Organizational and Production structure of a Firm

ORGANIZATIONAL AND PRODUCTION STRUCTURE

OF A FIRMRuhulla Abdul

IFF 2-2

Moscow 2016

FINANCIAL UNIVERSITY UNDER THE GOVERNMENT OF THE RUSSIAN FEDERATION

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ORGANIZATIONAL STRUCTURE

Organizational structure – the possible ways in which a firm can organize itself, for example, by function, byproduct or serviceThe word structure implies organization. People who work in an organization are grouped so that their efforts an be channeled for maximum efficiency.

Organizations can be structured in an infinite variety of ways, ranging from highly complex to extremely simple.

OBJECTIVES OF ORGANIZATIONAL STRUCTURE● Achieve efficiency in the utilization of resources;● Provide opportunities for monitoring organizational performance;● Ensure the accountability of individuals;● Guarantee coordination between the different parts of the enterprise;● Provide an efficient and effective means of organizational communication;● Create job satisfaction, including opportunities for progression;● Adapt to changing circumstances brought about by internal or external developments.

ORGANIZATIONAL STRUCTURE THREE KEY ELEMENTS:1. Designates formal reporting relationships

number of levels in the hierarchy span of control

2. Groupings of individuals into departments departments into the total organization

3. Design of systems for effective communication coordination integration across departments

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MAIN FORMS OF ORGANIZATIONAL STRUCTURE 1. Functional (traditional) — A form of organization that groups a company’s activities around essential functions such as manufacturing, sales, or finance.

2. Divisional (project) — A form of organization that groups together those employees who are responsible for a particular product type or market service according to workflow. It may be:

Product Customer Geographic Process

3. Matrix (hybrid) — Companies are structured by creating a dual hierarchy in which functions and divisions have equal control.

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FUNCTIONAL ORGANIZATION STRUCTURE• One of the most common types of

organizational structures, • Organization based on common

job functions. • Example: an organization with a

functional structure would group all of the marketers together in one department, group all of the salespeople together in a separate department, and group all of the customer service people together in a third department.

• It is most appropriate to small companies which have few products and locations and which exist in a relatively stable environment.

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Functional Organization Advantages1. It is simple, obvious, and logical.2. It fosters efficiency.3. It can simplify executive hiring and training.4. It can facilitate the top manager’s control.

Functional Organization Disadvantages1. It increases the workload on the executive

to whom the functional department heads report.

2. It may reduce the firm’s sensitivity to and service to the customer.

3. It produces fewer general managers.

FUNCTIONAL ORGANIZATION

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FUNCTIONAL ORGANIZATION SILOING EFFECT

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DIVISIONAL ORGANIZATION STRUCTURE Some organizations are structured in accordance with product lines or divisions or departments.

They are headed by general managers who are responsible for their own resources.

Divisions are likely to be seen as profit centers and may be seen as strategic business units for planning and control purposes.

Some departments, e.g. accounts will be centralized

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TYPES OF DIVISIONAL STRUCTURE

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DIVISIONAL STRUCTURE: PRODUCT-BASED

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DIVISIONAL STRUCTURE Divisional Organization Advantages

1. The product or service gets the single-minded attention of its own general manager and unit, and its customers may get better, more responsive service.

2. It’s easier to judge performance.3. It develops general managers.4. It reduces the burden for the company’s CEO.

Divisional Organization Disadvantages1. It creates duplication of effort.2. It may diminish top management’s control.3. It requires more managers with general management

abilities.4. It can breed disconnection.

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MATRIX ORGANIZATION STRUCTURE A matrix structure aims to combine

the benefits of decentralization (e.g. speedy decision making) with those of co-ordination (achieving economies and synergies across all business units, territories and products).

It usually requires employees from various departments to form a group to achieve a specific target.

They require dual reporting to managers and the diagram shows a mix of product and functional structures.

For example in a university, a lecturer may have to report to both subject and department heads.

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MATRIX ORGANIZATION

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MATRIX ORGANIZATIONS Matrix Organization Advantages

1. Access to expertise.2. Stability of permanent department assignments for

employees.3. Allows for focus on specific projects, products, or

customers. Matrix Organization Disadvantages

1. Confusion of command.2. Power struggles and conflicts.3. Lost time in coordinating.4. Excess overhead for managing matrix functions.

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EFFECTIVENESS OF DIFFERENT STRUCTURES

SOME OTHER TYPES OF STRUCTURINGMechanistic and organic structures

• Mechanistic structures are typified by narrow spans of control; high centralization, specialization, and formalization;

• Organic structures (“flat” structures) are typified by wide spans of control; decentralization; low specialization and formalization;

Circular structure• The circular structure depicts all divisions as

being part of the same whole.• the circular structure can be confusing,

especially for new employees. it can be difficult for employees to figure out who they report to and how they’re meant to fit into the organization.

SOME OTHER TYPES OF STRUCTURING

Team Structures Make extensive use of permanent and temporary teams, often cross functional, to improve communication, cooperation, and problem solving.

Network StructuresMaintain a staff of core fulltime employees and use contracted services and strategic alliances to accomplish many business needs.

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THANK YOU FOR ATTENTION!

REFERENCES http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Organisational%20Structure.aspx http://www2.pathfinder.org/site/DocServer/Organizational_Structure.complete.pdf?docID=323 http://www.slideshare.net/xenna_85/organizational-structure-26872255 http://www.slideshare.net/mukeshicyboy/organization-structure-presentation http://smallbusiness.chron.com/presentation-organizational-structure-63139.html http://smallbusiness.chron.com/different-types-organizational-structure-723.html http://www.forbes.com/sites/jacobmorgan/2015/07/06/the-5-types-of-organizational-structures-part-1-the-hierarch

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