Divisional structure

1. Multidivisional Structure

2. Functional Organisation
1840’s great wave of organisational
change
Telegraph
Continuous process manufacturing: mass
manufacturing
Appearance of rail road: most significant

3. Functional Organisation
(Contd.)
Sizable administrative organisation required
Set of managers to supervise functional activities
over an extensive geographical area
Command of middle and top executives to
monitor, evaluate and co-ordinate
First natural rail road links: 50 miles
“complex” contracting required
Decentralised line and staff organisation

4. General Motors
Durant’s regime
Primarily oriented to selling
Buying plants and integrating them with the
sales system
General office not more that 2-3 personal
assistants

5. Crisis of 1920 at GM
Sales plummeted and Durant resigned
Sloan structure
Objective
Line of authority throughout extensive
operations and
Coordinate each branch of service

6. Principles of Reorganisation
Responsibility attached to each Chief
Executive in no way be limited
Certain central organizational functions are
absolutely essential to the logical
development and proper control of the
corporation’s activities
Example
Distribution of financial and accounting functions
between VP and division head

7. Implementation
Defining division boundaries
Policy on interdivisional billing
ROI became the basic criterion for
appraisal

8. Development of Statistical and
Financial Controls
Uniform accounting procedures
Periodic forecasting of demand
Cash deposited in specific a/cs with
sole control of general office
Periodic demand forecasts by outsiders

9. Defining Role of the Advisory
Staff
Coordinate, appraise and plan policy
Interdivisional Committee with a
permanent secretary and office to
reduce line - staff friction
Final decisions by either operating
divisions or executive committee

10. GM had a Market Share of
48% by 1940

11. Microsoft in 1999 -
Decentralisation
Eight new divisions – revenue & profit goals
Business enterprise divn: corporate customers
Home & retail divn: home applications, children
Business productivity group: knowledge workers
Sales and support group: ISP, small business, etc.
Developer group: tools for corporate programmers
Consumer & commerce group: via web portal
Consumer windows divn: make PC user friendly
Microsoft research: basic research
“I am running my own little company”

12. Matrix Orgn. Structure
Combining functions and products
Functional form
Pooling and Sharing of Specialised
Resources
Co-ordination Difficult

13. Matrix Orgn. Structure
(Contd.)
Product form
Facilitates co-ordination among specialists
Clear responsibility
Duplication of specialists
Disadvantages
Confusion/ Conflict
Power struggle

14. Canadian
Division
Mexican
Division
United
State
Division
French
Division
British
Division
Chemicals
Product
Group
Consumer
Goods
Product
Group
Automobile
Product
Group
North American Area European Area
Individual Business Division
Global
Matrix
Struc-
ture