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Creating an Effective Organizational Structure

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What is an organization Organizational Structure Key Element of Organizational Structure Types of Organizational Structure The Classical Organizational Structure Simple Centralized Organizational Structure The Functional Organizations The Divisionalized Organizations Organizational Design Modern Organizational Design Horizontal Organizations Network Design The Virtual Organizations Matrix Organizations The Boundaryless Organizations An Introduction to the Organization (Virtual University of Pakistan) Organizational Structure Board of Governors Officers of the University Mission Statement Administrative Center and Virtual Campuses Milestone Practical Study As a Network Organization How VU Works As a Virtual Organization Merits & Demerits Conclusion Recommendations

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INTRODUCTION FIELD STUDY REPORT In this report it is discussed in the scope of Business Policy and Strategy what are the Creating Effective Organizational Structure. For preparation of this Field Study Report, in the first part theoretical part of the subject is written and then this topic is examined in a business organization. For this purpose the organization namely Virtual University selected which is mainly involved in emerging business of Online education in Pakistan.

Group of people who work interdependently toward some purpose.
A consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals.



Definition "institutional arrangements and mechanisms for mobilizing human, physical, financial and information resources at all levels of the system Utility Division of work into activities Linkage between different functions Hierarchy Authority structure Authority relationships Coordination with the environment Components Complexity Formalization Centralization


Now discuss different types of organizational structure.


The Classical Organizational Structure

Simple centralized design Functional organization Divisionalized organization

Modern organizational Structure

Horizontal Organizations Network Organizations The virtual Organization Project Design or Team Structure Matrix Organization Adhocracy The boundaryless Organization


Simple Centralized Organizational Structure

In a simple centralized organizational structure, power, decision making authority and responsibility for goal setting are vested in one person at the top. This structure is usually found in small and single-person-owned organizations. The basic requirement of a simple centralized structure is that it has only one or two functions, and a few people who are specialists in critical functions. The manager is generally an expert in all related areas of functions and is responsible for coordination. Thus, the organization has only two hierarchical levels. However, this structure has to become more complex for growth, diversification or other reasons.Organizational structure refers to formalized patterns of
interactions that link a firms Tasks Technologies People Simple structure is the oldest and most common organizational form 1. Staff serve as an extension of the top executives personality 2. Highly informal 3. Coordination of tasks by direct supervision 4. Decision making is highly centralized 5. Little specialization of tasks, few rules and regulations, informal evaluation and reward system

Functional Structure The organization is structured according to functional areas instead of product lines. The functional structure groups specialize in similar skills in separate units. This structure is best used when creating specific, uniform products. A functional structure is well suited to organizations which have a single or dominant core product because each subunit becomes extremely adept at performing its particular portion of the process. They are economically efficient, but lack flexibility. Communication between functional areas can be difficult. The most widely used structure is the functional or centralized type because this structure is the simplest and least expensive of the seven alternatives. A functional structure groups tasks and activities by business function such as production/operations, marketing, finance/accounting, research and development, and computer information systems. A university may structure its activities by major functions that include academic affairs, student services, alumni relations, athletics, maintenance, and accounting.

Besides being simple and inexpensive, a functional structure also promotes specialization of labor, encourages efficiency, minimizes the need for an elaborate control system, and allows rapid decision making. Some disadvantages of a functional structure are that it forces accountability to the top, minimizes career development opportunities, and is sometimes characterized by low employee morale, line/staff conflicts, poor delegation of authority, and inadequate planning for products and markets.


