ORGANIZATION Group 6 Contents 2 ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ What Is Organization? Organization Of A Pharmaceutical Company Organization Structure & Design Typology Of Organization Structures Formal And Informal Organization Centralization And Decentralization Typology of Organization Structures Project Organization Matrix Organization Designing Organization For Future Expansion 3 WHAT IS ORGANIZATION? ORGANIZATION OF A PHARMACEUTICAL COMPANY - Syeda Komal Fatima 06331613011 4 WHAT IS ORGANIZATION “An organization is the group of people with specific responsibilities acting together for specific purpose determined by the 5 ORGANIZATION OF A PHARMACEUTICAL COMPANY ▸ Business Goals ▸ Organizational Structures ▸ Core Functions 6 BUSINESS GOALS The Key Business Goal of the company is to create financial value for the shareholders. Other Business Goals include: Discover & develop beneficial products Bring to market products to improve human health Improve quality of life around the world Patient satisfacti on Reduce the overall cost of health care 7 ORGANIZATIONAL STRUCTURES The two most important issues when deciding how to organize a pharmaceutical company are: Personnel ▸ Individuals in the organization. Functions ▸ Activities that must be accomplished to achieve the company’s goals. 8 ORGANIZATIONAL STRUCTURES Common organizational structures of a pharmaceutical company include: Functiona l Structure ProductOriented Structure Matrix Structure 9 FUNCTIONAL STRUCTURE ▸ This organizational structure is present to some extent in most major pharmaceutical companies. ▸ Each function within the company is organized separately. ▸ Each function reports to a specific function/department head. 10 PRODUCT-ORIENTED STRUCTURE ▸ This structure organizes a company into self-contained business units focused on specific products, therapeutic areas, customers, etc. (e.g., Prilosec, Gastrointestinal Business, Hospital Products, etc.). ▸ Major advantages: individuals are expert in their specific business and have clear and full responsibility for all aspects of their business. ▸ Major disadvantages: individual expertise is limited to one area and there is duplication of functions (and expenses) that could be centralized. 11 MATRIX STRUCTURE ▸ Incorporates both the Functional and Product-Oriented structures. ▸ Recognizes business interdependencies and may offer greater flexibility than other structures. ▸ Is now the most common structure in the Pharmaceutical Industry. 12 CORE FUNCTIONS ▸ Regardless of ▸ All functions ▸ The quality of interaction the have specific organizational key structure, responsibiliti between functions strongly influences certain functions must exist. es. company performance. 13 ORGANIZATIONAL STRUCTURE AND DESIGN - Muhammad Saadullah Khan 06331613014 14 ORGANIZATIONAL STRUCTURE ▸ Organizational Structure refers to the differentiation and integration (quality of the state of collaboration for achieving unity) of activities and authority. ▸ An organization structure specifies the various job tasks and shows how them same are formally divided, grouped, and coordinated. ▸ It provides an appropriate framework for authority relationship. It indicates the hierarchy of authority and the reporting relationships. 15 ORGANIZATIONAL STRUCTURE ▸ Choice of an organization’s growth strategy is determined by three basic factors (contingency factors): 1. The organization’s size 2. Technology used by the organization (for converting the financial, human and physical resources into products and services) 3. Environmental uncertainty (external environment) 16 ORGANIZATION DESIGN ▸ Organization design aspects broadly include how the organization is structured, the types and numbers of jobs, and the processes and procedures used to: ▹ ▹ ▹ ▹ ▹ ▹ ▹ handle and pass information make decisions produce results manage quality communicate information plan, develop and manage resources innovate and handle crises 17 PURPOSE OF ORGANIZATION DESIGN ▸ ▸ ▸ To support the organization’s strategy. To arrange resources in the most efficient and effective way. To provide for the effective division of tasks and accountabilities among individuals and groups. ▸ To ensure effective co-ordination of the organization’s activities and clarify the decision-making processes. ▸ To enhance and elucidate the lines of communication up, down and across the organization. 18 PRINCIPLE OF GOOD ORGANIZATION DESIGN The various parts The number of The span of control will vary of the structure levels in the should be divided structure, nature of the into specialist sometimes jobs and the according to the organization, but areas. These referred to as specialist areas the scalar chain, so narrow that it need to be should be as few results in a it should not be structure with interlinked. as possible. too many levels, or too broad to allow effective management. 