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FACULTY OF SCIENCE AND TECHNOLOGY

SEMESTER JAN / 2012


BBPP 1103 - PRINCIPLE OF MANAGEMENT

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Table of contents
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1.0 INTRODUCTION... 3

2.0 TYPES OF ORGANISATIONAL STRUCTURE. 4
2.1 Functional Structure... 5
2.2 Geographical Structure... 11
2.3 Matrix Structure ..... 15
2.4 Product Structure.... 20

3.0 SUMMARY ... 25
References












INTRODUCTION

An organization able to be described as management structure that determine
relationships between functions and positions, and subdivides and delegates roles,
responsibilities, and authority to carry out defined tasks in a section or department.
Organizations able to be seen regardless in large or small scale and old or new concept,
organization should be solid, permanent, and orderly structured.
Modern organizations are more structured and hierarchical as compared to
conventional one. Organizations are observed to exist with various structures. As pointed out
by Mohr (1982, pp. 102103), the early theorists of organizational structure, Taylor, Fayol,
and Weber had seen vital of structure for effectiveness and efficiency and assumed if there is
no any issue rise on the current structure , people could fashion and adapt accordingly.
Meanwhile in the 1930s, the rebellion began which defined as human relations theory, no
more people should be treated as the artifact, but rather an advocacy of the creation of a
distinguish sort of structure, one in which the requirements, knowledge, and opinions of
employees might be given greater recognition towards an organization.
Nevertheless, a different view arose in the 1960s, recommending that the
organizational structure is "an externally caused phenomenon, an outcome rather than an
artifact." (Mohr, L. B, 1982). This explains organization may build by the influenced of the
environment regardless specific or general issue. In the 21st century, organizational theorists
such as Lim, Griffiths, and Sambrook (2010) are proposing that organizational structure
development is very much dependent on the management strategies and the workers as a
limitation by the power and authority distribution between them, and influenced by their
environment and the outcome.
In the new centuries, many organizations are designed as hierarchies, with each
manager reporting to one and only one manager at the next higher level. Within the
hierarchical structure, there is substantial variation in the number of levels and in the set of
activities grouped together. The several groupings are pertaining to organization such as
functional, product, matrix, geography and customer. For instance, other organizations may
apply a matrix structure in which each low-level manager reports to two or more superiors.

In the 21st century, parts of organizations are not purely employed hierarchical
structures, many management are still prone to practice the existence of the flat community
structure within their organizations (Butler Jr., J.K., 1986, p.5). For functional hierarchy,
departments were distributed into styling, engineering, manufacturing, research, public
relations, and personnel division (Sloan 1963, p. 190).





































2.0 TYPES OF ORGANISATIONAL STRUCTURE

Generally, organizational structures are able to be described based on the type of
departmentalization. It means the different organizational units which the division of system
and organization that is responsible to resolving the duties given. Differentiation of task or
activity into separate segments is called departmentalization. Briefing about grouping tasks in
different departments or it can be defined as division of work. The functions reflect the nature
of the business. The advantage of this type of grouping is obtaining efficiencies from
consolidating similar specialties and people with common skills, knowledge and orientations
together in common units. There are several types of departmentalization that being applied in
most of the organization in Malaysia which are functional, product, matrix geographical and
consumer. Each type of departmentalization will be described as below:























2.1 Functional structure:



Figure 1.0: Functional Departmentalization example
Departmentalization by function organizes by a group of people who have similar
skills which has its own functions and objectives to be performed. The functions reflect the
nature of the business. The advantage of this type of grouping is obtaining efficiencies from
consolidating similar specialties and people with common skills, knowledge and orientations
together in common units.
Functional departmentalization indicates grouping activities by functions performed.
Activities can be grouped according to function (work being done) to pursue economies of
scale by placing employees with shared skills and knowledge into departments for example
human resources, IT, accounting, manufacturing, logistics, marketing, and engineering.
Functional departmentalization can be used in all types of organizations. Figure 1.0 illustrates
departmentalization by function.




Figure 1.1 Sourced by: Error! Hyperlink reference not valid.