Enhanced coordination and control Centralized decision making Enhanced organizational-level perspective More efficient use of managerial and technical talent Facilitated career paths and development in specialized areas

Disadvantages Impeded communication and coordination due to differences in values and orientations May lead to short-term thinking (functions vs. organization as a whole) Difficult to establish uniform performance standards

Divisional Structure Divisional structure is formed when an organization is split up into a number of self-contained business units, each of which operates as a profit centre. such a division may occur on the basis of product or market or a combination of the two with each unit tending to operate along functional or product lines, but with certain key function (e.g. finance, personnel, corporate planning) provided centrally, usually at company headquarters. The divisional or decentralized structure is the second most common type used by American businesses. As a small organization grows, it has more difficulty managing different products and services in different markets. Some form of divisional structure generally becomes necessary to motivate employees, control operations, and compete successfully in diverse locations. The divisional structure can be organized in one of four ways: by geographic area, by product or service, by customer, or by process. With a divisional structure, functional activities are performed both centrally and in each separate division.


of general Separation of strategic and operating control Quick response to important changes in external environment Minimal problems of sharing resources across functional departments Development management talent is enhanced Disadvantages Can be very expensive Can be dysfunctional competition among divisions Can be a sense of a zero-sum game that discourages sharing ideas and resources among divisions Differences in image and quality may occur across divisions Can focus on short-term performance Divisional structure by geographic area A divisional structure by geographic area is appropriate for organizations whose strategies need to be tailored to fit the particular needs and characteristics of customers in different geographic areas. This type of structure can be most appropriate for organizations that have similar branch facilities located in widely dispersed areas. A divisional structure by geographic area allows local participation in decision making and improved coordination within a region. Divisional structure by product The divisional structure by product is most effective for implementing strategies when specific products or services need special emphasis. Also, this type of structure is widely used when an organization offers only a few products or services, or when an organization's products or services differ substantially. The divisional structure allows strict control and attention to product lines, but it may also require a more skilled management force and reduced top management control. When a few major customers are of paramount importance and many different services are provided to these customers, then a divisional structure by customer can be the most effective way to implement strategies. This structure allows an organization to cater effectively to the requirements of clearly defined customer groups. For example, book publishing companies often organize their activities around customer groups such as colleges, secondary schools, and private commercial schools. Some airline companies have two major customer divisions: passengers and freight or cargo services. Merrill Lynch is organized into separate divisions that cater to different


groups of customers, including wealthy individuals, institutional investors, and small corporations. Divisional structure by process A divisional structure by process is similar to a functional structure, because activities are organized according to the way work is actually performed. However, a key difference between these two designs is that functional departments are not accountable for profits or revenues, whereas divisional process departments are evaluated on these criteria. An example of a divisional structure by process is a manufacturing business organized into six divisions: electrical work, glass cutting, welding, grinding, painting, and foundry work. In this case, all operations related to these specific processes would be grouped under the separate divisions. Each process (division) would be responsible for generating revenues and profits. The divisional structure by process can be particularly effective in achieving objectives when distinct production processes represent the thrust of competitiveness in an industry. The Strategic Business Unit (SBU) Structure Strategic Business Unit or SBU is understood as a business unit within the overall corporate identity which is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets. When companies become really large, they are best thought of as being composed of a number of businesses (or SBUs). These organizational entities are large enough and homogeneous enough to exercise control over most strategic factors affecting their performance. They are managed as self contained planning units for which discrete business strategies can be developed. A Strategic Business Unit can encompass an entire company, or can simply be a smaller part of a company set up to perform a specific task. The SBU has its own business strategy, objectives and competitors and these will often be different from those of the parent company. As the number, size, and diversity of divisions in an organization increase, controlling and evaluating divisional operations become increasingly difficult for strategists. Increases in sales often are not accompanied by similar increases in profitability. The span of control becomes too large at top levels of the firm. For example, in a large conglomerate organization composed of 90 divisions, the chief executive officer could have difficulty even remembering the first names of divisional presidents. In multidivisional organizations an SBU structure can greatly facilitate strategy-implementation efforts. The SBU structure groups similar divisions into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer. This change in structure can facilitate strategy implementation by improving

coordination between similar divisions and channeling accountability to distinct business units. In the ninety-division conglomerate just mentioned, the ninety divisions could perhaps be regrouped into ten SBUs according to certain common characteristics such as competing in the same industry, being located in the same area, or having the same customers. Two disadvantages of an SBU structure are that it requires an additional layer of management, which increases salary expenses, and the role of the group vice president is often ambiguous. However, these limitations often do not outweigh the advantages of improved coordination and accountability. Atlantic Richfield and Fairchild Industries are examples of firms that successfully use an SBU-type structure.
The Matrix Structure

