Importance of Organizational Structure - Management Perspectives
Summary
TLDRThis module explores organizational structures, their importance, and various types like functional, multi-divisional, and matrix. It discusses the significance of organizational structures in defining authority, information flow, and control. The module also covers boundary-less structures like modular and virtual organizations. Criteria for choosing a structure include marketing advantage, parenting advantage, people test, and feasibility. Lastly, it touches on leadership theories, marketing, human resource management, and motivation.
Takeaways
- π« Module Six focuses on the management perspective, covering organizational structures, leadership theories, marketing, human resource management, communication, and motivation.
- π Despite being comprehensive, this module has not been heavily emphasized in exams, with questions constituting less than 5% of the syllabus over the past few years.
- π₯ Organizational structure is defined as the arrangement through which authority and information flow within an organization, including hierarchy and boundaries.
- π Importance of organizational structure includes defining responsibilities, communication paths, authority levels, control spans, and bureaucracy levels within a company.
- π’ Types of self-contained organizational structures discussed are functional, multi-divisional, holding company, matrix, transnational, team-based, and project-based.
- π Boundary-less organizational structures include follow, modular, outsourcing, offshoring, shared services, alliances, virtual, and collaborative.
- π To choose an organizational structure, organizations should consider nine benchmarks related to objectives, marketing advantage, parenting advantage, people test, feasibility test, culture, difficult link, redundancy, accountability, and flexibility.
- π The functional organizational structure aligns departments and divisions based on functions within the organization, like sales, finance, production, and marketing.
- π The transnational organizational structure aims to balance global scale with local responsiveness, often adopted by companies with international branches.
- π The matrix organizational structure combines functional structures with other organizational forms, creating dual authority lines within the organization.
- π The modular organizational structure involves outsourcing non-core processes and assembling components in-house, common in complex manufacturing like airplanes and cars.
Q & A
What is the main focus of Module Six in the syllabus?
-Module Six focuses on the management perspective, covering topics such as organizational structures, leadership theories, marketing, human resource management, communication, and motivation.
Why might the examiner have examined less from this section of the syllabus?
-The examiner might have examined less from this section because the content is more or less contained in the Level 1 business management and information system modules.
What is the definition of an organization according to the script?
-An organization is defined as a social arrangement which pursues collective goals, controls its own performance, and has a boundary separating it from its environments.
What is organizational structure and why is it important for companies?
-Organizational structure refers to the hierarchy of authority within an organization and the way authorities and information are routed. It is important because it shows the level of authority, the flow of information, who is responsible for what, and the span of control within the organization.
What are the two classifications of organizational structures mentioned in the script?
-The two classifications of organizational structures are self-contained organizational structures and boundary-less organizational structures.
Can you explain the functional organizational structure?
-A functional organizational structure is designed in relation to the various departments or functions within the organization, such as sales, finance, production, and marketing departments.
What is a multi-divisional organizational structure?
-A multi-divisional structure is where an organization is divided into semi-autonomous divisions that may differ by territory, products, or markets, and is often adopted by companies that produce more than one product or operate in more than one territory.
How is a holding company structure different from other organizational structures?
-A holding company structure is an extreme form of division where each division is a separate legal entity, similar to a parent-subsidiary relationship, with each division operating as a distinct entity under a parent company.
What is a matrix organizational structure and how does it work?
-A matrix organizational structure attempts to ensure coordination across functional lines by embodying dual authority. It combines functional structures with other organizational structures, allowing individuals to have responsibilities in both a division and a functional department.
What is a transnational organizational structure and its key features?
-A transnational organizational structure attempts to reconcile global scope and scale with local perspectives. Its key features include a response to global challenges and a high proportion of fixed responsibilities in a horizontal line of management.
What are the nine benchmarks that organizations have to follow to test which organizational structure will be suitable for them?
-The nine benchmarks include marketing advantage, parenting advantage, people test, feasibility test, specialized culture, difficult link, redundancy, accountability, and flexibility.
What is a boundary-less organizational structure?
