the advantages of product departmentalization?
Duplication of resources. Difficult to coordinate across different customer departments. May lead to decisions that please customers but hurt the business.
What are the disadvantage of customer departmentalization?
The loss of control over outsourced business activities. May reduce competitive advantage of outsourcing firms
What are the disadvantages of modular organization?
Duplication of activities. Difficult to coordinate across the different product departments.
What are the disadvantages of product departmentalization?
Dramatic
What is the reengineering term? IBM Credit's operation has done a successful reengineering. It used to take five departments six days to approve or deny the customer's loan. After IBM redesigned the process, one person, not five persons in five departments, now handles the entire loan approval process.
Delegate
What kind of authority? First, the manager can transfer some or full responsibility for the assignment to the subordinate. The subordinate then is often referred to as the DRI (directly responsible individual).
Staff
What kind of authority? If the Beauty Care division at P&G wants to make a hiring decision, the corporate human resource function can give advise about the hiring policy and procedure, but cannot order the division to hire a certain applicant
Accountability
What kind of authority? The subordinate or the directly responsible individual now has the authority and responsibility to do the job and, in return, is accountable for getting the job done satisfactorily.
Line
What kind of authority? P&G CEO has line authority over the divisional heads and can issue orders to the divisional heads and expect his orders to be carried out. In turn, the divisional heads can issue orders to departmental chairs. Then the chairs can issue orders to their subordinates. All these managers have line authority
Organizational
What kind of chart? is a box-and-lines illustration showing the formal lines of authority and the organization's official positions or work specialization.
Chain
What kind of command? If an employee has two bosses and receives conflicting commands from two different bosses, this may cause confusion for employees. Following unity of command can avoid this problem. In practical terms, unity of command means that only one person can be in charge at a time.
Geographic
What kind of departmentalization has six regional groups based on geographic locations, as shown in the organizational chart: North America, Latin America North, Latin America South, Central Europe, Eastern Europe, and Asia Pacific.
Functional
What kind of departmentalization in two different companies - Insurance Company and Advertising Agency.
Matrix
What kind of departmentalization? Along the horizontal line on the top of the figure, there are four global business units that are product divisions: On the left side of the figure, the company also uses functional structure. There are three main functional areas at P&G:
Matrix
What kind of departmentalization? As a consumer products giant, Proctor & Gamble (P&G) markets its products in over 180 countries and serves near 5 billion population of the over 7 billion people on the planet. Its market capitalization is greater than the GDP of many countries. P&G has a very unique organizational structure and its organizational chart is in a circle shape. There might be an internal and workable organizational chart within the company with more details
Customer
What kind of departmentalization? at Swisscom AG, Switzerland's leading telecom provider. The company organizes its businesses into four divisions by four types of customer groups that the company serves:
Staff
What kind of function? At P&G company, accounting, human resources, and legal services are considered staff function since those activities just support line activities but not directly involve in creating or selling the company's products
Enrichment
What kind of job? As an accounts payable specialist in a company, Tina had authority to sign off on outgoing checks over $1,000 in the past, Now Tina can approve checks of $2,000. Tina has a higher level of authority.
Specialization
What kind of job? Companies use specialized jobs because it is more economical. A large task is divided into small, simple parts with low variety and high repetition. It is easy to learn and more efficient. There are drawbacks with job specialization too. When employees keep doing the same simple task, they tend to get bored and lost interest in jobs. Their job satisfaction may decrease and productivity may suffer.
Rotation
What kind of job? Copywriters write the words for promotional materials for your company but they rarely have contact with their customers directly. Copywriters can be rotated to the sales department so that they have a chance to hear firsthand from their customers about their needs and wants.
Enlargement
What kind of job? In a graphic designing company, Alan has been working in Photoshop to create images for the websites for a year. Now Alan is also assigned to create graphics and icons for print media and mobile devices. This job enlargement increases the number of tasks and workload to Alan's job.
