ASPECTS OF STRUCTURE

1
ASPECTS OF STRUCTURE
3.3.1

• A grouping of activities to achieve goals
• The organization of work around roles
• The grouping of roles to form teams and
  departments
• The allocation of differential amounts of power
  and authority to roles

2
FACTORS INFLUENCING STRUCTURE
3.3.2

• Technology
• Size
• Changes in the environment
• Strategy
• Culture
• Interest groups
• Preference of senior management

3
TYPES OF STRUCTURE
3.3.3

• Simple
• Functional
• Divisional
• Holding company
• Project team
• Matrix
• Alternative forms - Home working, franchising

4
Simple structure
5
Functional structure
CEO
Finance
Purchasing
Marketing
Production
With or without staffs
6
Divisional structure
CEO
Finance
Audit
Division 1
Division 3
Division 2
S
Maybe carbon-copy in divisions
P
M
A
7
Matrix structure
Function 2
Function 1
Function 3
Object 1
Object 2
Object 3
8
Project team
Project management
Object 1
Object 2
Object 3
9
Adhocracy

• Not a structure, but a group of specialists
  meeting and coordinating a new task.
• Can be members of an existing organization and
  external consultants.

10
Span of control
Tall and slim 2
Flat and thick 4
11
Exercises

• EX-21 B, C and E
• EX-23

12
ADVANTAGES OF MAIN STRUCTURAL TYPES
3..3.4

• Functional
• Specialization
• Clear chain of command
• Commonly understood
• Divisional and holding company
• Use of profit centres
• Encourages entrepreneurship
• Reduces upward dependency
• Economies of scale by central functions
• Project team
• Cope with unstable environments
• Focus on individual expertise
• Close to customer
• Matrix
• Mixes strength of functional and project teams
• Flexible in operation and use of labour
• Dual controls
• Close to customer

13
DISADVANTAGES OF MAIN STRUCTURAL TYPES
3.3.5

• Functional
• Conflicting departmental objectives
• Lack of co-ordination
• Lack of consumer orientation
• Divisional and holding company
• Lack of co-operation between organizations
• Difficulty with accounting procedures
• Problems with control of diverse operations
• Project teams
• Duplication of resources
• Scheduling difficulties
• Lack of functional home for staff
• Matrix
• Lack of co-ordination and control
• Too many bosses
• Conflicting loyalties
• Can be slow to adapt

14
WHY IS OWNERSHIP VERSUS CONTROL SIGNIFICANT?
3.4.1

• The trend away from owner-managers to ownership
  by shareholders and control by professional
  managers raises important questions
• How committed are managers with no ownership
  stake?
• Can strategies be developed that satisfy all
  stakeholders?
• Do professional managers have sufficient freedom
  to act?
• Are firms and their employees at the mercy of
  stock-market behaviour?

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PRIVATISATION
3.4.3

• Based on belief in workings of the free market
  and the inefficiencies of the public sector
• Perceived benefits of privatisation
• Stimulate competition and improve service levels
• Greater responsiveness to customer needs
• Political gains for government
• Widen share ownership and public involvement
• Available evidence
• Most shares re-sold
• Some price reductions but also some price
  increases
• All organizations restructured with job losses
• Mixed evidence on service level improvements
• Some privatised companies acquired by overseas
  interests
• Privatisation has become a global trend

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SIZE AND BUSINESS - GENERAL RELATIONSHIPS
3.5.1

• In general terms
• Size influences structure
• Increasing size leads to increasing
  specialization
• Increasing size means increasing market power
  leading to increasing market share and
  profitability
• Increasing size can mean increasing protection
  against external changes
• Complex relationship with technology especially
  with developments in I.T

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Larry Greiners model
Where are we going?
No. of employees
Control crisis
Self ruling crisis
Leadership crisis
Time
Old
Young
Divisions
Supportive staffs
Corporate culture
Creative leadership
Formalization
Functions
Simple
Divisions
Big complex organisations
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Survival rates
Nystrøm and Starbuck To avoid organizational
crisis, Organizational Dynamics, 1984, American
Management Association.
19
Joan Woodward (1965)
The initial interest in technology as a
determinant of structure. Her research, which is
focused on production technology, was the first
major attempt to view organization structure from
a technological perspective. Three types of
technologies Unit, mass, or process
production Her research teams gathered
information from a large number of companies in
South-east Essex in England. Number of levels,
span of control, extent of formalization,
managers/total employee ratio, centralization,
proportion of skilled workers etc. Her work was
to represent the initial transition by
organization theory from a principles perspective
to a contingency theory of organizations.