Group yourselves in 5 groups (10 members) to

accomplish the following:

1. Creative and knows how to draw

2. Can edit a video presentation
3. Can share and sell a thing in 1 minute
 I need a
volunteer
Choose 1 classmate that can do the ff:

1. Creative and knows how to draw

2. Can edit a video presentation
3. Can share and sell a thing in 1 minute
Organizational Design include the processes and integrating mechanisms necessary to
ensure that boundaries among internal activities and external parties such as supplieRs,
customers, and alliance partners, are flexible and permeable.

National Health Service (1948) - health care for all British citizens
§ Hospital Services
§ Family Doctors, Denstists, Opticiand, & Pharmacists
§ Local Authority Health Services, including Community Nursing

Problems:
q breakdown in communication
q using first-class delivery

Results:
q In 2001, wasted 18M British Pounds (30M US Dollars) in catering
“a whole culture of management which is deficient”
- Dr. David James
Lead, Conservative Party's Investigation

An evidence of staff having learned procedures rather than think for themselves

Or could it be an indication of culture of sticking to the job description and not worrying
abouts costs that may be incured in the process?

Underlying cause of NHS's problem was its inability to

establish close and effective working relationship
between its internal departments.
>>Traditional Forms of Organizational Structure
Structures are designed to ensure that resources are used effectively toward
accomplishing and organization's mission.

Balancing two conflicting factors:

1. Need for the division of tasks into meaningful groupings
2. Need to integrate such groupings in order to ensure organizational
effeciency and effectiveness
PATTERNS OF GROWTH OF LARGE CORPORATIONS
SIMPLE STRUCTURE
- typically increases its sales revenue and
volume of outputs over time

FUNCTIONAL STRUCTURE
- to concentrate efforts on both
increasing effeciency and enhancing its
operations and products

DIVISIONAL STRUCTURE
- business expands in terms of sales
revenues, and domestic growth
opportunities become somewhat limited,
it seek opportunities in international
markets

MATRIX HOLDING
- tries to overcome the inadequacies
inherent in other structures (functional +
divisional)
PATTERNS OF GROWTH OF LARGE CORPORATIONS
SIMPLE STRUCTURE
- typically increases its sales revenue and volume of outputs over time

FUNCTIONAL STRUCTURE
- to concentrate efforts on both increasing effeciency and enhancing its operations and
products

DIVISIONAL STRUCTURE
- business expands in terms of sales revenues, and domestic growth opportunities become
somewhat limited, it seek opportunities in international markets

MATRIX STRUCTURE
- a company structure in which the reporting relationships are set up as a grid, or matrix,
rather than in the traditional hierarchy. In other words, employees have dual reporting
relationships - generally to both a functional manager and a product manager.
PATTERNS OF GROWTH OF LARGE CORPORATIONS

SIMPLE STRUCTURE
PATTERNS OF GROWTH OF LARGE CORPORATIONS

FUNCTIONAL STRUCTURE
PATTERNS OF GROWTH OF LARGE CORPORATIONS

DIVISIONAL STRUCTURE
DIVISIONAL STRUCTURE
**Strategic Business Unit (SBU) Structure
divisions in similar producrs, markets, and/or technologies are
grouped into homogenous groups in order to achieve some
synergies

**Holding Company
Structure (conglomerate)
appropriate when the businesses
in a corporation's portfolio do not
have much in common
PATTERNS OF GROWTH OF LARGE CORPORATIONS

MATRIX STRUCTURE
INTERNATIONAL OPERATIONS: IMPLICATIONS FOR
ORGANIZATIONAL STRUCTURE

Primary types of structures:

• International division
• Geographical-area division
• Worldwide functional
• Worldwide product division
• Worldwide matrix
INTERNATIONAL DIVISION

This structure is built to handle all international

operations by a division created for control. It is
often adopted by firms that are still in the
development stages of international business
operations.

Advantages
• International attitude gets the attention of top
management
• United approach to international operations

Disadvantages
• Separates domestic managers from their
international counterparts
• Difficulty in ideating and acting strategically
and in allocating resources globally

source: www.tutorialspoint.com
GEOGRAPHICAL/GLOBAL AREA DIVISION

Global area division structure is used for

operations that are controlled on a geographic
rather than a product basis. Firms in mature
businesses with select product lines use it.

Advantages
• International operations and domestic
operations remain at the same level
• Global division managers manage business
operations in selected geographic area
• Ability to reduce cost per unit and price
competitively

Disadvantages
• Difficult to align product emphasis in a
geographically oriented manner.
• New R&D efforts are often ignored, as sale in
mature market is where the focus is.

source: www.tutorialspoint.com
WORLDWIDE/GLOBAL FUNTIONAL DIVISION

This structure is to primarily organize global operations

based on function; product orientation is secondary for
firms using global function division structure.
GLOBAL FUNCTIONAL DIVISION
Advantages
• It emphasizes on functional leadership, centralized-
control, and leaner managerial staff
• Favorable for firms that require a tight, centralized
coordination and control over integrated production
mechanisms
• Helps those firms that need to transport products and
raw materials between geographic areas

Disadvantages
• Not suitable for all types of businesses. Applicable to
only oil and mining firms
• Difficult to coordinate manufacturing and marketing
processes
• Managing multiple product lines can be challenging, as
production and marketing are not integrated.

source: www.tutorialspoint.com
WORLDWIDE/GLOBAL PRODUCT DIVISION

Global product divisions include domestic divisions that

are allowed to take global responsibility for product
groups. These divisions operate as profit centers.

Advantages
• Helps manage product, technology, customer diversity
• Ability to cater to local needs
• Marketing, production, and finance gets a coordinated
approach on a product-by-product, global basis

Disadvantages
• Duplication of facilities and staff personnel within
divisions
• Division manager gets attracted to geographic
prospects and neglects long-term goals
• Division managers spending huge to tap local, not
international markets

source: www.tutorialspoint.com
WORLDWIDE MATRIX DIVISION
(Mixed Matrix)

This structure combines global product, area,

and functional arrangements and it has a
cross-cutting committee structure.

Advantages
• Can be designed to meet individual needs
• Promotes an integrated strategic
approach tailored to local needs and
priorities

Disadvantages
• Complex structure, coordinating and
getting everyone to work toward
common goals becomes difficult.
• Too many independent groups in the
structure
source: www.tutorialspoint.com
GLOBAL START-UPS: A NEW PHENOMENON

LOGITECH INC.
GLOBAL START-UPS: A NEW PHENOMENON

business organization that from inception seeks to derive

significant competitive advantage from the use of resources
and the sale of outputs in multiple countries.

*uses input from around the world and sell around the world

Involves higher communication, coordination, &

transportation costs
HOW AN ORGANIZATION'S STRUCTUE CAN INFLUENCE
STRATEGY FORMULATION

ü division of tasks
ü appropriate patterns of information flow
ü need for integration of activities
ü authority relationships within the organization

Challenges:
• structure is in place, it is difficult and expensive to change
• modify their duties and responsibilities
• may not welcome disruption associated with transfer to new location
• costs in hiring, training, & replacing executive, managerial, & operating personnel