-A boundary-less organizational structure includes various forms such as following, modular, outsourcing, offshoring, shared services, alliances, virtual organization, and collaborative organizational structures, which often involve collaboration with outside parties and flexibility in operations.
Outlines
π’ Organizational Structure Overview
This paragraph introduces Module Six, focusing on the management perspective. It discusses the importance of understanding organizational structures, leadership theories, marketing, human resource management, communication, and motivation. The speaker highlights that although this module is comprehensive, it has been less emphasized in exams. The paragraph defines an organization as a social arrangement with collective goals and boundaries. Organizational structure is explained as the framework through which authority and information flow. It is crucial for defining responsibilities, communication, authority hierarchy, and control within a company. The paragraph also introduces different types of organizational structures, such as self-contained and boundary-less structures.
π Types of Self-Contained Organizational Structures
This section delves into various self-contained organizational structures. It starts with the functional structure, which is based on departments and functions within an organization. It then moves on to the multidivisional structure, suitable for organizations with diverse products or operating in multiple territories. The holding company structure is described as an extreme form of division where each division is a separate legal entity. The matrix structure is explained as a combination of functional and other organizational structures, aiming for coordination across functional lines. The transnational structure is designed to balance global and local perspectives, and the team-based structure focuses on groups with specific skills to manage business processes. Lastly, the project-based structure is mentioned, where teams are formed to complete specific projects and then disbanded.
π Choosing an Organizational Structure
Paragraph 3 discusses how organizations can determine the appropriate organizational structure. It introduces nine benchmarks proposed by Goold and Campbell, which are divided into two categories: organizational objectives and design principles. The benchmarks under organizational objectives include marketing advantage, parenting advantage, people test, and feasibility test. Design principles benchmarks cover specialized culture, difficult link, redundancy, accountability, and flexibility. The paragraph emphasizes the importance of these factors in assessing and choosing the right organizational structure for a company.
π Boundary-Less Organizational Structures
The final paragraph explores boundary-less organizational structures, which include the follow-the-leader model, where organizations focus on core processes and outsource non-core ones. The modular structure is similar but involves outsourcing production processes and then assembling the components in-house. Other concepts mentioned are outsourcing, offshoring, shared services, alliances, virtual organizations, and collaborative structures. The paragraph concludes by summarizing the key points about organizational structures and looks forward to the next module.
Mindmap
Keywords
π‘Organizational Structure
π‘Leadership Theories
π‘Functional Organizational Structure
π‘Multi-Divisional Structure
π‘Holding Company Structure
π‘Matrix Organizational Structure
π‘Transnational Organizational Structure
π‘Team-Based Structure
π‘Project-Based Structure
π‘Boundary-Less Organizational Structure
π‘Marketing Human Resource Management
Highlights
Module Six focuses on management perspective, covering organizational structure, leadership theories, marketing, human resource management, and motivation.
The examiner has historically tested little from this section, possibly due to its overlap with Level 1 business management and information systems.
Understanding organizational structures is crucial as it outlines the hierarchy, authority, and information flow within a company.
Organizational structures are important for defining responsibilities, communication paths, authority levels, and control spans.
Self-contained organizational structures are independent and do not rely on external relationships for operations.
Boundary-less structures involve collaboration with external parties for flexibility during times of change.
Functional organizational structure is based on departments and functions within an organization.
Multi-divisional structure is adopted by companies that produce multiple products or operate in different territories.
Holding company structure treats each division as a separate legal entity with a parent-subsidiary relationship.
Matrix organizational structure combines functional structures with other organizational forms to ensure cross-functional coordination.
Transnational organizational structure reconciles global scope with local perspectives, as described by Professors Bartlett and Ghoshal.
Team-based structure forms groups of individuals with required skills to manage specific business processes.
Project-based structure assembles individuals to undertake a project, dissolving the team once the project is complete.
Good and Campbell's nine benchmarks help organizations determine the most suitable organizational structure.
Design principles such as culture, difficulty in linking departments, redundancy, accountability, and flexibility are crucial for implementing organizational structures.
