The organization is the result of a process of organizing a group of people, aimed at achieving common goals that their complexity cannot be achieved by one person. So, the organization has developed from the need to produce goods in much higher than in times past could make workers in their workshops. Also, the organization has emerged as a necessity to increase efficiency and quality work. We can say the organization is a system that is characterized by a specific functional structure and a process through which the common targets and specific. For example, the university is a organization that integrates student, teacher, administrator and laboratory technical staff, aimed at the generation, transfer and diffusion of knowledge.
In any organization there are two fundamental processes: a process for achieving products and services for which an organization was created and a management process to ensure implementation of the first in terms of efficiency and quality Organization is characterized by an internal environment, external environment and a functional interface between the two environments.
Being an open system, we see the existence of the system input streams and output streams of system. Internal environment is characterized by the existence of generalized field of forces and a transformation of input into output. External environment are characterized by having a generalized field of forces that act continuously on the organization, at its interface with the intern environment .If these forces are stronger than the internal environment, the organization declines and if adaptation measures are not taken, in this case result bankruptcy. For example: a factory that produces fertilizers for agriculture, manages to successfully sell products market and to ensure good employees a salary.
Management of company has developed a dynamic equilibrium between existing forces inside and outside At a time, there is a law protecting the environment and impose more severe requirements new quantities of harmful substances discharged into the atmosphere or wastewaters .This means that the external environment have developed strong legislative force, for which there is enough strength inside and so was some imbalance. To restore the dynamic balance of company is necessary to invest in new technologies for filtering and treating harmful substances, in order to meet new standards. If fails this, technological line may be closed and if the company has no other viable processes, the company may go bankruptcy.
The organization is on based two structures: a functional and organizational structure. The ORGANIZATION STRUCTURE of units is all position work and departments that make up the unit, their grouping and subordination including links to be established between them to carry out properly all work tasks. When is projected, a rational and efficient organization structure must meet certain general requirements such as covering the whole spectrum of activities of the organization and to distribute them properly, to ensure continuity and fluidity in carrying out, to ensure that management units at each level as possible that each have a single chief subordinated; also be flexible to adapt to different light requirements: amplification for organization development, job cuts for a decline in the organization etc.. Characteristic elements of an organizational structure are: position, function, hierarchical level, department, hierarchical share, and functional connexion. POSITION is a set of tasks, objectives, powers and responsibilities incumbent in regularly and one permanent employee.
FUNCTION represents all jobs with the same characteristics .So, in organization more employees can work with as head of department or head office. HIERARCHICAL SHARE is number of employees led by a directly manager. In a mid-sized or large enterprise hierarchy shares is 4-8 subordinates for positions located in the upper half of the managerial pyramid and can grow up to 20-30 subordinates, as the hierarchical level approaches the bottom.
DEPERTMENT are all employees divided into groups subordinate to the same manager.
HIERARCHICAL LEVEL represents all departments that are at the same distance from the top of hierarchical pyramid management. As hierarchical level has a lower value, the better will be more levels in that organization. As the number of hierarchical levels is greater with both the managerial pyramid is higher. As the number of hierarchical levels is smaller, so the pyramid becomes flattened. For example, Ford inherited an organizational structure with 17 vertical levels of hierarchy, and the youngest company Toyota has only 5 hierarchical levels.
FUNCTIONAL CONNEXION is necessary to integrate all functional activities. Connexions or links include: vertical, horizontal and vertical and oblique. Organizational structure with the functional integration is performed using the following concepts: authority, responsibility, delegation, centralization, decentralization and specialization. AUTHORITY managers can ensure order. Subordinate first decision you need to implement even if they sometimes have different views. RESPONSIBILITY we all know that accepting a job, is implicitly and accountability to achieve the objectives set and answer for their failure to achieve.
DELEGATION is a share transfer, for a period of time, a decision of a competent other people, at a lower hierarchical level .Superiors delegates, transferring authority to subordinates in order to facilitate the activity. Another important structure underlying an organization is FUNCTIONAL STRUCTURE which we can say that involve functions such as research and development function, production function, the function of commercial, financial accounting function and staff function.
About research and development function we can say that integrates aimed at generating new knowledge and ideas on the production and their introduction .Innovation is one of the most powerful and competitive strategies of firm .This includes activities such as: forecasting activities, research, development and innovation, implementation and evaluation of results.
