structural implication - Strategic Management

Structural implication

1. STRUCTURAL IMPLEMENTATION

2. STRUCTURE Structure refers to how the workers within a business are organised and how they relate to each other. Structure defines how activities such as task allocation, coordination and supervision are directed toward the achievement of organizational aims. An organisation structure specifies three key components that are enumerated below: 1. It identifies the relationships between the number of steps in the hierarchy and the span of control of managers. 2. It specifies the grouping of individuals into departments and of departments into total organisation . 3. It consists of plan of activities in order to ensure effective communication, harmonization and integration of goals and objectives across departments.

3. KINDS OF STRUCTURE Vertical Structure Horizontal Structure

4. VERTICAL STRUCTURE Process of Differentiation Involves Division of Labor and Specialization. Dominates: SPECIALISED TASKS HIERACHY OF AUTHORITY RULES AND REGULATION VERTICAL COMMUNICATION CENTRALISED DECISION MAKING EMPHASIS ON EFFICIENCY

5. -continue Also called as Tall structure . Best suited for standardized products and services in large volumes . Established technologies, wide market, seeking customer on undifferentiated items .

6. HORIZONTAL STRUCTURE Process of Integration among members in an organization, cross functional systems and teamwork . Dominates: SHARED TASKS. FLEXIBLE RULES AND REGULATION. HORIZONTIAL COMMUNICATION. DECENTRAILISATION DECISION MAKING. EMPHASIS ON LEARNING.

7. -continue Its also called lean and mean organization or flat structure. Liberal exchange of information among different layers and across departments . On Negative side, such structure has loss of control and high cost in coordination .

8. STRUCTURE AND STRATEGY Research conducted by Chandler proposes structure follows strategy for economic efficiency. There is a 2 way relationship among the strategy and structure. Strategy determines how the organization structure has to be formed. And structure influences present strategy implemented and in future STRATEGY STRUCTURE DETERMINES AFFECTS

9. STAGES OF DEVELOPMENT OF ORGANISATION STAGE I: Organization are Small scale enterprise CHARACTESTICS:- Single Owner Simplicity In Objective , Operations and Management . Termed as Entrepreneurial Strategy is generally Expansion type.

10. -continue STAGE II: Organization bigger than Stage I CHARACTERSTICS:- Functional Specialization or Process Oriented. Strategy ranges from stability to expansion

11. -continue STAGE III: Organization is Large and widely scattered CHARACTERSTICS:- Units or Plants at different places. Each units is linked to its Headquarters but functionally Independent. Divisions on functional forms for particular needs. Strategy is much the same stability or expansion.

12. -continue STAGE IV: Organization are most complex. CHARACTERSTICS: Generally Large, Multi-Plant, Multi-Product organization. Cooperate Headquarters provided strategic directions and policies Division formulate business level strategies.

13. TYPES OF ORGANISATIONAL STRUCTURES 1. ENTREPRENEURIAL STRUCTURE: Elementary form of structure. Organization owned and managed by one person. Typically organization serving single business, product, or serve local markets. Owner looks after all decisions, day to operations of strategic nature. Owner- manager Employees

14. -continue ADVANTAGES OF ENTERPRENEURIAL STRUCTURE Quick Decision- Making Timely response to environmental changes. Informal and simple organization systems. DISADVANATGES OF ENTERPRENEURIAL STRUCTURE Excessive Reliance Many divert attention. Increasing Inadequate for future requirement if business expands.

15. -continue 2. FUNCTIONAL STRUCTURE: Functional structure seeks to distribute decision making and operational authority towards each CEO Public Relation Legal Finance HRM Production

16. -continue BENEFITS OF FUNCTIONAL STRUCTURE Efficient Distribution of work through Specialization . Delegation of day to day operational functions. Provides time for top management to focus on strategic decisions. DISADVATAGES OF FUNCTIONAL STRUCTURE Creates difficulty in Coordination –Functions Create only narrow specialization. Leads to conflicts among Line, functional and staff.

17. 3. DIVISIONAL STRUCTRUE In divisional structure work is divided on basis of product lines , type of customers served and geographical area covered. Each separate divisions or units are created and placed under divisional-level management under which functional structure may still operate. ADVANTAGES OF DIVISIONAL STRUCTURE Enables grouping of Functions. Generate Quick Response Enable top management to focus on strategic matters.