According figure 1.1, this organization involves in developing and implementing
departmentalization by function. In this case, managing director is a top level management
followed by business management, corporate function, human resources management and
operations as a middle level management. Business management as marketing department is
responsible to project BASF PETRONAS Chemicals' manufactured products (OMP) around

the world. Management for corporate functions is divided by three sections. This department
responsible for accounting and financial, information technology related services to the
various constituents of the business and acquires goods and services through world class
procurement of raw materials, technical goods & services and packaging. Human resources
management recovers all areas related with recruitment of employees, including delegates
from BASF and staff seconded from PETRONAS. Meanwhile, operation management is
responsible to apply procedure, technique and specialist knowledge required in a certain task.
This management can be categorized as technical division.



Figured 1.2 - Sourced by: http://www.mpc.gov.my/home/?cont=ds&item=d3

The Malaysia Productivity Corporation (MPC) known as the National Productivity
Corporation which is a cooperative project between the United Nations Special Fund and the
Federal Government, with the International Labour Organisation acting as its executing
agency. Based on figure 1.2, development, measurement and certification management were
put together in a line of authority to provide value-added information on productivity, quality,
competitiveness and best practices through research activities and databases. In addition,
MPC also is responsible to develop human capital and organizational excellence for building
a knowledge-based society through training, systems development and best practices.

WINTRAD INDUSTRIES SDN BHD

Figure 1.3 - Sourced by: http://www.wintrad.com.my/chart.htm
The management is illustrated in figure 1.3, WINTRAD INDUSTRIES SDN BHD
which known as a professional company in designing, manufacture and supply of Low
Voltage Switchgear. As a top level management, managing director as well as general
manager is responsible to be as an advisor and negotiator for new tender and role as a leader
for this organization. Middle level management, manager for each functions are responsible
as a spokesperson to general manager and managing director from lower level management

and as a leader for lower level management to ensure the organization move towards
achieving its objectives. Manufacturing division, sales and marketing division, finance and
administration division as a lower level management responsible to focus on objectives
organization and controlling work daily to ensure achieve organization target.






Figure 1.4 - Sourced by: http://www.murata.com.my/Portal/MMEPortal.nsf/dx/organization-structure.htm

Murata Electronics (Malaysia) Sdn. Bhd.(MME) is an overseas subsidiary of Murata
Manufacturing Co. Ltd. in Japan. The objective of the organization is solely on production
base and sales footing of the Murata Group in Malaysia and Southeast Asia. According figure
1.4, managing director as a top level management responsible as figurehead entertaining his
clients and act as channel for communication between his department and outside his
organization. There are divided by seven department management for implementation, this
section responsible carry out time planning and effectively organize the sources and
information.


2.2 Geographical structure:


Manager





South region North Region Central region


Figure 2.0 Geographical Structure example
A geographic structure is typically found in companies with operations in large region, such
as national or international organizations. Each location will have its own internal structure and
management, allowing them to conduct business activities in certain geographical locations. The
advantage of this structure is most beneficial in international locations, where companies need help
in transitioning their operations to specific international markets. In addition the organization can
organize effective and efficient to the requirements of the specific market and advantage to market
to different countries.
Other than that, the organization can reduce of costs management to allocate any
organization to entire location. The disadvantage for the geographical structure is the organization
difficult to make centralized of decision-making. This difficult will be arising in coordinating between
department as the departments in geographic structure cause of location far from each others.
Manager must give responsibility to another authority to take actions and improve organization
rather than giving a directive from the head of organizations.










Figure 2.1 - Sourced by : http://www.cosway.com.my/
COSWAY (M) Sdn Bhd is a Malaysian-based is multi-level network marketing. They began
their operations in December 1979. It is a simple concept of distributing quality product and unique
network marketing system. Concept for the business, to allocate the hundreds of COSWAYs
stockiest centre throughout the country which ensure that there will always be a centre close to
where you work or live via a network. Today, it has grown to become one of Asias, Brazils and
Mxicos largest network marketing companies. The consumer product related home care, personal
care, food, auto care, healthcare and fashion.








Figure 1.2 - Sourced by: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence
According figure 2.2, Samsung Electronics has a total 196 subsidiaries around the world
including production subsidiaries, sales subsidiaries, distribution subsidiaries and research
laboratories. Samsung Electronics produce the product of consumer electronics, semiconductor,
telecommunication, digital media and digital convergence technologies. In this organization,
management is the ability to react effective and efficient within the scope of requirement and more
important when the products and services that are produced are marketed to different countries.
Samsung global network also includes one global headquarters in Korea and nine regional
headquarters in North America, Europe, China, Southeast Asia, Southwest Asia, Latin America, CIS,
Middle East, and Africa.