Another function is the production: the company that processes inputs in order to enable the products and services to satisfy the law are basically existential demand consumers. Basically, production is the existential law firm. Function of production includes activities such as programming, scheduling and monitoring production, manufacture or use, control processes and outcomes, and repair equipment … Commercial operation is achieved in two ways: from environment to organization and from organization to external environment.
In environment first case the function performs supply material resource, energy, financial and information organization and in the latter function makes the sale and selling or offering products and services to population. Base activities of this function are supply, sales and marketing. Financial accounting function includes all activities that provide financial resources necessary to achieve business objectives and out value financial cycle of organization. In achieve this function .There are three major activities: financial activities, accounting and financial control management. FINANCIAL ACTIVITIES represents all processes which determine and obtain the necessary financial resources for firm.
ACCOUNTING objectives relate to activities which highlight the value recorded and material and financial resources management financial of organization. FINANCIAL CONTROL MANAGEMENT refers to activities which check legal compliance regarding the existence, integrity, use and storage of material goods and money which is equipped organization. PERSONNEL FUNCTION integrates activities that comprise the recruitment, hiring, training and continuous improvement staff organization. This function has activities like: evaluation of staffing, personnel selection, framing staff, performance appraisal, motivation and training personnel.
FUNCTIONAL STRUCTURE is a classical structure, characterized by aggregation of positions in homogeneous department which performs a function of the organization. For example, the entire organization is structured on the departments like: research and development department, production department, human resources, accounting department and marketing department. Efficiency potential of functional structure is achieved by specialized employees in defined areas of activities and their motivation by allowing hierarchical promotion to the top pyramid. When diversify company production very much and is distributed across many intern and international markets can begin to find problems between units responsible for carrying out various products.
Functional structure is used in centralized and remain effective as long as the field strength variations in the external environment is very slow, and if the changes are predictable. In a highly dynamic external environment that requires quick reactions from firms to adapt, functional structure behaves rigid and higher response times to changes. Some of the advantages of functional structure are: – creating conditions for specialized personnel to increase efficiency of staff capacity;-departments employees must communicate regulated. About disadvantage of functional structure:-enhancing coordination comportment difficulty because of its sequence of activities;
– some employees get work of their department rather than the benefit of the organization;-company conflicts between departments when business objectives are met, each compartment tending to exculpate.
“The functional organizational structure is characterized by the formation of groups that share similar functions”. (SCOTT HEBERT).
Other important structures underlying on organization are CENTRALIZATION and DECENTRALIZATION. Centralization is concentration in higher management authorities, in which most decisions are developed and has strong control over structural hierarchy organization. DECENTRALIZATION is granted autonomy in decision-making managers to average and lower. Centralization advantages are: control, stability, coordination, responsibility, economies of scale.
Centralization has disadvantages such as the implementation of decisions takes more time, because managers must obtain approval from all relevant authorities. Also narrow spectrum management activities. Advantages decentralization activities are: speed, flexibility, responsiveness, relevance, motivation. DECENTRALIZATION disadvantages are: diseconomies of scale; more difficult to ensure consistent practices and policies (customer might prefer consistency from location to location)
Fast-food business like Burger King and Pizza Hut use a predominantly centralised structure. Also, McDonalds is an excellent example of company with centralised structure. These restaurants are typically franchises they all receive food and packaging from the same approved vendors. All decision-making about menus and marketing are made at the corporate level in the America.
Major supermarket chain like Morrison and Tesco use a decentralised structure .Each supermarket has a store manager who can make certain decision concerning areas like staffing, sales promotion. The store manager is responsible to a regional or area manager.
Honda Motor Co. is a company with a decentralized structure.” Honda develops it’s products in the regional markets in which it operates. The company has over 500 subsidiaries and affiliates throughout the world. The company is headed by an executive council Japan, but operations are divided across six regions (Honda, 2009). This allows Honda to sell cars and motorcycles that are most suited to the preferences of each region. Additionally, the fact that Honda vehicles are manufactured in the region they are sold encourages the local population to view these vehicles more positively.”(SCOTT HEBERT).
Other models of organizational structure are product based structure, divisional structure, matrix structure, geographically structure, network structure and team structure.
PRODUCT BASED STRUCTURE is a method of identifying all products from units. Advantages: -helps to develop products or services better able to meet customer needs;-oriented staff interest and help increase motivation. Disadvantage: – may cause the creation of autonomous units that can be driven hard.
DIVISIONAL STRUCTURE is characterized by aggregation of position on the type of products. For each type of products constitute a division. It was created especially for very large companies with production facilities in different geographic areas of the same country or different countries.
