Reminders



C & C Grocery case will be in your mail files by
the end of the week.
University Art Museum revisions are due by
2:00 PM on Monday.
Aquarius Advertising case is due by 2:00 PM on
Monday. Think carefully about possible
structural changes. Don’t jump to conclusions
about appropriate structures simply as a
function of what you have read most recently.
Review of last week
What is structure?
 What influences the structure chosen?
 What are the options for structuring work?

– Functional Structures
– Task forces and task teams for coordination
– Divisional Structures
What are the characteristics, advantages
and disadvantages of functional/divisional
structures?
 Questions?

Understanding and Managing
Organizational Structure: B
BA 152
From last week’s discussion
Functional structures work well when the
environment demands efficiency.
 Divisional structures work well when the
environment demands responsiveness.

But what happens if . . .

The environment demands both
efficiency and responsiveness?
Other approaches to putting
organizations together
Hybrid Structures
 Matrix Structures
 Horizontal/Team Structures
 Network/Network/Virtual Structures

A Hybrid Organization
President
Domestic Sales
Vice-President
Manufacturing
Director
Manufacturing
Domestic
Manufacturing
International
Manufacturing
Vice-President
Engineering
International
Sales
Vice-President
Research & Dev.
Vice-President
Finance & Acct.
Building a Hybrid Organization
President
Finance &
Accounting
Personnel
Vice-President
Eastern Region
Director
R&D
Director
Manufacturing
Director
Marketing
Vice-President
Southern Region
Vice-President
Northern Region
Vice-President
Western Region
Same as East
Same as East
Same as East
A Matrix Organization
CEO
Prod. Director
Prod. A
Prod. B
Prod. C
MFG
ENG
MKT
F&A
Characteristics of Matrix
Structures
1. Individuals or work units can have a
combination of functional and divisional
assignments.
2. Methods and procedures will change by
assignment.
Characteristics of Matrix
Structures
3. Shared control and decision making
between functional and divisional leaders
4. Dual reporting relationships and balance of
power needed for success
Characteristics of Matrix
Structures
5.
Competitive in dynamic environments
requiring responsiveness and efficiency
A Matrix Organization-NASA
CEO
Program Director
Shuttle
Mars
Space
Station
Propulsion
Engineer.
Flight Cont.
Operations
A Matrix Organization
CEO
Program Director MFG
Prog. A
Prog. B
Prog. C
ENG
MKT
F&A
A Matrix Organization
CEO
Country Director MFG
USA
Canada
Mexico
ENG
MKT
F&A
Kenan-Flagler Business School
Matrix Structure
DEAN
Management Accounting Finance
UDG
DB
MBA
DB
MAC
PhD
DB
Exec. Ed.
DB
Marketing Operations
Can you imagine a 3-D
Matrix Organization?
Function
Country
Product
Matrix Structures
Advantages & Disadvantages

Advantages

– Can meet dual
environmental demands
– Flexible use of resources
– Relatively quick reaction
times
– Good training for both
generalists and specialists
Disadvantages
– Lose some economies
of scale
– Difficult to maintain
balance of power
– Having two bosses can
be stressful
– Conflict resolution can be
time-consuming
– Requires talented
management
Matrix Structure
What happens when the economy goes bad?
CEO
MFG
ENG
MKT
F&A
Matrix Structure
What happens when the economy looks good?
CEO
Project. Director
Proj. A
Proj. B
Proj. C
Top Management Team
Horizontal/Team Structures
Process
Owner
Research
Product
Planning
Testing
NEW PRODUCT DEVELOPMENT
Process
Owner
Identification
Execution
Integration
MERGERS & ACQUISTIONS
Process
Owner
Purchasing
Material
Flow
Distribution
SUPPLY CHAIN MANAGEMENT
Characteristics of
Horizontal/Team Structures
1.
2.
3.
4.
Organized around cross-functional core
processes
Self-directed teams are the basis for the
design of the organization.
Focus must be on the “customer” of the
process.
Requires non-traditional organizational
culture.
Horizontal/Team Structures
Advantages
1.
2.
3.
4.
5.
Rapid response to changes in customer demands
Focus is on delivering value to the customer.
Employees have a broader view of organizational
goals.
Promotes focus on teamwork/collaboration
Improves quality of work-life for employees
Horizontal/Team Structures
Disadvantages
1.
2.
3.
4.
5.
Identifying core processes can be difficult.
Requires major changes in most organizational
systems and culture.
Requires managers to give up power/authority.
Requires significant training for employees.
Can limit in-depth skill development
Kenan-Flagler Business School
Horizontal/Team Structure
Process
Owner
Admissions
Internships
Placement
DEAN
ADMISSIONS & PLACEMENT
Process
Owner
BSBA
MBA
PHD
CURRICULUM DEVELOPMENT
Process
Owner
Research
Support
Service
Support
Teaching
Support
FACULTY DEVELOPMENT
A Modular/Network/Virtual/ Structure
Designers
Producers
Corporate Headquarters
Suppliers
Distributors
Kenan-Flagler Business School
Modular/Network/Virtual Structure
Admissions
Placement
DEAN’S OFFICE
Facilities
Faculty
A Modular/Network/Virtual Structure:
Advantages
1. Small organizations can obtain talent and
assistance from anywhere.
2. Organization can “ramp up” without huge
investments in facilities.
3. Increases organization flexibility and
responsiveness.
4. Reduces administrative overhead costs.
A Modular/Network/Virtual/ Structure:
Disadvantages




Little hands-on control of “partners”
Expenses of establishing monitoring systems
Reduced partner-employee loyalty
Weakened corporate culture, if you can talk
about a corporate culture at all.
Is It the Wrong Structure?
How can you tell?
1) If we replaced the people, would the
problems remain?
2) Is the firm inefficient or inflexible?
3) Are decisions made too late?
4) Are decisions of poor quality?
5) Is there too much conflict between units?
Next Time:
Aquarius Advertising Agency