ORGANIZATION SYSTEM,
STRUCTURE, AND CULTURE
Dr. Crazy’s Problems - 1
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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
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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
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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
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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
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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
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Organizational Structure
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The formal arrangement of jobs within an
organization.
Organizational Design
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A process involving decisions about six key
elements:
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Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
Exercise: NEU Structure
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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
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Organizational Culture
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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.”
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Values, symbols, rituals, myths, and practices
Implications:
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Culture is a perception.
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Culture is shared.
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Culture is descriptive.
Dimensions of Organizational Culture
Exhibit 3.2
Benefits of a Strong Culture
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Creates a stronger employee commitment to
the organization.
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Aids in the recruitment and socialization of
new employees.
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Fosters higher organizational
performance by instilling and
promoting employee initiative.
Organizational Culture
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Sources of Organizational Culture
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The organization’s founder
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Past practices of the organization
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Vision and mission
The way things have been done
The behavior of top management
Continuation of the Organizational Culture
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Recruitment of like-minded employees who “fit”
Socialization of new employees to help them
adapt to the culture
Three Dot.Com Companies
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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
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The old way
Security
Detachment
Hierarchy
Work and fun don’t mix
It’s just a job
The new way
Opportunity
Total commitment
We’re all equal
Pamper me
It’s so much more