organizational structure copyright © 2008 the mcgraw-hill companies, inc. all rights reserved

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

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

Organizational Structure

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

Page 2: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

10-2

Designing Organizational Structure

• Organizing– The process by which managers establish

working relationships among employees to achieve goals.

Page 3: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 4: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

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

Page 5: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 2007 Prentice Hall, Inc. All rights reserved.

10–5

Functional Departmentalization

Page 6: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 7: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 8: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 2007 Prentice Hall, Inc. All rights reserved.

10–8

Geographical Departmentalization

Page 9: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 10: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 11: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

Ex. Of Organization by Geography

Hewlett-Packard’s Headquarters Worldwide

AmericasHouston, Texas

Europe, Middle East, AfricaGeneva, Switzerland

Asia PacificHong Kong

Hewlett Packard

Page 12: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 2007 Prentice Hall, Inc. All rights reserved.

10–12

Product Departmentalization

Page 13: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 14: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 15: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

An Example of Organization by Product

Imaging andPrinting Group

PersonalSystems Group

EnterpriseSystems Group

HP ServicesHP Financial

Services

Hewlett Packard

Page 16: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 2007 Prentice Hall, Inc. All rights reserved.

10–16

Customer Departmentalization

Page 17: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 2007 Prentice Hall, Inc. All rights reserved.

10–17

Customer Departmentalization

+ Customers’ needs and problems can be met by specialists

Page 18: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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

Page 19: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

© 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.

Page 20: Organizational Structure Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved

10-20

Example of Network Structure

Marketing Research Consultants

Interviewing Company

Coding & Data Tabulation Firm

Printing Company