A matrix structure is the most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication (hence, the term matrix). In contrast, functional and divisional structures depend primarily on vertical flows of authority and communication. A matrix structure can result in higher overhead because it creates more management positions. Other characteristics of a matrix structure that contribute to overall complexity include dual lines of budget authority (a violation of the unity-of-command principle), dual sources of reward and punishment, shared authority, dual reporting channels, and a need for an extensive and effective communication system. Despite its complexity, the matrix structure is widely used in many industries, including construction, healthcare, research, and defense. Some advantages of a matrix structure are that project objectives are clear, there are many channels of communication, workers can see visible results of their work, and shutting down a project can be accomplished relatively easily.

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Advantages Facilitates the use of specialized personnel, equipment and facilities Provides professionals with a broader range of responsibility and experience Disadvantages Can cause uncertainty and lead to intense power struggles Working relationships become more complicated Decisions may take longer

The Boundaryless Organization

An organization that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams. The boundaryless organization seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams. And because it relies so heavily on information technology, some have turned to calling this structure the Tform organization.

Network Design
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The network design goes beyond even horizontal structure and totally abandons the classical, hierarchical, functional structure of organizations. The bureaucratic model worked fine in the previous era when there was less competition and more stable market conditions, and before the now boundaryless conditions of advanced information technology and globalizations.

Firm such as Ford is not just redesigning in the Greenfield sense or rediscovering and extending their past. Instead they are undergoing efforts to disaggregate and partner. In the network approach, the firm concentrate on where it can add the greatest value in the supply chain and it outsourcers to upstream and/or downstream partners who can do a better job. This network of the firm and its upstream and downstream partners can be optimally effective and flexible. An other network approach is to require internal units of the firm to interact at market prices.

The Virtual Organization

In a virtual world (such as Second Life) organization is understood as planned, coordinated and purposeful action of human beings and computer In order to construct and/or compile a common intangible product or service to its community. Just as "an organization in sociology" this action is usually framed by formal membership and form (institutional rules). As in Second Life an organization is usually used for making money (i.e. Power Products inc. - or like in World Of Warcraft: the clan Farmers Organization-) and security, some are also wicked and evil organizations- usually called griefer/troller groups/organizations such as the Pirates of Tibia that roams Tibia. Many fail to realize that Wikipedia is a wiki, and thus subject to the review and editing of others, and also that they will be aware of any slander put upon them in this medium. These would not be classified as organizations in the "real world" because they are not truly "alive". Some organizations in Virtual Worlds have a very important roles in Real Life activities. Some of these "clans" exist between virtual worlds, sometimes migrating between them, as newer versions of software come out, or games better suited to the system of clans. Some games, such as the aforementioned World of Warcraft and Dungeon Siege have extensive clan systems, consisting of hundreds of members. This gives rise to entire "mini societies", where you can buy and sell equipment, using real world or virtual money. In structural terms, the virtual organization is highly centralized, with little or no departmentalization. The prototype of the virtual structure is todays movie making organization. Now a days most movies are made by a collection of individuals and small companies who come together and make films project by project. When a large organization use the virtual structural, they frequently use it to outsource manufacturing. Cisco, for instance, is essentially a research and development company that uses outside suppliers and independent manufacturers to assemble the internet routers that its engineers design. The virtual organizations have created networks of relationships that allow them to contract out manufacturing, distribution, marketing, or any other business function for which management feels that others can do better or more
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cheaply. The virtual organization stands in sharp contrast to the typical bureaucracy that has many vertical levels of management and where control is sought through ownership. In such organizations, research and development are done in house, production occurs in company owned plants, sales and marketing are performed by the companys own employees. To support all this, management has to employ extra staff, including accountants, human resource specialists, and lawyers. The virtual organization however outsource many of these functions and concentrate on what it does best. A virtual organization Different from traditional mergers and acquisitions, the partners in the virtual organization share costs, skills, and access to international markets. Each partner contributes to the virtual organizations what it is best at its core capabilities. Briefly summarized. Here are the key attributes of the virtual organization:

Informational networks will help far-flung companies and entrepreneurs link up and work together from start to finish. The partnerships will be based on electronic contracts to keep the lawyers away and speed the linkups.