Figure 2.3 - Sourced by: http://renchin.com/?tag=7-eleven
7-Eleven operating as a franchise, is the world's largest operator, franchisor and licensor of
convenience stores. Private labels for 7-Eleven are slurpee and big gulp. In addition, 7-Eleven would
come to own or operate several brands of food and concepts. Concept for the business, operating in
24 hours per day and easy for customer to buy any food and beverages located in any places. The
main objectives for the organization are to fulfill the needs of customers.





2.3 Matrix Structure:


Figure 3.0 Matrix Structure example
As above illustration figure 3.0, the matrix structure defined as a product manager (A
until D) can report more than two different of managers. The type of this structure combines
two or more types of departmentalization at the same time. For example, in this organization,
product manager A has to produce the sample product which is ordered from design vice
president. When the product has been produce, product manager A must report the progress
of the product to three of vice president from manufacturing, marketing and controller to
evaluate cost of the product and customer satisfied.
Advantage for matrix structure, the organization can manage effective and efficiency
in a large scale production. Furthermore, organizations can achieves synchronization
necessary to meet dual demands from customer, easy to make decisions and frequent changes
in unstable environment. Apart from that, matrix structure provides opportunity for both
functional and product skill development and exceptional for medium size organization with
multiple product to produce.
The disadvantage of this matrix structure is employees must have excellent
interpersonal skills and extensive training to conduct the big projects that have many phases
to be completed. This situation can make conflict of authority and confusing among
employees to make report more than one supervisor and managers. Besides from that, the

matrix structure will not functioning unless participants understand it and adopt collegial
rather than vertical-type relationship.


Figure 3.1 - Sourced by: http://www.townplan.gov.my/english/image/service_regionalplan_chart.jpg
Based on figure 3.1, this is the chart of organization department of town country
planning in peninsular Malaysia, Ministry of Housing and Local Government. The objective
for this department requires the setting up of a Regional Planning Committee (RPC) for a
region in an area consisting of two or more States. Example for matrix structure determined in
regionals planning committee secretariat department and projects of national priority
department, those lower-level management have to report more than one supervisor or
manager.










Figure 3.2 - Sourced by: http://www.chemlab.com.my/organization.asp
Chemical Laboratory or CHEMLAB is a member of the KAM Holdings Group of
Companies. The objectives this organization to specializing in many aspects of scientific and
technology services in this part of the world. This requires technical people excellence in
assisting its clients to operate extra optimally and profitably, even as complying with existing
and future government regulations. Figure 3.2 shows the matrix structure able to be
implemented by regions manager to report two or more different managers. As an example,
Johor and Kuching region managers must report to quality assurance manager, senior
manager, sales manager and quality director.








PERUNDING DMA SDN BHD

Figure 3.3 Sourced by: http://www.pdma.com.my/ver1/?mobj=001&mact=content&pid=14
According figure 3.3, PERUNDING DMA SDN BHD was incorporated on 1st August
1995 in Kuala Lumpur, and the objective for the organizations is a chartered quantity
surveyors consultant firm. The matrix structure for this organization interconnected with low
level management. As a professional surveyor consultancy firm, most of surveyor related to
each other to make right decision to preparation tender report and tenders document. Human
relations skill needed to build long term relationships and increase the number of clients who
value the services we provide to their business and their success.














Figure 3.4 - Sourced by: http://www.snia.org/about/organization/staff/org_chart
The missions for this organization to association with local industry to developing and
achieve standards, technologies, and educational services to authorize organizations in the
management of information. Via looking at the figure 3.4, even though they implement the
departmentalization by function, in certain cases, they are also applying matrix structure as
well. For instance, by referring to business services director which is indicate in orange box,
the membership manager is not only able to report to his director, he can report directly as
well to the executive director. Besides, the Marketing Programs and Design Manager also can
have an interconnection with the Online Programs and Website Manager






2.4 Product Structure:




Company
ABC





Shampoo Toothbrush Facial Wash

Figure 4.0 Product Structure example
The intention for product structure is to focus of producing a product and services.
Based on figure 4, the organizations have to produce three different products with three
different structure organizations. Employees in different units that is responsible to
accomplish the duties given. In such an arrangement, the top manager of the product group
typically has considerable autonomy over the operation.
The advantage of this type of structure is that the personnel in the group can focus on
the particular needs of their product line and become experts in its development, production,
and distribution. A disadvantage, at least in terms of larger organizations, is the duplication of
resources. Each product group requires most of the functional areas such as finance,
marketing, production, and other functions. The top leadership of the organization must
decide how much redundancy it can afford.