Boundary-less structures like modular, outsourcing, offshoring, shared services, alliances, and virtual organizations are becoming more prevalent.
Collaborative organizational structures require information from the outside world to function.
Transcripts
hi there welcome to module six
management perspective this is by far
one of the most involving modules or
chapters in there syllables
however the examiner has done really
examined much from this section of the
syllabus I don't know why but maybe
because the modules are things here more
of less contained in the level 1
business management and information
system because here we are will be
discussing various types of
organizational structure we are going to
look at leadership theories and we look
at issues about marketing human resource
management communication motivation I
think the reason why the examiner has
normally tested and has been silenced
over the period there are some questions
that he has as from this session though
but the contents in here and the
question that has been asked in the past
is relatively very small less than like
5% or something like that in the past in
the last four or five years of managing
settings that I'm talking about to be
specific so manager perspective on the
end of this module you should be able to
understand the various types of
organizational structures you should be
able to understand the importance of
organizational structures you should be
able to explain the various leadership
Theory story will be going to you then
you should be able to explain the
concepts of marketing human resource
management among other stuff so let's
begin the journey what is organizational
structure but first before we define
what are the relational structure is
that is we have to look at what an
organization is so analyzation an
organization it simply define us as
social arrangements which pursues
collective goals which controls its own
performance and has a boundary
separating it from its environments so
an organization can be defined as what a
social arrangement a social arrangement
all right in that order but what is an
organizational structure an
organizational structure can simply be
defined as the various who
through which authorities information is
transported in within an organization or
the hierarchy of authority within an
organization to be able to understand
organizational structures there are
various things that we have to take into
consideration in that order
organizational structures are important
for companies because every company must
have the organizational structure the
CEO the Board of Directors the
departments and then under each
departments there are divisions ok
that's the organizational structure it
shows the level of authority it shows
the flow of information it shows who
responds towards it shows also the span
of control within the organization so
what are the importance of
organizational structure 1 it shows who
is responsible for what I've already
mentioned that it shows who communicate
with whom here as also I've also
mentioned that it shows the hierarchy of
authority and the subordinates yes
it shows the span of control in the
organization then it shows the level of
bureaucracy within the organization now
if we want to understand the issue about
organizational structure that are
basically what we call classification of
organizational structure there are two
classification of organizational
structure of the organizational
structure of company can be companies
can be categorized into what we call
self-contained organizational structure
and boundary-less
organizational structure you have to be
able to follow me well to understand
these two things when we say a
self-contained organizational structure
it is where the organization has the
ability to spontaneously arrange its
components and elements in purposeful
manner and that appropriate conditions
but without the help of external
agencies so with self-contained
organizational structure the
organization is
dependent it is form its own so does not
depend on any relationship outside in
the undertaking of its responsibilities
then the convenience organizational
structure this involves the organization
collaborating with the outside parties
to make it more flexible during times of
what changes right so let's now narrow
down our attention to look at the
various types of self-contained
organizational structure the first one
is called functional status this is
where the structure is designed in
relation to the various departments of
functions within the organization so if
you look into your study notes there I
have the functional organizational
structure where I have top management's
where I have the various department and
we're hard division so it is where we
design the flow of information we design
a span of control we design a flow of
information in relation to the flow of
Authority in relation to who does what
within the organization so based on the
functions so we are the sales department
we are the finance department we have
the production department we have the
marketing department those kind of
things okay in that order when it comes
to the functional organizational
structure the next one is called the
multi divisional structure this is where
the organization is defined in two semi
autonomous division that may be
different by territory products or
markets
so sometimes organization has very
divisions of territory so it can devise
it into the northern division into the
Saudi division or into yes so the
northern and the southern division so
that is it when we talk about a multi
division of strategy
normally this is adopted by companies
that produce more than one product and
all companies that operates in more than
one territory or locations as such the
ones and have various projects in these
locations so they want to bring all
those branches for those departments
into multi vision structures in that
order
again the holding company structure
this is an extreme form of division
