Copyright © 2019 John Wiley & Sons, Inc. 4
during maturity and decline, many companies revert to functional structures. Why might
this be? (Note: you may wish to refer to Chapter 8, which outlines the main features of
the life-cycle model).
Firms that supply very different products (GE, Samsung, 3M) will always need to organize
around product divisions (see discussion of Du Pont under Q.2 above). Firms that supply more
homogeneous ranges of products (e.g. GM and Apple) can be organized either by product
division or functional department, the critical issue is this: Between which organizational
members is coordination more important: employees working in the same function (but in
different products) or employees within the same product across different functions? It
depends, in part, on the characteristics of the environment, which in turn depend on the stage
of the product life cycle. Thus, in the growth phase of the cycle, the emphasis on strategy is,
naturally, on growth. The emphasis of strategy is on developing new products, differentiating
them to appeal to groups of customers, and launching them. These activities require close
coordination between functions, coordination between products is less important. As products
mature, price competition becomes stronger, differentiation opportunities become fewer, and
the emphasis of strategy is on cost efficiency. Cross-functional capabilities such as product
development become less important, effectiveness and efficiency in functional capabilities such
as manufacturing, sales, marketing and finance become more important. At the same time,
differentiation between products becomes less evident. The implication is that functional
organizations are more closely aligned with industry key success factors. For example, once
excess capacity emerges in production and sales, then functional structures allow for the better
management of excess capacity and better allocation of capacity across products.
6. Draw an organizational chart for a business school that you are familiar with. Does the
school operate with a matrix structure (for instance, are there functional/discipline-
based departments together with units managing individual programs)? Which
dimension of the matrix is more powerful, and how effectively do the two dimensions
coordinate? How would you reorganize the structure to make the school more efficient
and effective?
An organizational chart may be drawn showing organizational units, or the job titles of the
individuals who hold positions in the organizational structure. To the extent that each
organizational unit is headed by an individual manager/coordinator, the result should be the
same.
Most business schools have some form of matrix organization. For example, the structure of
Georgetown University’s McDonough School of Business is shown below. There are two primary
dimensions of the organization: the program structure (represented by three Associate Deans
for programs; then there is the discipline or functional structure (represented by the different
academic areas, each headed by a coordinator). Faculty members are recruited into different
disciplinary areas, then assigned to teach within the different programs.
In terms of decision-making power, the discipline-based part of the structure is primary. This
reflects status (within universities professors have more status than administrators), job
security (most senior professors have tenure), and actual decision-making power. Most
strategic decisions concerning programs are taken by committees—notably the Graduate
Curriculum Committee, the Undergraduate Curriculum Committee, and the MBA Admissions
Committee—these committees are dominated by faculty and chaired by a faculty member.
Coordination between programs and the academic areas occurs in three principal ways:
• Hierarchically through the Dean.