Need assignment done for BUS 402 402 Strategic Management & Business Policy details below with everything attached needed for assignment please follow all instructions for assignment
Troubleschild1
2.6.docxOrganizational Designs and Strategy
The process of organization involves deploying resources to achieve strategic objectives. It entails dividing the workforce into specificdepartments and jobs, identifying formal lines of authority, and creating mechanisms for coordinating diverse organizational tasks.Organizational design is thus a major determinant of whether the strategy can be implemented effectively. Strategy execution depends oncompetent people who have the resources and the knowledge, and who know what to do and how their jobs relate to everyone else's.Additionally they require information where and when they need it. How the company is staffed and organized becomes critical. Over time,as the organization grows, the difficulties of implementing the strategy increase. For example, as it grows to become an internationalorganization, or broadens its product line, or acquires other companies, of necessity will its organizational design evolve. While detailsabout executing strategies come later in the book, this section introduces the different kinds of organizational design and the reasons eachone is effective.
Comstock/Getty Images
Functional organizations are usually led by a CEO, with positionsfor a VP of Finance, VP of Marketing, VP of Production, VP ofHuman Resources, VP of Research and Development, andpossibly a VP of Engineering.
Functional Organizational Design
The functional organizational design is the most common design used bybusiness single-companies (Figure 2.1). It groups employees togetheraccording to discrete functional activities in the belief that the work will bedone more effectively. Employees of small companies organized this waygenerally aren't aware they are using a specific "design" because it happensto be so common.
Functional organization designs are variants of the following structure. At thetop of the hierarchy sits the CEO or president. In public companies thisincludes the chairman of the board of directors and office of legal counsel.Below the CEO are a number of vice presidents, each responsible for one ormore functional areas. Some companies have a chief operating officer (COO)or executive VP, who has the authority to act as CEO in the latter's absence.That executive sometimes oversees the functional vice presidents. Reportingto most vice presidents are C-level officers, with responsibilities for theirfunctional area. Examples include the CFO (chief financial officer), CMO (chief marketing officer), CTO (chief technology officer), and newerones like CIO (chief information officer) and CSO (chief strategy officer). Figure 2.1 illustrates the basic functional organization design.
Figure 2.1: Functional organization design
The principal disadvantage of this form of organizational design is that it discourages horizontal communication, that is, across functions.For example, a situation might arise in which a company's marketing department advertises the benefits of a particular product anddelivers a dramatic sales increase only to discover it could not fulfill the new orders because production wasn't prepared to keep up withdemand. In another scenario, efforts to cut manufacturing costs might dictate automating part of the production process, but if the financedepartment had not been informed of this possibility and set aside funds accordingly, the company might not have the money to fund theinitiative. To get around this, a company might form cross-functional teams composed of members from each affected functional area.Special task forces might also be established to tackle a problem that only occurs once such as business-process reengineering. Cross-functional teams are rarely fulltime activities, but must be done in addition to members' regular jobs and responsibilities.
Matrix Organizational Design
Associated Press/Mark Lennihan
A matrix organizational design is usuallypreferred when a company produces distinctbrands or product lines. For example, Proctor &Gamble has 96 brands of products, includingTide detergent—one of its most popularbrands.
Whereas a functional organizational design is the most common design used by companies, matrix organizational designs are preferred when a company encounters a more specificset of circumstances or challenges. Companies that serve the functions described in thefollowing sections may consider using a matrix organizational design.
Many Projects for Clients
Companies that provide consulting services or perform research for multiple clients maychoose a matrix organizational structure. An example of this is the RAND Corporation, a"think tank" in Santa Monica, California, that undertakes research and policy projects for allagencies of the federal government, especially the military, as well as state and localgovernment. RAND is organized by intellectual discipline and by project teams that propose,carry out, and report on particular contracts for individual clients. In effect, any member ofthe professional staff working there has a "home"—say, in the economics or computer-science group—and works on one or more projects. Most individuals have two or moreoverseers; but the department head is more of a resource than a manager, thus removing apotential conflict. Figure 2.2 represents a simple matrix organizational structure.