19 PRINCIPLE OF GOOD ORGANIZATION DESIGN(CONT.) ▸ The extent to which the organization should be centralized or decentralized will need to be determined by reference to a number of factors. ▸ These include the ▹ nature and type of ▹ geographical dispersion ▹ history, environment ▹ resources available industry 20 ENVIRONMENT AND ORGANIZATIONAL DESIGN Environmental Complexity ▸ ▸ Environmental complexity is an Dynamism ▸ Dynamism relates to the stability estimate of the magnitude of the or instability of the problem. environment. This is identified by three main factors: ▸ It is presumed that when the task and environmental uncertainty a) Environmental Richness contingency is low, the b) Environmental Interdependence mechanical structure is used and c) Uncertainty and Volatility when the task and environmental uncertainty contingency is high, an organic structure produces high effectiveness. 21 SRATEGY AND ORGANIZATION DESIGN - Farwa Shahid 06331613030 22 STRATEGY AND ORGANIZATION DESIGN “Organizational strategy refers to the way the organization positions itself in its’ setting in relation to its stakeholders, given the organization’s resources, capabilities, and mission.” 23 ▸ These are in terms of cost focus and product focus. ▸ According to Michael Porter, companies need to differentiate and place themselves differently from their competitors in order to build and sustain a competitive advantage ▹ Low Cost ▹ Differentiation ▹ Focused 24 TYPES OF ENVIRONMENT 25 ORGANIZATIONAL EFFECTIVENESS It is the ability Effectiveness & It is of two efficiency in an of a manager to effectively organization is determined by the no. of people a supervise a number of people. types:- manager can effectively handle. ▸ Wide Span ▸ Narrow Span 26 TYPOLOGY OF ORGANISATION STRUCTURES ▸ ▸ ▸ ▸ ▸ ▸ ▸ Product Organization Structure/ Divisional Geographic structure Market structure Hybrid Structure Formal and Informal Organization Centralization and Decentralization Vertical Structure 27 TYPOLOGY OF ORGANISATION STRUCTURES ▸ ▸ ▸ ▸ ▸ ▸ Horizontal Organization Project Organization Matrix Organization Mechanistic and Organic Structures Line Organization and Line and Staff Organization Functional Organization Structure 28 TYPOLOGY OF ORGANISATION STRUCTURES - Ameena Tur Rasool 06331613033 29 TYPOLOGY OF ORGANISATION STRUCTURES ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ ▸ Product Organization Structure/ Divisional Geographic structure Market structure Hybrid Structure Formal and Informal Organization Centralization and Decentralization Vertical Structure Horizontal Organization Project Organization Matrix Organization Mechanistic and Organic Structures 30 LINE ORGANIZATION ▸ Line organization is the simplest form of organization structure. ▸ The primary emphasis in the line organization is upon the superior-subordinate relationship. ▸ It is based on the scalar principle, which states that authority and responsibility should flow in a direct line vertically from the highest level of the organization to the lowest level. ▸ ▸ Advantages ▸ ▸ Disadvantages It facilitates decision making and execution because there is a defined authority at each level of the hierarchy. If a wrong decision is made at the top level, the same is carried our simply without anybody down the line venturing to point out its deficiencies. 31 LINE ORGANIZATION STRUCTURE 32 DIVISIONAL ORGANIZATION 33 GEOGRAPHICAL STRUCTURE Organization that Companies that are spread over a market products wide area may find globally sometimes advantages in organizing along geographical lines structure. In addition, experience so that all the division is often activities excellent training region are managed together. advantages of structure are ▸ Serve local needs better ▸ Positive competition ▸ More effective communication between firm and local customers adopt a geographic gained in a regional performed in a Some of the for management at higher levels. 34 PRODUCT ORGANISATION STRUCTURE / DIVISIONAL STRUCTURE “This form of organization structure is adopted by large companies producing a wide range of products. Here, the activities are grouped on the basis of the individual products manufactured by the company. The organization structure of a large multi-product 35 PRODUCT ORGANISATION STRUCTURE / DIVISIONAL STRUCTURE Advantages ▸ ▸ One of the advantages of the product Disadvantages ▸ The main disadvantage of the organization is that it enables product organization is that each diversification of the products to product division may promote its take place with minimal effort. own product group. Another advantage is that it can cope better with technological change by grouping people with expertise and their specialized equipment in one major unit. ▸ It creates problems to other product division of the company. 