ORGANIZATIONAL

STRUCTURE

By

Sreenath B.
Every Organization has a
Structure
But structures can differ
Due to choice
Due to national laws
The words used to describe them
also can differ
Organization chart, design, structure
The way they are drawn can differ
pyramid, sideways pyramid, circle
 The Structural Configuration
• is the skeleton of the organization
• reflects corporate governance
• is intended to meet organizational
objectives
• arises out of strategic directions
• and causes managers to ask:
– what structure will best aid us in meeting
our strategy and objectives?
 Restructuring Occurs for Many
Reasons

• Turnover in top management

• Competitive positioning
• Mergers and/or acquisitions
• Cost-savings
• Even the illusion of managerial control
 Structural Choice is Important
Because
• it focuses attention on particular areas
• shapes how resources will be used
• directs communication flows
• defines control and other processes
• illustrates people’s roles relative to
others’ roles
 Your Job

• Understand organizational objectives

(articulated in the varied levels of
strategy)
• Analyze the structure
• Assess the match between
organizational strategies and
structures
 Top Managers Answer to a Power
Greater than Themselves
• God or conscience in a wholly owned private firm
• The family in a family owned firm
• The Board in a publicly owned firm:
– U.S. boards often are chaired by the CEO
– Boards in U.K. usually are chaired by a non
executive
– European companies often have a two-tier board
• In Germany, duties are split between
supervisory and management boards
• Spain and France often use an executive
committee
 Beneath the Board are Several
Structural Types
• Intra and interorganizational networks
• Special cases
• Functional, divisional, hybrids
 Networks
Intra organizational networks
internal networks
shamrock
spider webs

Inter organizational networks

– strategic alliances
– joint ventures
– partial acquisitions/mergers
– cross-sector partnerships
 Special Cases
• Family structure
• Holding companies
• Virtual structure
 Except for “born globals,” Most
Companies Grow into Expansion
 Most Common Structural
Types
Among Global Firms are:
• Functional structure
• Divisional structure
• Hybrid structures
– Combined functional/divisional structure
– Matrix structure
 Global Functional Structure

C E O

V P M a V r kP e t F i n i Vn g a P n Oc e p eV r P a t iR o V n& P s D L e

P r o d P u r c o t d P1 u r c o t d 2 u c t 3

C o u Cn t o r yu nA t r y B
 Divisional Structure Can Take
Different Forms
• Product
• Geographic
• Customer group served
 Global Geographic Division
Structure
C E O

A d m i n / F i n a n c e

V P f o r t h Ve P A Em u e r Vr o i c pP a e sE . VA Ps i aA u s t r a

A u s t r I a n l di a o / Nn I se Z l s a i

M a r k O e p t i en r g a t i o n s
 Global Product Structure

D I V I S I O N A L

C O S M E T I C

F R A S G K R I N AH N CA C AI R E R O CS E T AH P
Hybrids Often Emerge to Deal with Problems of
Functional and Divisional Forms

• Matrix forms are hybrids

• Some hybrids combine a mostly functional structure
with one or more important products or markets, e.g.,
North America
• Some hybrids combine a mostly divisional structure
with one or more important functions, e.g., marketing
• We Use a Matrix to Organize Roles and
Relationships in Business Education
 Global Matrix Structure
C h a i r m a n o f t h e B o a r d

E x e c u t i v e C o m m i t t e e

M a n a g e m e n t

S t r a t e g i c B u N s .i n A e ms se r u i cLn a ai t ts i n A m e rE i c u a r o p e A s i a

a u t o s

l i g h t t r u c k s

s p o r t s u t i l i t i e s

p a r t s

f i n a n c i n g
 Combined Functional and
Divisional Structure
Danone Group, 2003
Chair and CEO Vice Chair and COO

Exec VP, Exec VP,

General
Exec VP, Fresh Dairy Water
Secretary
Finance

Exec VP, Exec VP, Exec VP,

Biscuits and Asia-Pacific Intl Strategy
Cereal Snacks
 Intraorganizational Structures

• spiderwebs
• internal
• networks
• shamrocks
• horizontal
• keiretsu
• chaebol
Interorganizational Structures
• Strategic alliances
• Joint ventures
• Partial acquisitions
 Special Cases
• Family structures—usually hierarchical with a
patriarch/matriarch or a set of family members
who divide tasks according to skill or obligation
• Structures that arise out of national tradition—
German firms always have union
representation and two levels of boards
• Holding companies
• Virtual organizations