Producing Distinct Brands or Product Lines
A large enterprise that produces many established brands for discrete markets may besuited to a matrix design. Proctor & Gamble, one of the largest and most innovativeconsumer-product corporations in the world, produces no fewer than 52 brands of beautyand grooming products such as Tampax, Gillette, Oral B, Crest, and Pert, and 46 brands ofhousehold-care products such as Tide, Bounty, Pampers, and Comet (Proctor & Gamble, n.d.).Organizationally, every brand is called a global business unit (GBU), which exclusively targets consumers, brands, and competitorsworldwide. The GBU is also in charge of the innovation pipeline, profitability, and shareholder returns. Market-development organizations(MDOs) are responsible for being aware of the buyers and sellers in every market area Proctor & Gamble competes in, as well asincorporating new GBU-driven workflows into the individual business plans operating in each country. Lastly, Global Business Services(GBS) manages Proctor & Gamble talent and expert partners with the goal of providing business-support services at the lowest costspossible.
Figure 2.2: RAND Corporation matrix organization
Managing International Operations
Large multinational corporations with business interests in many countries may be organized in a matrix structure. The organizationalmatrix could be two-dimensional; think of a spreadsheet in which product managers are column headings and country managers are rowheadings, or even three-dimensional with the third dimension being disciplines like chemists, engineers, statisticians, computer scientists,and so forth. Proctor & Gamble has refined an incredible organizational design for what is a very complex organization, but most suchorganizations experience many difficulties. Even simple organizations that market only a few products internationally have conflicts withcountry managers. It is not uncommon for managers employed by international corporations to complain that, although they know theirown domestic market and how to run the local office better than the executives at the home office, they still get told how to do their job.
Divisional Organizational Design
Much like functional and matrix organizational designs, the divisional organizational design works better for some companies andindustries than others. A divisional organization is most effective when a company is in several businesses. A company with a broad productline or that serves several vertical markets could still be in one business. Honeywell International is an example of a business with adivisional organizational design. Honeywell is an enormous conglomerate that has evolved through numerous mergers and acquisitions. Itdoes business in a variety of industries ranging from defense contracting to consumer products with divisions dedicated to aerospace,automotive products, specialized materials, and research and development among others.
The test to determine if a divisional organizational structure is the best choice for a company is whether each of the businesses has quitedifferent customers, competitors, and strategies and therefore needs to be run by a separate manager. In such a case, one would find manyfunctions such as engineering, sales, and manufacturing duplicated in each business. In a diversified or multi-business company (discussedin Chapter 11), its different businesses can be divisions that still retain the corporate name and have developed organically or"subsidiaries" that have different names as a result of having been acquired.
The divisions or subsidiaries are considered "line departments" as they continue the chain of command up to the CEO and overall board ofdirectors. Staff departments such as human resources, labor-relations, finance, and legal counsel exist at the corporate office and serve alldivisions and subsidiaries. An international department would coordinate the operations of each division in different countries, allowing forcontacts that one division had developed to be accessed by the other divisions. As you may well imagine, divisional organizations, whilesimple in concept, can become complex in an international corporation.
Figure 2.3: Divisional organization
Discussion Questions
1. Describe how a small company's organization might change from a functional organizational design to one that mightbetter support a new product it had just developed for a new market.
2. Imagine you are working for a company that had a matrix form of organization, and you had progressed to being one ofthe project managers. The client for your project suddenly changed the terms of your project, and you needed moresupport in computer modeling as a result. The department head for computer science claims that the person already onyour project could handle the extra load, but you feel you need an additional person. How might you resolve thisconflict?
3. As an international company expands to a particular country, would you hire someone from that country to run theoffice there but train them in the company's culture and products, or have someone set up shop in that country from thehome country and have him learn about the market in that country? Discuss the reasons for your choice.