Design
What kind of job? Fast-food workers rarely stay on the job more than six months. Image that you do the same simple tasks an average of 50 times per hour, 400 times per day, 2,000 times per week, 8,000 times per month. Few people can stand to do this kind of job. So there is a high turnover rate in many fast-food restaurants.
Span
What kind of management? PepsiCo's Gemasa cookie plant in Mexico has a span of control of 56 people, which is a very wide span. If a retailing chain has many stores and each store is far away from another geographically, then each store needs to have a store manager even if each store has just a few employees. The retailing chain has a very narrow span.
Inter-organizational
What kind of process? The Artist, a movie that won the Academy Award for Best Picture in 2012, was made by dozens of teams from different companies. It was produced and financed by several companies such as La Petite Reine, ARP Selection, and Studio 37, etc. The movie was directed by a French director and shot primarily in Los Angeles. The music was composed by a French composer but performed by the Brussels Philharmonic Orchestra. The costumes were designed by a designer in New York City.
Internal and external
What kind of processes? processes that Microsoft company uses to write computer software, beginning from customer feedback and ending with software distribution and sales. The cycle begins again. In the process in purple color in the figure, Microsoft gets feedback from customers through Internet newsgroups, email, phone calls, or letters in order to understand customer needs and problems. In the process in orange color in the middle part of the Exhibit, Microsoft identifies important software issues and needed changes and functions based on the customer feedback, and then recode software and test software internally in the company. In the beta testing process in green color in the Exhibit, customers who volunteer or are selected by Microsoft give extensive feedback on the software. For example, during the beta test for Window 7, testers reported 2,000 bugs. The beta testing process may take as long as a year and involve thousands of knowledgeable people. Microsoft corrected those bugs before releasing the software to customers.
Organizational
What kind of structure? shows who reports to whom - there are seven business groups and their heads all report to CEO of Sony. There are also four groups under Consumer Products Group and these four groups all report to the head of Consumer Products Group. Sony's structure also shows who does what and where is the work done - each of the seven groups is responsible for one area of business such as Semiconductor & Component Group, B2B Solutions Business Group, Consumer Products Group, Sony Ericsson Mobile Communication Group, Game Business Group, Entertainment Business Group, and Sony Financial Holdings Group.
the vertical hierarchy of authority: who reports to whom; and the horizontal specialization: who specialized in what work
What two kinds of of information about organizational structure
Virtual
What type of organization? Corning, the glass and ceramics maker, has partnered with companies like Siemens, Germany's engineering and electronics conglomeration, and Vitro, Mexico's largest glassmaker. These alliances are so important to Corning's business strategy that the corporation has defined itself as a network of organizations.
Decentralization of authority
Which degree of centralization? For example, Harley-Davidson Motor Company uses decentralized authority
Of authority
Which degree of centralization? For example, McDonald's has centralized authority. There would be less duplication of work, the procedures are uniform, and it is easier to control.
Standardization
Which degree of centralization? Toyota used to have 100 different radiators in the cars it made around the world, which increased costs and decreased quality. Now Toyota uses just 21 different kinds of radiators. This leads to greater volume for each part and thus less cost; and fewer suppliers to manage overall, therefore reducing complexity. Toyota intends to raise the use of standardized parts to about 50% among similar-size vehicles in its lineup.
Matrix
Which departmentalization? the Pantene team may also need to use global business services to work with suppliers and keep costs down in addition to working with other functional departments. The high level of cross-functional interaction requires a higher level of coordination among managers.
Authority
Which organizational authority? a supervisor reports to a department manager, and the manager reports to the head of a division. That division head, in turn, reports to President or CEO of the company.
Empowerment
Which process? A warehouse employee can see on the intranet that a shipment is late but has no authority to accelerate its delivery. This example shows that this company is not empowering workers. So the employee has the knowledge but does not have the authority to make decision to do the job better. As Michael Schrage put, Knowledge isn't power; the ability to act on knowledge is power.
