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Organization structure: Departmentation

Bases of departation
Departmentation by enterprise function Departmentation by territory or geography Departmentation by customer group Departmentation by product Matrix organization

Departmentation by enterprize functions


Advantages
Is a logical reflection of functions Maintains power & prestige of major functions Follows principles of occupational specialization Simplifies training Furnishes means of tight control at top

Disadvantages
De-emphasizes overall co objectives Overspecializes & narrows viewpoints of key personnel Reduces coordination btn functions Responsibility for profit at the top only Slow adaptation to changes in the env Limits development of general managers

Departmentation by territory or geography


Advantages
Places res at a lower level Places emphasis on local mkts & problems Improves coordination in a region Takes adv of economies of local operations Better face to face communication with local interests Furnishes training ground for general managers

Disadvantages Requires more persons with general manager ability Tends to make maintenance of economical central services difficult and may require services such as personnel & purchasing at the regional level Increases problems of top mgt control

Departmentation by customer group


Advantages Encourage concentration on customer group Give customers feeling that they have an understanding Develop expertness in customer area Disadvantages May be difficult to coordinate operations btn competing customer demand Requires managers & staff expert in customers problems Customer groups may not always be clear defined

Departmentation by products
Advantages
Places attention & efforts on pdct line Facilitate use of specialized capital, facilities, skills & knowl &edge Permits growth & diversity of pdcts & services Improves coordination of functional activities Places res for profit at div level Furnishes training ground for general managers

Disadvantages Requires more person with general manager abilities Tends to make maintenance of economical central services difficult Presents increased problems of top mgt control

Matrix organization
Advantages Oriented towards end results Professional identification is maintained Pin-points product profit responsibility Disadvantages Conflict in org authority exists Possibility of disunity of command exists Requires manager effective in human relations

Guidelines for making matrix org effective


Define objectives of the project or task Clarify the roles, auth & res of managers & team members Ensure that influence is based on knowledge & info rather than on rank Balance the power of functional & project managers Select an experienced manager for project who can provide leadership. Undertake org & team development Install appropriate cost, time & quality controls that reports deviation from standard in a timely manner Reward project managers & team managers fairly

Strategic business unit (SBU)


Strategic Business Units (SBUS) are distinct businesses set up as units in a larger co to ensure that certain products or product lines are promoted & handled as though each was an independent business.

Criteria of SBUs
Must have its own mission, distinct from the missions of other SBUs. Have definable groups of competitors Prepares its own integrative plans, fairly distinct from those of other SBUs Manage its own resources in key areas Be of an appropriate size, neither too large nor too small. Separate manager is responsible for each SBU Will have its own staff, strategic & operational plans