Transcript Functional Structure

Organizational Structure
 Need
to create division of labor
 Need to integrate these groups to ensure
organizational effectiveness
 Dimensions of Structure
 Horizontal differentiation
 Vertical differentiation
 Spacial dispersion
 Degree of formalization
 Degree of centralization
Firm Growth as Evolutionary Process
Single Business
Geographic
Diversification
(Foreign Sales as %Total Sales)
Product
Diversification
(Product Diversity)
Product and Geographic
Diversification
Horizontal Differentiation

degree to which tasks
are divided into
distinct homogeneous
groups
–
–
–
–
function-wise
geographic-wise
product-wise
Mkt
production stage-wise
CEO
Prod 1 Prod 2 Prod 3 Prod 4
CEO
Mfg
Finance
R&D
Logistics
Vertical Differentiation

CEO
Number of levels
within the
organization
EVP
EVP
EVP
Sr. VP
Sr. VP
VP
VP
VP
Asst. VP
Asst. VP
Asst. VP
Branch Mgr.
Asst. Branch Mgr
Branch Mgr.
Spacial Dispersion

Degree to which
activities are located in
different areas
HQ
Finance
US
Pacific
Eur.
Support
Mfg.
Mfg
Prod 1
Prod 2
R&D
Legal
Pressures for Global Efficiency
and Centralization
Structure Follows Strategy
High
Horizontal Differentiation?
Vertical Differentiation?
Spacial Dispersion
Low
Low
High
Pressures for Local Responsiveness and Decentralization
Export
Germany
U.S.
Mexico
Malaysia
Functional Structure
w/ International Sales Division
HQ
Fin./Acct.
Manufacturing
Marketing
Logistics
International
Sales
R&D
Multidomestic
Germany
U.S.
Mexico
Malaysia
Geographic Structure
HQ
N. Amer.
Mkt.
Mfg.
Eur.
R&D
Latin Amer.
Pac.Rim
Prod. A Prod. B Prod. C
Pure Global
Germany
U.S.
Mexico
Malaysia
Global Functional Structure
For Single-business Firms
HQ
U.S.
Fin./Acct.
Manufacturing
Mexico
Marketing
Germany
R&D
Malaysia
Product Division Structure
For Product-diversified Firms
HQ
Product A
Mfg.
Product B
Mkt. R&D Mfg.
Product C
Mkt. R&D Mfg.
Mkt. R&D
Transnational (1)
Germany
U.S.
Mexico
Malaysia
Matrix Structure (A)
HQ
U.S.
R&D
Marketing
US
Eur
Mexico
Malaysia
Manufacturing
Mexico
Matrix Structure (B)
HQ
Geographic Areas
US
Eur
Asia
Product 1
Product 2
Product 3
Product 4
Transnational (2)
Germany
U.S.
Engines
Steel
Mexico
Final
Assembly
Malaysia
Trim, seats,
glass
Matrix Structure (B)
HQ
R&D
Integrated
Functions
Logistics
Drivetrain
Body/
Frame
Glass/
Plastic
Final
Assembly
Germany
US
Malaysia
Mexico
Marketing
Marketing
Marketing
Marketing
Mixed Structure
HQ
PCs
US
Europe
Pacific
Mfg.
Faxes
Faxes
Faxes
Mkt.
Mobil Phones
Mobil Phones
Mobil Phones
R&D
Copiers
Copiers
Copiers
Stopford-Wells Structure Model
Product Diversity
Hi
Lo
Product
Divisions
Intl.
Division
0%
Mixed /
Matrix /
Network
Geographic
Divisions
100%
Foreign Sales as % of Total Sales
Kimberly-Clark’s Old Structure
U.S. HQ
CEO
US
Mfg.
Mkt.
Europe
Mfg.
Mkt.
Kimberly-Clark’s New Structure
U.S. HQ
CEO
Geographic Areas
US
Manufacturing
Eur
Manufacturing
Marketing
Marketing
Tissue Products
Personal Care Products
Kimberly-Clark’s New Structure
U.S. HQ
CEO
Integrated
Units
Marketing
Tissue Products
Marketing
Personal-Care
Products
U.S.
Mfg.
Europe
Mfg.
Formalization
 Degree
to which rules, procedure, lines of
authority/responsibility are enunciated or
specified
 More formality: eliminates confusion and
uncertainty, limits creativity and innovation
 Less formality: imbues flexibility, creative
solutions.
Centralization
 Degree
to which authority and decision
making is at higher levels of the organization
 Centralized: tight org control, managers are
order-takers
 Decentralized: managers closest to product
and/or customer able to make decisions
Data Management Control
Mechanisms
 Information
systems
 Measurement systems
 Resource allocation procedures
 Strategic planning
 Budgeting processes
Managers’ Management
Control Mechanisms
 Choice/selection
 Career
of key managers
paths
 Rewards and punishment systems
 Management development
 Patterns of socialization
Organizational Learning/
Conflict Resolution
Control Mechanisms
 Decision
responsibility assignments
 Integrators
 Transnational teams
 Coordination committees
 Task forces