where each division is a separate legal
entity so here it is like a divisional
ization but here each division is a
separate legal entity on each one so it
is more or less like a parent by a group
structure so you have the parents
company every other subsidiaries so like
back to my example of Jian or group
indium we have a group the parents
company then we have the group Jian
insurance do you have the GN bank then
we have the GN money whatever G and
everything G and in that order
GN electricity GN security GN
hospitalities and hotels that kind of
thing that is over if s was on the
holding company structure here each
revision is seen as a separate legal
entity on it also there is a
relationship like a parent-subsidiary
relationship in that order third the
next one is a matrix organizational
structure this structures attempts to
ensure coordination across functional
lines by embodiment of duong Authority
in organizational structures what does
this mean what it means is that for
instance somebody can be the head of the
division then can be also the head of a
function or a department in the entire
organization in a product so this is the
combination of functional structures
with other organizational structures now
so if you look at a diagram that I have
there you will see that I have fairly
difficult to read though my diagram then
yes so you will see that I have the
manufacturing there I have the various
departments so what a matrix
organizational structure tries to do is
to combine functional structures with
words other organizational structures so
you are performing a functional
structure as for instance the head of
the production department but you cannot
ascend to become the head of a division
okay in that order so that is what me by
the matrix organization
structure in that order then the next
one is a transnational organizational
structure this structure attempts to
reconcile global scope and scale with
what's local perspective now when we
talk about management and managers in
globalization two names come to mind
that is Professor a ballets
of Harvard Business School and then some
entre ghoshal they published a book
called managing across borders the
transnational solution and in that book
they describe that transnational
organizational structures have two
important features one in response to
specifically it respond specifically to
the challenges on the global level and
m2 it tends to have a high proportion of
fixed responsibilities in a horizontal
line of management of the organization
so that is only by the transnational
organizational structure here the
graduation has branches in other
countries so it's gonna have a
transnational organizational structure
the next one is for the team-based
structure since each organization or
business consists of various processes
this type of structure of the
organization to put together a group of
individual with required skills to
manage specific processes of what's the
business so this is when religion put
together a team of experts so we are
launching a new product or the
organization wants to launch a new
product it is going to put together a
research and development team in that
research and development team we will
have the products production manager
they will have the sales manager there
you gotta have the finance
we will have a member of the sales and
distribution there so we go to her that
is a team together to undertake a
specific objective of the organization
at the end of that the team continues to
exist in that product then we have a
project based structure now this is
similar to team up here we put together
individual to undertake a project and at
the end of the project
the team is what's dissolved in that
honor so that is these are some examples
of various types of organizational
structures that is that exist in what we
call self-contained organizational
structure the netting we want to
consider is choosing a design how can
organization determine or assess the
appropriate organizational structure how
can organizations say we want to look at
a function organizational structure we
want to look at a transnational
organizational structure how can they
meet a meander in to be able to answer
that we were to borrow the thought of
good and Campbell and they put together
nine benchmarks that organizations have
to follow to test which organizational
structure that will be well good for
them
these nine Pinterest has been subdivided
into two broad categories the first
category is according to the
organizational objectives and the
restraints it must consider so based on
the organizational objective good good
and good and Campbell says that in the
designing of organizational structure in
the two silicon organizational structure
or in the determination of
organizational structure for the company
based on the organizational objective
the organization has to look at their
marketing advantage so the proposed
structure must fist into the marketing
objectives of the organization to enable
the organization to gain competitive
advantage so based on our objective any
structure we are choosing must be able
to be fit into our marketing world
strategy as a company to parenting
advantage since a lot of companies have
subsidiaries across the structure must
support the parenting
played by all the Corporate Center that
is what I was talking about in relation
to something like the holding
organizational structure because there
has to be what we called parenting and
subsidiary relationships so the
organizational structure has to support
that scheme in that order next one is
people text people test the proposed
structure must suit the skills and
experience of the people that have to
function in narrative function or work
within it so we must look at the fact
that the new organizational structure
that we are implementing we have the
labor force there we have the technical
know-how they in relation to
successfully implementing and
successfully undertaking that
organizational structure by the
