ORGANIZATION SYSTEM,

STRUCTURE, AND CULTURE

Dr. Crazy’s Problems - 1

 Dr. Crazy left his university to open his own

management consulting firm
 The firm provides training and consulting services
on management to organizations in Hanoi
 The firm has 4 people – 2 of them are trainers and
consultants, 1 is secretary. The firm contracts out
outside trainers when needed.
 How do Dr. Crazy and his friends organize his firm
in order to run his business?
Dr. Crazy’s Problems - 2

 After 1 year, the firm has many customers

 It now has 5 trainers/ consultants and
contracts outside trainers if needed
 It also has a number of people who help with
marketing, accounting, personnel, and
administration works
 How would Dr. Crazy organize his firm?
Functional Departmentalization

• Advantages
• Efficiencies from putting together similar specialties and
people with common skills, knowledge, and orientations
• Coordination within functional area
• In-depth specialization
• Disadvantages
• Poor communication across functional areas
• Limited view of organizational goals
Figure 10.2a
Dr. Crazy’s Problems - 3

 After 5 year, the firm has a good reputation

 It now has 20 trainers/ consultants and
contracts outside trainers if needed
 It also provides different training/consulting
services - management/marketing,
financial/investment, and legal – to
organizations
 How would Dr. Crazy organize his firm?
Product Departmentalization

+ Allows specialization in particular products and services

+ Managers can become experts in their industry
+ Closer to customers
– Duplication of functions
– Limited view of organizational goals

Source: Bombardier Annual Report.

Figure 10.2c
Dr. Crazy’s Problems - 4

 After 10 years, the firm has good reputation

internationally
 It now provides these services in different
countries: Laos, Mainland China, Vietnam,
and Cambodia
 Different countries require different ways of
management: customers/ local trainers/ level
of requirements, etc.
 How would Dr. Crazy organize his firm?
Geographical Departmentalization

• Advantages
• More effective and efficient handling of specific
regional issues that arise
• Serve needs of unique geographic markets better
• Disadvantages
• Duplication of functions
• Can feel isolated from other organizational areas

Figure 10.2b
Defining Organizational Structure
 Organizational Structure
 The formal arrangement of jobs within an
organization.
 Organizational Design
 A process involving decisions about six key
elements:
 Work specialization
 Departmentalization
 Chain of command
 Span of control
 Centralization and decentralization
 Formalization
Exercise: NEU Structure

 Describe the organizational structure of NEU.

Compare the structure in 2007 and today.
 Evaluate advantages and disadvantages of
this structure
 Offer your recommendation for improvement
The Organization’s Culture
 Organizational Culture
 A system of shared meanings and common beliefs
held by organizational members that determines,
in a large degree, how they act towards each
other.
 “The way we do things around here.”
 Values, symbols, rituals, myths, and practices
 Implications:
 Culture is a perception.
 Culture is shared.
 Culture is descriptive.
Dimensions of Organizational Culture

Exhibit 3.2
Benefits of a Strong Culture

 Creates a stronger employee commitment to

the organization.
 Aids in the recruitment and socialization of
new employees.
 Fosters higher organizational
performance by instilling and
promoting employee initiative.
Organizational Culture

 Sources of Organizational Culture

 The organization’s founder
 Vision and mission
 Past practices of the organization
 The way things have been done
 The behavior of top management
 Continuation of the Organizational Culture
 Recruitment of like-minded employees who “fit”
 Socialization of new employees to help them
adapt to the culture
Three Dot.Com Companies

 How do you describe these companies’

structure, cultures?
 How do these companies develop their
cultures?
 What are the pros and cons of these
cultures?
The Old and New Ways – Examples from Three
Dot.com Companies

The old way The new way

 Security Opportunity
 Detachment Total commitment
 Hierarchy We’re all equal
 Work and fun don’t mix Pamper me
 It’s just a job It’s so much more