18. -continue DISADVANTAGES OF DIVISIONAL STRUCTURE Problems in allocation of resource Inconsistency arising from sharing of authority between cooperate and divisional level CEO Cooperate Legal Cooperate Finance General Manager Div B General Manager Div A HRM Marketing HRM Marketing

19. 4. SBU Structure Strategic Business Unit Defined as “any part of a business organization which is treated separately for strategic management purpose ”. SBU created due to difficulty in top management to exercise strategic control over a division. ADVANTAGES OF SBU STRUCTURE Establishes coordination between divisions. Facilitates strategic management and control of large, diverse organization. Fixes accountability at level of distinct business units.

20. DISADVANTAGES OF SBU STRUCTURE There are too many different SBUs to handle effectively. Difficulty in assigning responsibility. Addition of another layer after cooperate and divisional management. CEO GROUP HEAD GROUP HEAD DIV B DIV A DIV A DIV B

21. 5. MATRIX STRUCTURE In large organization, there will handling more than one project. For each project or product will be strategically significant. Such kind of structure is created by assigning functional specialists to special projects or new product or service. During the duration of project specialists from different areas form group or team reporting to a team leader. These specialists will be working under there project and in their parent department simultaneously

22. ADVANTAGE OF MATRIX STRUCTURE Allows individual specialists to be assigned; in accordance on their talent. Foster creativity on diverse talents. Provides good exposure to specialists in general management. DISADVAVANTAGE OF MATRIX STRUCTURE Dual accountability creates confusion among employees. Requires a high level of vertical and horizontal contribution. Shared authority may create communication problems.

23. 6. NETWORK STRUCTURE Its is also called as ‘ Spider Web Structure’ or ‘Virtual organization’ Network structure is ‘composed of a series of project groups or collaboration linked by constantly changing non-hierarchical, cobweb like network.’ Structure is highly decentralized and organized around customer groups or geographical regions. Core organization is only shell a shell with one small headquarter acting as ‘broker’ for integrating suppliers and specialized functions performed by autonomous teams or workforce. Applicable for organization facing continues changes in environment, require quick response, high level of adaptability and strong innovation skill

24. ADVANTAGES OF NETWORK STRUCTURE High Level of Flexibility Permits Concentration on core competencies of firm. Adaptability to cope with the changes in environment. DISADVANTAGE OF NETWORK STRUCTURE Loss of Control and lack of coordination as there are several partners. Risks of Overspecialization. High cost of duplication of resources could exist.

25. OTHER TYPES OF STRUCTURE PRODUCT BASED STRUCTURE COSNSUMER BASED STRUCTURE GEOGRAPHICAL STRUCTURE INTRAPRENURIAL STRUCTURE

26. PRODUCT BASED STRUCTURE Grouping of activities on basis of product or product lines. Such a need arises when the strategy adopted requires exclusive attention to a group of products or product. Benefits includes optimum use of specialized skills and equipment's, increase coordination and enables fixation of responsibility for profit making and usages of resource Product based structure can only classified if sales of product line is so large enough to create an optimum use of resource and skills.

27. CUSTOMER BASED STRUCTURE Created on the basis of customer groups served; separate and distinct customer groups Advantages includes employment of marketing orientation to serve customers, better use of skills, especially in marketing and quick response to changing customer needs. Its applicable only if volume of individual customer group justifies separate divisions.

28. GEOGRAPHICAL STRUCTURE This type of structure evolves in expansion and diversification. Multi plant or Multi unit organization dispersed geographically in such type of structure Advantages includes: Decentralization to a local level Use of local available resource and raw materials. Such kind of organization applicable only if there is high coordination among different units with corporate deparememnt .

29. INTRAPRENEURIAL STRUCTURE Combination of 2 words internal and entrepreneur. In contrast to entrepreneur, here the inside the boundary of an organization the employee is paid to involve new ideas, products or services for evoking entrepreneurial capabilities. Resources are allotted for further developments of innovation in developing new venture. Advantages includes motivating for highly qualified individuals, to bring creativity and innovation Major disadvantage would be position to risk time and resource if projects are not successful.