organization and then the last one based
on the organizational objective is the
feasibility test this simply talks about
other factors that has to be taken into
consideration such as loss stakeholders
opinion resource availability these are
referred to as other constraints of the
company so what's good and calm Bell is
talking about is that what we are
deciding which organizational structure
we have to use the run line benchmark
for of those benchmark relates to the
organizational objective that is the
marketing advantage of the company that
is the puritan advantage of the company
that is the people test whether we are
the employees and then the feasibility
test whether we have the resources
available what is the expectation of our
stakeholders and whether we really are
undertaking a strategy that falls within
the scope of the laws of the land aside
that good and Campbell said that we have
also considered methods of design
principles that these are issues that
have to be considered in relation to the
implementation and execution of all the
structure so aside now we've looked at
the marketing advantage it fits into a
magazine advantage we have look at the
furniture
there's no issue we look at our people
test years we have the employees there
we look at a disability test yes there
is no problem in relation to that but we
must look at the various factors have to
be considered so that when we implements
the organizational structure when we
execute an organizational structure it
will be well the first one is called the
specialized culture the organisation
already has a culture within which it
operates
and it's known to all stakeholders
however a proposed structure may change
the structure thus culture which may
result into a lot of friction or
disorders so the resident has to look at
the faulkner
people already understand how things are
done within the organisation proposal a
new organizational structure means there
is going to be a change in how things
are done within the organisation this
can result into a lot of friction a lot
of this order a lot of the rejection on
behalf of other parts of some stickiness
of the company the first one is the
difficult link now it is difficult to
combine some department because if you
are delivering something like the matrix
organizational structure when you are
combining some functional organizational
structure with the organizational
structure it is difficult to combine
some of the department into one single
department if you adopted a different
organizational structure so that has to
also be considered then redundancy
hierarchy proposed organizational
structure we mean that probably with all
of the technical know-how we now have
the people they employee so there has to
be new employees that must come on board
this may lead to redundancy within the
organization so the organization has to
also assess that then accountability
built into every organizational
structure there has to be a system of
accountability where we'll be able to
measure the performance of the
organizational structure and compare it
with what's the objective of the
organizational structure to see what
other organizational structure
implemented
it's affecting its objective the final
thing is that every organizational
structure adopted designed implemented
or executed must be flexible so that it
will allow for future changes to be
taken into consideration so these are
what we have to understand in relation
to designing or choosing an
organizational structure then the next
thing we want to talk about the next
thing we want to talk about in an aura
so the next thing we want to talk about
is the boundary less organizational
structures the boundary less
organizational structures these include
the following one follow organizational
structure with that structure the
organization classifies activities into
core processes and non core processes
and organization outsources know core
processes and focuses on course in these
there are any odds add value remember
what we did an evaluation analysis I
mentioned that the organization would
look at the primary activities and then
what the supporting activities so now
when I think I'm focused on what they
call activity so we're an organization
is only focusing on its core activities
and outsourcing or almost also popular
activities that it means the
organization is adopting what we call
the follow organizational structure the
next one is called the medulla
organizational structure now this is
similar to the model organizational
structure in that the organization
outsourced some parts of its production
process to special needs to provide and
then later assemblies their outsource
components in-house to produce the final
products this is usually used by
companies that produce airplanes that
produce cars that manufacture or build
ships in ship in that order
so in relation to the production of
those products like carbon factoring
companies they outsource parts of the
castle a company produces their engine
another company produces the ties
another company produce the windscreens
another company produces
maybe the seeds in that order so they
outsource these various component parts
of the major of the main product to
specialists then they now bring it
in-house and assemble all of them to
produce the finished product that is
what we refer to as the modular
organizational structure then other
modules that we can talk about in most
outsourcing offshoring shared services
alliances virtual organizational
structure destroyed organization doesn't
really have a location okay
you can't trace it it has a very
business and but usually that does
everything electronically in that order
collaborative organizational structure
this is where the organization requires
information and will go to the outside
world and adds them in that border so
these are what you have to understand
when it comes to money the perspective
of the organization and I'll see you in
the next module
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