Partnerships will be less permanent, less formal, and more opportunistic. Companies will band together to meet all specific market opportunities and, more often than not, fall apart once the need evaporates.

No Borders
This new organizational model redefines the traditional boundaries of the company. More cooperation among competitors, suppliers, and customers makes it harder to determine where one company ends and another begins.

These relationships make companies far more reliant on each other and require far more trust than ever before. They share a sense of codestiny, meaning that the fat of each partner is dependent on the other.

Because each partner bring its core competence to the effort, it may be possible to create a best of every thing organization. Every function and process could be world classsomething that no single company could achieve.
A Project-type organization

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When a management uses teams as its central coordination device, you have a horizontal organization or a team structure. The primary characteristics of the team structure are that it breaks down departmental barriers and decentralizes decision making to the level of the work team. Team structure also require employees to be generalists as well as specialists. In smaller companies, the team structure can define the entire organization. For example Whole Foods Market, Inc. the largest natural food grocer in the United States, is structured entirely around teams. Every one of Whole Foods stores is an autonomous profit center composed of an average of 10 self managed teams, each with a designated team leader. The team leaders in each store are a team, store leaders in each region are a team, and the companys six regional presidents are a team. More often, particularly among larger organizations, the team structure complements what is typically a bureaucracy. This allows the organization to achieve the efficiency of bureaucracys standardization while gaining the flexibility that team provide.

I visited the virtual campus Wah Cantt and meet the Advisory Committee.

The Virtual University, Pakistans first University based completely on modern Information and Communication Technologies, was established by the Government as a public sector, not-forprofit institution with a clear mission: to provide extremely affordable world class education to aspiring students all over the country. Using free-to-air satellite television broadcasts and the Internet, the Virtual University allows students to follow its rigorous programs regardless of their physical locations. It thus aims at alleviating the lack of capacity in the existing universities while simultaneously tackling the acute shortage of qualified professors in the country. By identifying the top Professors of the country, regardless of their institutional affiliations, and requesting them to develop and deliver hand-crafted courses, the Virtual University aims at providing the very best courses to not only its own students but also to students of all other universities in the country. The Virtual University of Pakistan holds a Federal Charter, making its degrees recognized and accepted all over the country as well as overseas.
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The University opened its virtual doors in 2002 and in a short span of time its outreach has reached over sixty cities of the country with more than a hundred associated institutions providing infrastructure support to the students. Pakistani students residing overseas in several other countries of the region are also enrolled in the University's programs. The launch of university is a historical milestone for Pakistan in the field of higher education. It is expected to have a great impact on the socio-economic growth of Pakistan. The idea of the virtual university of Pakistan is to extend affordable, quality higher education to all areas of Pakistan, based on the existing telecommunication infrastructure. The feasibility study for the establishment of a virtual IT university (VITU) was carried out in 2001 and it quickly evolved into the project proposal for the virtual university of Pakistan, which was designed to be a full-fledged university, not limited to any particular field. The Govt. has put it as a high priority project in its policy. As the name indicate, the virtual university delivers education with a modern approach, it combines broadcast television and the internet to deliver quality education. The driving force behind the concept of virtual university is the lack of IT faculty in particular and other fields in general, at any academic institution in Pakistan. This severely compromises the quality of education being imparted. Additionally, quality staff is only present at a few very highly ranked intuitions where, access is not easy and the cost of education is out of reach for the common man. Virtual university of Pakistan collects the scattered intellectual resources on a single platform, and then makes their expertise available to students across the length and breadth of the country as well as to students overseas, all at a very affordable cost.


