Forms of Project Oraganization

8/4/2019 Forms of Project Oraganization

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Definition of Organizational Structure Forms Of Organization Structure Line Organization Structure Staff Organization Structure Functional Organization Structure


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Organizational Structure refers to thedifferentiation (differences in theorientations among the managers ifdifferent departments and differences informal structure among thesedepartments) and integration (quality ofthe state of collaboration for achieving

unity) of activities and authority, roleand relationships.


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Organisation Structure refers to thepattern of relationships amongindividuals and department in anorganisation

Organisation Structure is theframework through which theorganisation operates. Classification of organisation structureis based on various activities which aregrouped together to createdepartments and units & prescribingtheir relationships in the organisation.


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Organizational structure alsorefers to the well definedjobs, each bearing a definiteauthority, responsibility andaccountability.

Four pillars of OrganizationalStructure Division of Labour Scalar and functional processes Structure Span of control


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There are 7 types of OrganisationStructureLineLine & staffFunctionalDivisionalProjectMatrixFree-form


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Line Organisation Structure Lines of authority and instructions arevertical, i.e. they flow from the top tothe bottom. The unity of command is maintained ina straight and unbroken line. It impliesthat each subordinate receivesinstructions from his immediatesuperior alone and is responsible tohim only.


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All persons at the same level oforg. are independent of each other.

This structure specifiesresponsibility and authority for allthe positions limiting the area ofaction by a particular positionholder.


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Line & Staff Organisation Structure Refers to a pattern in which staff specialistsadvise managers to perform their duties. Staff managers provide advice to the linemanager who are generally specialists in thefield. Staff positions are purely advisory in nature.They have a right to recommend but have noauthority to enforce their preference onother dept. The line executives are the DOERS orcommanders, where as, the specialists arethe THINKERS or advisors.


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Functional StructureProduct Structure Flat Structure Vertical Structure Matrix Structure


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Functional structure is created by groupingthe activities on the basis of functionsrequired for the achievement oforganizational objectives.

Functions are classified intoBasic(essential: e.g. production, marketing, inmanufacturing organization),Secondary(subparts :e.g. marketing is furtherdivided into market research, advertising,salesetc) &Supportive (e.g. finance, accounting,personnel, industrial relations)functionsaccording to their nature and importance. Authority relationships in functional structure

may be in the form of line, staff & functional.


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Head Quarter

Marketing

plant1

manufacturing

plant2

Finance

plant3

personnel

plant4


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V.P. Tax V.P. Controller

V.P. MIS DirectorCorp. Planning

Exec. V.P.Finance & Admin.

Senior V. P.Stores

DirectorTransportation

V.P.Distribution

Senior V.P.Logistics

Clark JohnsonCEO


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Characteristics of functional structure:1. Specialization by functions2. Emphasize on sub goals3. Pyramidal growth of the organization4. Line and Staff divison5. Functional authority relationships amongvarious departments.6. Limited span of management and tallstructure.


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ADVANTAGES: Result into high degree of specialization

Brings order & clarity in the org.

Promotes professional achievements, provides

satisfaction to the specialist.

Resources can be saved

High degree of control and coordination offunctions.


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DISADVANTAGES: Judging the performance of each dept is

difficult. Slow Decision Making process Lack responsiveness necessary to cope up withnew & rapidly changing work requirements. Offers usually line & staff conflict &interdepartmental conflict and results ininefficiency.


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Suitability Required when small org. grows& business activities become

more & more complex.

Works better if org. has one

major product or similarproduct line.


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A division is a collection of functions workingtogether to produce a product. Divisions create smaller, manageable parts of a firm.

Divisions develop a business-level strategy to compete.

A division has marketing, finance, and other functions.

Functional managers report to divisional managers who thenreport to corporate management.

Product structure:divisions created according to thetype of product or service.

Geographic structure:divisions based on the area of acountry or world served.

Market structure: divisions based on the types ofcustomers served.