For example, Suzuki has 6 large factories located in different geographical areas of Japan. Each manufacture is to produce a certain type of car or motorcycle. Divisional structure allows managerial autonomy for each main division. Advantage of this structure is that employees of a division can focus on any particular type of product and how best to meet the requirements consumers. By aggregation products, divisions are so technologically equipped better meet the quality requirements imposed on the market.
Because all employees working for proper tooth-a division of this category of consumers, work relations are converging towards common objectives, avoiding conflict relationships. For divisions located in different geographical areas, functional autonomy allows them to respond adequately local market demands. Divisional structure made an important step in the decentralization process by defining substantial autonomy to each division, which led to better adapt them to different market requirements. “The divisional structure divides the company into groups based on product, market, or region.”(SCOTT HEBERT).
MATRIX STRUCTURE has a vertical reunion of work position according to company functions and horizontal reunion of work positions according to typology product. In such a structure, an employee relates to the requirements of two heads: one vertical head (functional manager) and one horizontal head (product manager). It is a complex structure, whose effectiveness depends on the professionalism of managers and on the organizational structure which promotes well quality.
Matrix structure is indicated in organization, which have a static functional structure over a dynamic structure overlapping projects. While department heads positively correlated with their functional performance, the project heads positively correlated with duration of their projects. This structure, theoretically offers a lot of advantages, in practice, duality managerial responsibilities is also a high potential conflict. Also, because is complexity structure appear difficulties for assessing performance and identifying opportunities for quality improvement.
Several advantages of matrix structure are: – flexibility and shaping them so as to obtain maximum efficiency and better utilization of resources;- information circulates more rapidly, using both the vertical and horizontal flows of communication.
Some disadvantages of matrix structure are: the existence of several command lines may affect the dilution of responsibilities;-conflicts may occur between the desire to hold managers more authority;-although information move faster decision-making process takes longer, meetings due to be held between department managers in the decision.
GEOGRAPHICALLY STRUCTURE: organization operates in different areas, regions, countries or continents. Local manager is responsible for all activity performed by the company in his area and is subordinate to the general manager of company (head office). Advantages: -the power to decide local managers; -knowledge in detail the coordinates local-market knowledge that can be better exploited locally. Disadvantages:-differences of language and culture that could prevent the information flow;-lack of interest in promoting regional departments of new products, made at central head.
The McDonald’s business is a geographical structure, divided its operation into 5 geographical division. McDonald’s has over 31,000restaurants in 120 countries.
TEAM STRUCTURE can be implemented in companies with a high degree of decentralization. Teams are so they can make a full product. In a team, each employee must be able to perform several types of operations such as assembly teammates to be able to integrate work in making a finished product. Team structure led to decentralization advanced production and management, thus increasing the flexibility to adapt and significantly reduce response time to change.
Advantages: – workers are motivated; – response decision-making takes place in a quick time; -level management is removed:-costs are administration in reduced. Disadvantages: – conflicts between team members; – increased time spent in meetings; -time-management issues.
NETWORK STRUCTURE is based on the most advanced information technologies and the explosive development internet .Is very decentralized structure and dynamic, able to change and adapt fast.
Network structure is composite of various people or organizations, located on a large geographical area, aimed at achieving a common goal with the contribution, skills and resources. Partners in a organization have legal status and electronic connections depend on coordination of their activities.
For example, MITSUBISHI group consists of several companies (28), being joined by other members holding shares through collaborative relationships and the social links .Of MITSUBISHI group, remark 3 main companies:-MITSUBISHI HEAVY INDUSTRY (for production); MITSUBISHI BANK (for finance) and MITSUBISHI CORPORATION (for marketing).
Advantages network structure:-facilitate the achievement of objectives complex, impossible to achieve on their own.
I managed to expose previously, multiple organizational structures, each one with similarities and differences. Indifferent of the structure underlying an organization, all structure having the common goals which are favourable business itself. Each structure in part aims to reach maximum business success through efficiency and quality of work that are performed in the organization.
Cliffs Notes-Principles of Management: Five Approaches to Organisational Design.
Practical management.com-Transforming Theories Into Practice.
Scott Hebert (Mar.23 rd. 2009)-Introduction to Organizational Structure.
Scott Hebert (Jan.30th. 2009)-Market Strategy and Organizational Structure: Three Companies.
Study Notes: People Management.