Chancellor General Pervez Musharraf, Nishan-i-Imtiaz (Military),

Tamgha-i-Basalat President, Islamic Republic of Pakistan The Board of Governors is the apex body of the University, responsible for the general supervision and control of administrative, academic and financial affairs and the power to lay down the policies of the University. The Rector is the Chief Executive and academic officer of the University whose responsibility is to ensure that the provisions of the Virtual University Ordinance, the Statutes, the Regulations and Rules are faithfully observed in order to promote teaching, research, administration, general efficiency and good order of the University. Authorities of the University include the Executive Council, the Academic Council, the Boards of Studies, the Advanced Studies and Research Board, the Selection Board, the Finance and Planning Council and the Affiliation Committee. Officers of the University include the Registrar, the Director Finance, the Controller of Examinations and the University Auditor.

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Secretary, Ministry of Information Technology Govt. of Pakistan Chairman, Highier Education Commission Rector, Virtual University of Pakistan Secretary, Ministry of Information and Media development Secretary, Ministry of Education Chairman, National Telecommunications Corporation Mr. Justice (Retd.) Fazal Karim Dr. S.M Junaid Zaidi, Rector, COMSATS Institute of information Technology Dr. Farid Malik, Chairman, Pakistan Science Foundation Mr. Zaheer Aslam Kidvai, CEO, Beyond Information Technology Solutions Mr. Naveed A. Khan, Country Manager, ABN-AMBRO Bank Registrar, Virtual University of Pakistan

Chairman Member Member Member Member Member Member Member Member Member Member Secretary


Dr. Naveed A. Malik Mr. Tajdar Aslam Dr. Sadaqat Mehdi Mr. Abrar A. Khan Dr. Naveed A. Malik Dr. Shafaat Bokharee Rector MD Virtual Television Network Registrar Director Finance Rector Director Administration

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Vu will provide world-class education at an affordable cost across the length and breadth of the country through a uniform education environment without differentiating between large cities and smaller towns. VU will offer academic programs that are equivalent or better in content and quality to those offered by leading institutions of higher education in the country. VU will admit students solely on the basis of their educational qualifications regardless of race, color, gender, religion, disability, geographical location or their age. VU will provide its students with a rich and challenging educational experience that fosters their personal growth and supports their transition to responsible adulthood in a rapidly shrinking world. VU will integrate liberal studies and professional education to give its graduates both breadth and specialization. VU will give its graduates an education that enables them to comprehend the complexity and dynamic of cotemporary global processes and empowers them to guide those processes in constructive directions.


The virtual university of Pakistan has established one Administrative center which acts as the hub, coordinating all activities of the university. This administrative center houses the management as well as the basic electronic infrastructure for the activities of VU. This includes, but is not limited to, servers, communications equipment, control development work stations, CD writers and print media duplication facilities, as well as full fledged state of the art digital television broadcast station alongwith its associated studios. The VU has established its own virtual campuses at Sukkur, Ghotki, and Dera Ghazi Khan and more are being established in all four provinces as well as in the capital area. With the participation of existing public and private sector institutions, an annual enrollment capacity of over 20,000 students is anticipated. The virtual campuses are equipped with state of the art multimedia projectors and screens, multimedia equipped personal computers in a LAN configuration as well as UPS and generators. The LANs are interfaced to the internet, thereby allowing VU students to gain immediate access to the on line learning environment. Video equipment to receive television broadcasts and display via multimedia projectors is also provided. The VU has also established Private Virtual Campuses (PVCs) in collaboration with its private sector partners in over 65 cities of the country. The PVCs are equipped with the latest computers and uninterrupted internet connectivity. The campuses also have audio-visual lecture theaters to receive television broadcasts. VU students attend lectures in electronic classrooms at these centers, where lectures delivered over broadcasts television are screened. The formal class room equipment allows students to participate in active discussion groups and enjoy a campus-like atmosphere which is quite a contrast to the normally isolated traditional e-learning environment. Adult mentoring and guidance is also provided by the management of these virtual campuses.