Empowerment
Which process? Ritz-Carlton hotels, all employees are empowered to spend up to $2,000 per incident to solve customer service issues. One day, a couple were eating at a Ritz-Carlton restaurant during a particularly busy time and the service was slow. The waiter apologized for the waiting and gave the couple complimentary appetizers and paid for their desserts. When the customer asked the waiter why he did so, the waiter said, "I'm empowered to keep my guests happy
Modular
Which type of organizations? most of the components for Apple's iPad are outsourced to other firms both in US and in foreign countries. Texas Instruments company supplies chips for the touchscreen interface. Broadcom company in Irvine produces the chipsets that control the iPad's wireless connections. LG and Samsung, two South Korean firms, make the Retina display. Foxconn in China handles final assembly of iPad. Through outsourcing, Apple is able to focus on its core competencies and reduce its product cost.
Inter-organizational process
a collection of activities that take place among companies to transform inputs into outputs that customers value
Matrix Departmentalization
a hybrid organizational structure in which two or more forms of departmentalization are used together.
Job specialization
a job composed of a small part of a larger task or process.
Unity of command
a management principle that workers should report to just one boss.
Line function
an activity that contributes directly to creating or selling the company's products.
Staff function
an activity that does not contribute directly to creating or selling the company's products but instead supports line activities
Organic organization
an organization characterized by broadly defined jobs and responsibilities, loosely defined and often changing roles, and decentralized authority and horizontal communication based on task knowledge
Mechanistic organization
an organization characterized by specialized jobs and responsibilities, precisely defined roles, and a rigid chain of command based on centralized authority and vertical communication.
Modular organizations
an organization that outsources noncore business activities to outside companies, suppliers, specialists, or consultants.
Job enlargement
increasing the number of different tasks that a worker performs within on particular job.
Job enrichment
increasing the number of tasks in a particular job and giving workers the authority and control to make meaningful decisions about their work
Empowerment
is a feeling of intrinsic motivation in which workers perceive their work to have meaning and impact and perceive themselves to be competent and capable of self-determination.
Departmentalization
is a method of subdividing work and workers into separate organizational units responsible for completing particular tasks
Geographic departmentalization
is organizing work and workers into separate units responsible for doing business in particular geographic areas.
Organizational Process
is the collection of activities that transform inputs into outputs that customers value.
Organizational Structure
is the vertical and horizontal configuration of departments, authority, and jobs within a company.
Simple matrix
managers in different parts of the matrix negotiate conflicts and resources
Complex matrix
managers in different parts of the matrix report to matrix managers who help them sort out conflicts and problems
Customer departmentalization
organizing work and workers into separate units responsible for particular kinds of customers.
Job rotation
periodically moving workers from one specialized job to another to give them more variety and the opportunity to use different skills.
Standardization
solving problems by consistently applying the same rules, procedures, and processes
Delegation of authority
the assignment of direct authority and responsibility to a subordinate to complete tasks for which the manager is normally responsible.
Intra-organizational process
the collection of activities that take place within an organization to transform inputs into outputs that customers value.
Responsibility
the duty to satisfactorily perform a task.
Reengineering
the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance, such as cost, equality, service, and speed
Decentralization of authority
the location of a significant amount of authority in the lower levels of the organization.
Centralization of authority
the location of most authority at the upper levels of the organization
Span of management or span of control
the number of subordinates that a manager can directly control
Job design
the number, kind, and variety of tasks that individual workers perform in doing their jobs
Accountability
the obligation to account for the results
Staff authority
the right to advise, but not command, others who are not subordinates in the chain of command.
Line authority
the right to command immediate subordinates in the chain of command
Authority
the right to give commands, take actions, and make decisions to achieve organizational goals.
Chain of command
the vertical line of authority that clarifies who reports to whom throughout the organization.