Figure 4.1 Sourced by: http://www.berjaya.com/corporate-structure.html
Tan Sri Dato' Seri Vincent Tan Chee Yioun as a owner The Berjaya Corporation
Group, with a total employee strength of 16,000. In figure 4.1, the Group is a diversity in a
consumer product, financial services, hotels and recreation development, property investment
development, gaming and lottery development, food and beverages, technology development
and investment holdings. By the nature of their businesses, Berjaya encouraged its staff to
share their skills and talents in accomplish organization objectives. Beneficial for Berjaya
Corporation Berhad organization allows to expand their experience and expertise, related to
the overall activity of the product and services.







Figure 4.2 Sourced by: http://thinking-brands.blogspot.com/2010/09/nestle-brand-portfolio.html
Family branding or corporate branding in word of Nestle is attached all the brands in
all categories. Figure 4.2 illustrates, every food product meets the needs of customer demands.
In this era, customer more likely to buy the product based on branding name and not
compromise on price. Advantages for the product, if customers constantly to use the nutrition
products for their child, customer will continuously used the next level product to make them
satisfy if the company has a well managed product portfolio.






Figure 4.3 - Sourced by: http://www.terusmaju.com.my/chart.html
Teras Maju Services Sdn Bhd actively involved in the transportation bus industry.
Main service for this organization, to provide transportation as a factory buses for their
clients. Refers illustration figure 4.3, specialist employees develop that are well trained to
provide specific services for buses maintenance. Advantage for the organization, no cost rises
to hire external expertise to service the buses maintenance.








Figure 4.4 - Sourced by: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence
Refer figure 4.4, Samsung Electronics is worldwide supplier in consumer electronics.
There are the largest technology company in the world, Samsung is guided by a simple
philosophy, strong values and high ethical standards that authority of departmentalization.
The most important for the organization, the line authority and staff authority have
cooperation to each other to ensure the effective and efficient of an organization.




SUMMARY

This study attempts to explain organization structure based on rationalization
coordination of interactions among activities. Many organizations are designed as hierarchies,
with each manager reporting to one and only one manager at the next higher level. Therefore,
the function of organization structure is work arrangement by division or management to
individual or grouping intended for achievement of an organizations objectives. The
important potency to accomplish organizational structure is organizational strategies, size of
organization, technology and environmental factor.
Combination between people, hierarchies and system may recognize as a
departmentalization. Departmentalization can be described as a distribution of work and
employees to different organizational units that are responsible for resolving the duties given.
There are few types of departmentalization had been applied by variety of companies. It can
be observed through their types of organization chart. As above mentioned, those types of
structure are functional, geographical, matrix and product base.
Functional structure is the most common type departmentalization whereby it is quite
straight forward in coordinating the interactions between top management and each specific
department representative which is normally department managers. This typical structure
allows one company to have in depth knowledge and skills on each function. However, there
is still some limitations if they are facing with global and environment changes which it might
slow the response time on it.
Depending on the types of businesses, some companies able covers certain region,
meanwhile the others cover all areas of market demand. For the companies that apply
geographical structure, most likely they will determine the regions either by cardinal
directions or by name of the states. Cardinal point of directions such north, south, east and
west are normally being applied by major players. It is much easier for them to monitor and
track performance and market demand analysis instead of by product or services itself.
Matrix structure presents complex design of hierarchy whereby the authority and
responsibility of manager is bigger than the functional structure. Those companies that apply
matrix structure are more fragile and flexible in terms of reporting matters. Even though, staff
works in the different department, they are able to cross report to another department. This

structure is normally applied within production department by the maintenance people. For
those who applied this structure are able to create huge network within multidisciplinary
department. However, management of this company has to ensure that their staffs are self
driven to carry out major tasks and deal with the multi cross-sectional network.
Product structure is normally applied by those companies who have numbers of
products as their bullet to succeed. In order to penetrate current global changes, certain
companies have to survive to run their businesses. Varieties of product almost certainly have
variety of margin and able to analyze market trend which one is worth to be sold and vice
versa. Limitation on product structure is the companies have to spend their time on market
analysis and determining thoroughly the market trend as well as their benefits on it.
However, in order to fulfill customer demand, an organization is required to study the
market trend and observe the best in class or multinational company best practices. They
might assist new born company and developing company to take a step further in establishing
their own businesses.











2961 words

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