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Washing Machine

Division

Lighting

Division

Television

Division

CorporateManagers

CEO

Corporation


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Northern

Region

Western

Region

Southern

Region

Eastern

Region

CorporateManagers

CEO

Corporation


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Large Business

Customers

Small Business

Customers

Educational

Institutions

Individual

Customers

Corporate

Managers

CEO

Corporation


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Product departmentalization involves thegrouping of all activities necessary tomanufacture a product or product line. Preferred for product expansion & diversification

when manufacturing & marketing characteristicsof each product are of primary concern.

Used when the product is relatively complex & agreat deal of capital is required for plant and

facilities.

Each product division contains the functionsnecessary to that service the specific goods or

services it produces


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CEO

Func.Managers

Sales Design Production

Manufacturing Manufacturing Manufacturing

= Product Team Manager = Team member


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Advantages Coordination within product lines made

easier

More adaptable to changes in environment

(e.g., can shut down a division when aproduct is no longer selling)

Responsibility for failures, successes

identifiable

Competition across divisions can serve as a

motivator


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FLAT STRUCTURE reduces thelevels of management.

Widens span of control ofmanagement at various levels oforganisation.

More decentralized with regard todecision-making


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ADVANTAGES: More delegation of authority More clear policy Development of managers for higherpositions because of their initiative &authority to make decisions.DISADVANTAGES: Tendency of overloaded superior to becomebottlenecks in decision making Requirement of highly trained managerialpersonnel.


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Tall structures have many levels of authorityrelative to the organizations size. As levels in the hierarchy increase, communication gets

difficult.

The extra levels result in more time being taken to

implement decisions. Communications can also become garbled as it is

repeated through the firm.

Flat structureshave few levels but wide spans ofcontrol.

Results in quick communications but can lead tooverworked managers.


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Narrow span of control Large number of management levels More centralized decision making


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ADVANTAGES: Close Supervision

Close control of subordinate activities

Fast communication between superior &his subordinate

DISADVANTAGES: Creation of many levels of management High cost to the organisation

Excessive distance between lowest level &highest level in the organisation.


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Matrix Organization In a matrix organization a vertical as well aslateral communication and information flow isallowed. The matrix organization integrates functionalresponsibility with product responsibility. It is a combination of the functional and theproduct org. structure.


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A product manager is responsiblefor the total performance of theproduct and Will have the production manager,the marketing manager, theaccounts manager as hiscounterparts in the manufacturing,marketing, and accountingfunctions respectively.


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These functional managers report to thefunctional head vertically and productmanager laterally.

MOS is used in big companies havingdiverse business activities

The structure enjoys the advantages of afunctional as well as of a productorganization.


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Matrix structure:managers group people by functionand product teams simultaneously.

Results in a complex network of reporting relationships.

Very flexible and can respond rapidly to change.

Each employee has two bosses which can causeproblems.

Functional manager gives different directionsthan product manager and employee cannotsatisfy both.

Product Team Structure:no 2-way reporting and themembers are permanently assigned to the team andempowered to bring a product to market.


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CEO

Func.Managers


Productteam A

Product

team B

Productteam C

Product Team

= two boss employee

TeamManagers


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CEOFunc.

Managers


Manufacturing Manufacturing Manufacturing

= Product Team Manager = Team member


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Many large organizations have divisionalstructureswhere each manager can select thebest structure for that particular division. One division may use a functional structure, one

geographic, and so on.

This ability to break a large organization intomany smaller ones makes it much easier tomanage.


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Design Of Matrix Structure

In MOS, a project manager is appointed tocoordinate the activities of the project. A subordinate in matrix structure may receiveinstructions from two bosses. Matrix superior has to share the facilities with

others. He reports in a direct line to the up, but doesnot have a complete line of command below.


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MD

Manufacturing Finance Personnel Material

Production-MGR-BProductManager-B

Product-ion MGR-A

ProductManager-A

FinanceMgr-A

PersonnelMgr-A

MaterialMgr-A

FinanceMgr-B PersonnelMgr-BMaterialMgr-B


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Advantages of the matrix organization It attempts to retain the benefits of bothstructures ( functional organization and projectorganization). Coordinates resources in a way that appliesthem effectively to different projects. Staff can retain membership on teams and their

functional department colleagues.


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Documents

Forms of Project Oraganization