36 - FORMAL AND INFORMAL ORGANIZATION CENTRALISATION AND DECENTRALISATION VERTICAL STRUCTURE HORIZONTAL ORGANIZATION - Arooj Shahid 06331613067 37 FORMAL AND INFORMAL ORGANIZATION ▸ The formal organization structure refers to a structure of clearly defined jobs, each bearing a definite amount of responsibility and authority. ▸ The formal organization lays down formal procedures, rules and regulations, which guide the behavior of individuals performing these jobs. ▸ The informal organization is the outcome of social interaction that takes place between the individuals of the formal organization. ▸ It serves as a useful channel of communication and it lightens the workload of the management, if the latter gives due importance to the informal workgroups. 38 CENTRALISATION AND DECENTRALISATION Centralized Decentralized ▸ It refers to concentration of decision making at a single point in the organization. ▸ In a decentralized organization, action can be taken more to quickly to solve problems. ▸ In contrast, when the top management gives maximum, though not complete, discretion to the lowerlevel personnel in the organization to make decisions, then it can be said that there is decentralization in the organization. ▸ More people provide inputs into decisions. ▸ Large companies prefer to make organizations more flexible and responsive, so there has been a marked change towards decentralized decision making. 39 DECENTRALISATION ▸ Advantages 1. It can contribute to staff motivation by enabling middle and lower-level managements to get a taste of responsibility, and by encouraging the use of knowledge, innovation, and initiative by all employees. 2. It reduces the burden of the top management by freeing them from many operational decisions. ▸ Disadvantages 1. It requires greater coordination by senior management. 2. Decentralization does require a plentiful supply of capable and well-motivated managers, who are able to cope with increased responsibility which decentralization brings about. 40 VERTICAL STRUCTURE “ A vertical organization is that in which the size of the hierarchal chain of command is long i.e., the number of hierarchal levels are high.” 41 VERTICAL STRUCTURE ▸ Advantages 1. They provide better communication of the organization’s mission, values, and goals to all employees. 2. These organizations have the ability to sustain a very of specialization of functions and roles. ▸ Disadvantages 1. The scope for initiative and risk taking at operational levels becomes limited. 2. Too many hierarchal levels consume more time for communication and the same may lead to delays in decision making. 42 HORIZONTAL STRUCTURE Horizontal The horizontal The vertical hierarchy is structures are structure created around facilitates the use of three to five core cooperation, supervision. This flattened due to is done by processes for the teamwork, and time rather than customer fragmented tasks, traditional orientation rather eliminating work combining the that fails to add departmental than a functional functions. orientation. value, and by cutting to the minimum activities within each 43 - PROJECT ORGANIZATION MATRIX ORGANIZATION DESIGNING ORGANIZATION FOR FUTURE EXPANSION EMERGING CONCEPT OF ORGANIZATION STRUCTURE EMERGING STRUCTURES - Ayesha Sabir 06331513021 44 PROJECT ORGANIZATION ▸ When an organization takes a big project, it creates organizations for the completion of the same. ▸ A project organization is separate from and independent of functional departments of the company. ▸ It is headed by a Project Manager; every project organization consists of a team of specialists drawn from different functional areas of the company or from outside. 45 MATRIX ORGANIZATION ▸ It combines two forms of departmentalization— functional and product. ▸ Employees of the matrix have two heads; Functional Departmental Managers and their Project Manager. ▸ The Project Manager is responsible for the output (product) of the project. ▸ The project teams comprise of employees (specialists) drawn from different functional departments such as the; ▹ ▹ ▹ ▹ Human Resources Finance Production Marketing 46 MATRIX STRUCTURE OF A FIRM 47 DESIGNING ORGANIZATION FOR FUTURE EXPANSION ▸ ▸ ▸ ▸ ▸ ▸ ▸ Non-hierarchic organization Flexible & loose nature of organization Streamlining of operating processes Localized planning and decision making Elimination of middle level management Adaptable structure Focus on Multiple Skills and broad job description 48 EMERGING CONCEPT OF ORGANIZTION STRUCTURE The modern It will allow Organization Structure should organization rapid changes in should reap design and with shared benefits of product & rapid values, beliefs be integrated and assumptions standardization responses to and at the same market demands. time give processes greater flexibility. the employees enjoy. 49 EMERGING STRUCTURES VIRTUAL ORGANIZATION BOUNDARY LESS ORGANIZATION NETWORK ORGANIZATION LEARNING ORGANIZATION FLAT STRUCTURES INVERTED PYRAMID TASK FORCES 50 THANKS!