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Initial funding released by Government of Pakistan President of Pakistan inaugurates the Virtual University Classes of first cohort of students start Federal Charter granted by Government of Pakistan Virtual University starts broadcasts over its own TV channels University starts lecture recordings in its own studios Launch of MCS, MIT and MBA programs Launch of two new channels VTV3 & VTV4 VU becomes Asia-Pacific Broadcasting Union (ABU) Member VU Agreement with Ujala TV Dubai Launch of BA, BCom and BBA programs Launch of MS program in Computer Science November, 2001 March 23, 2002 March 25, 2002 September 11, 2002 June 15, 2004 July 1, 2004 March, 2006 September 25, 2006 November 07, 2006 November 30, 2006 September, 2007 September, 2007

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NETWORK ORGANIZATION How VU Works (way of education)?

The Virtual University of Pakistan delivers education through a judicious combination of broadcast television and the Internet. VU courses are hand-crafted in meticulous detail by acknowledged experts in the field. Lectures are then recorded in a professional studio environment and after insertion of slides, movie clips and other material, become ready for broadcast. Course lectures are broadcast over free-to-air television and are also made available in the form of multimedia CDs. They can also be made available as streaming media from the Virtual Universitys servers. The multiple formats allows for a high degree of flexibility for students who may view the lectures at a time of their choosing within a 24-hour period. Additionally, students can use the lectures to review an entire course before their examinations a facility simply not available in the conventional face-to-face environment. In addition to the prescribed texts, comprehensive reading material / lecture notes in the form of web-enabled content are provided through a comprehensive Learning Management System (LMS) hosted on the VU Web Servers and accessible over the Internet. The full power of hyperlinks is utilized for making the on-line experience a truly powerful one. The LMS also provides an e-mail facility to each and every student as well as discussion boards for interaction within the VU community. An important feature of the LMS is a Question/Answer board where VU faculty provides answers to questions posed by students on the subject matter covered in the lectures. The Question/Answer board (also known as the Moderated Discussion Board) is extremely fine grained, providing separate sessions for each lecture of each course. In addition, read-only access is made available to previous question/answer sessions and this constitutes an extremely useful study resource for students. VU faculty monitors this board on a continuous basis and answers to student questions are provided within a short space of time. Assignments are handed out through the LMS and also submitted by the students through the same mechanism. Pop-quizzes and practice tests are also conducted through the LMS.
Midterm and Final Examinations for every semester are conducted in a formal proctored environment at exam centers designated for the purpose throughout the country. Invigilators appointed by the University conduct the exams. The formal examination atmosphere assists in critical quality assurance of the student assessment system.

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Virtual University of Pakistan is working as virtual. It has an excellent telecommunications network with a redundant fiber-optic backbone. A high priority project of the Govt. is the Pakistan Education and Research Network (PERN), which is being laid down to interconnect universities and allow them to share academic content as well as provide a convenient platform for collective research. VU being the predominant provider of electronic academic content in Pakistan is making its assets available over this intranet to its sister institutions in the country, in addition to their availability to VU students over the internet. VU is also expanding its operations by offering professional development courses as part of its contribution to continuing education.

Virtual University of Pakistan delivers education through a judicious combination of broadcast television and the Internet.

VU provides world-class education at an affordable cost across the country. VU is offering academic programs that are equivalent or better in content and quality
to those offered by leading institutions of higher education in the country.

VU admit students solely on the basis of their educational qualifications regardless of

race, color, gender, religion, disability, geographical location or their age.

VU provides computer and internet facility to all the students at their campuses. Lecturers can be listened again and again from CDs.


Some VU campus have not computer facility for all the students. VU campus have not still established through out the country. There is not facility of competent consultant person at the regional campuses.. Students can not describe their problems through net. CDs of the lecturers are not available easily. Every student require personal computer to listen the lecturers and performing other relating work

VU is gaining popularity across the country, and hence university has to establish campuses throughout the country.

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VU should establish regional campuses across the country. University should depute a competent/qualified person at the regional campuses for consultancy. . University should provide prior training to the students regarding internet, assignments and examination procedure. Availability of computers to every students should be confirmed at the regional campuses.

Reference: WEB SITE:

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