According to Bateman and Snell, “Two fundamental concepts around which organizations are structured are differentiation and integration” (2011, pg. 227). Differentiation refers to the different units that work on different kinds of tasks with the use of different skills and work methods in an organization. These differentiated units are combinedand coordinated into an overallproduct for the purpose of achieving the organization’s mission as the result of integration. The two fundamental concepts indicate how the organization separates into key components and how the organization works together between the different components.
Along with these fundamental concepts, an organization must examine the organizational functions and organizational design of the company. This examination is included into the process of selecting an organizational structure to suit the organization based on the functions and design. Therefore, an organization must address specific organizational functions and an organizational design in accordance to the appropriate organizational structure to achieve the organization’s mission.
Organizational Structures Comparison There are vertical and horizontal organizational structures that refer to the way in which power is distributedwithin a system directed towardthe achievement of the organizational aims. Fred Meyers is a unique regional retailer with a strong vertical and horizontal structure resulting from a system of each division divided into individual departments and sections within the stores. This system implements the fundamental concept of an organizational structure called differentiation.
The most striking characteristic of this system is that there are no store managers instead the highest authorities are department managers whocommand the front linesof the company (Smith &Albaum, 2005). These characteristics of Fred Meyer’s system incorporate vertical and horizontal organizational structures. The company consists of a decentralized organization with lower-level managers making important decisions as a result of a vertical structure and the divisional structure in consolidating units around products as a result of a horizontal structure.
Apart from Fred Meyer’s organizational structures, there are two different organizational structures including the matrix and network structures that are only a few out of the other organizational structures available. The matrix structure involves teams of employees reporting to multiple superiors, whereas the network structure consists of outsourcing to other organizations in collaboration on a good or service (Bateman & Snell, 2011).
In comparison to the matrix and network structures, this decentralized organization with the divisional structure empowers the authority of department managers and reduces outsourcing business functions with their system of individualized departments and sections. Although these are other organizational structures available, Fred Meyer selected decentralization and divisional structures appropriate to the organization’s mission. Along with theses organizational structures, there are organizational functions that influence and determine the appropriate organizational structure for an organization.
Organizational Functions Evaluation Organizational functions are the activities performed in an organization such as marketing, finance, human resources, and operations. There are several functional approaches with potential advantages through evaluation of the external factors to implement solutionsthrough the functions of an organization. On the merchandising side, Fred Meyer coordinates buyers within each department to develop marketing plans, displays, and advertising for the products purchased.
This functional approach impacts the marketing and operations of products in individual departments to enhance the product and services offered. Through the dozens of merchandise sections within these departments, the company is able to offer customers one-stop shopping convenience in addition to the company operating a dairy, bakery, kitchen, and photo plan. These functional approaches incorporate the fundamental concept of integration with combining and coordinating products and services to offer the consumers one-stop shopping (Smith &Albaum, 2005).
This type of marketing and operational trategiesprovides the company an advantage in multiple areas of business while contributing to the organization’s direction and mission. Fred Meyer’s organizational structures are effective in the company’s strategy of seeking competitiveness by enabling each department and each product division in response to the local competition with marketing and operational strategies. The position of the company is measuredby concepts of awareness, use, share, and competitive evaluation in determining the appropriate organizational structure to achieve the goals of the organization.
This position of the company impacts the organizational functions in accordance to the organizational design and organizational structure. The operational and marketing functions performed by Fred Meyer reflect qualities of the organization geared toward the appropriate organizational design to achieve the direction of the company. Organizational Design Results The organizational design provides the framework of the core qualities in an organization to achieve the organization’s mission such as geographic, functional, customer-based, product, service, hybrid, matrix, marketing channels, and departmentalization.
Through an organizational design, the organizational functions and organizational structure evolve from the advancement and direction of the company. This process starts with the focus and mission of the organization to layout the appropriate organizational design. Fred Meyer is geared toward thinking like a customer to figure out what customers want and providing the best possibleprice resulting in the type of organizational design focused on departmentalization. There are different types of departmentalization including product, customer, and process of activities in addition to the core qualities of an organization.
The product departmentalization design of the company is identifying their competitive position against other retail stores on a department-by department basis in providing the best possible price. Next, the customer departmentalization design of the company is evaluating the demographic profiles of the customers to implement thinking like a customer. Then, the process departmentalization design of the company is examining how and why customers shop within different departments to focus on the requirements of product, service, and customer (Smith Albaum, 2005). These types of departmentalization contribute to the organizational design and the organizational functions focused on Fred Meyer’s mission of thinking like a customer through products and service provided. Since the mission of Fred Meyer is thinking like a customer, the selection process of the organizational structure will require incorporating the organizational design and organizational functions surrounding the mission of the company.
Therefore, the organizational design and the organizational functions are compiledinto the organizational structure of an organization geared toward the company’s direction of success. Conclusion All in all, the organizational structure incorporates the evaluation of organizational functions and the organizational design requirements to achieve an organization’s mission. There are two fundamental concepts associated with organizational structures including differentiation and integration.
Fred Meyer’s system of separating each division into individual departments and sections within the stores displays the fundamental concept of differentiation. The marketing and operational functional approaches of the company display the fundamental concept of integration with combining and coordinating products and services to offer one-stop shopping. Through the process of determining an organizational structure, Fred Meyer analyzed the departmentalization organizational design to focus on the company’s mission of thinking like a customer.
In addition to achieving the company’s mission, Fred Meyer was able to determine an organizational structure with the appropriate organizational functions and organization design advancing the company to achievement. This selection process becomes vital for a successful organizational structure with the supporting organizational functions and an organizational design implemented into moving toward the direction of the company exceeding in the business environment.