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Designing Organizational
Communication Structures
1
Major Functions in Satellite Production
Product Design
Process Design
Fabrication
Assembly
Testing
2
Functional Design
General Manager
Engineering Director Manufacuring Director
Product Design Fabrication
Process Design Assembly
Testing
3
Strengths Weaknesses
• Functional efficiency: economies • Communication inefficiency:
of scale within functions slow information sharing and
decision-making across functions
• Depth: in-depth skill development and up and down the hierarchy
• Focus: on functional goals • Information overload:
• Careers: long career paths communication moves vertically
up the hierarchy
• Intrafunctional coordination
• Functional myopia: poor inter-
function coordination; conflict
across functions
• Inertia: low responsiveness and
adaptability to change
• Low innovation
Functional Structure works best for small- or medium-size organizations
facing stable environments and producing only a few products
4
Horizontal communication
solutions, in order of capacity
Liaison roles
Task forces
Teams
Integrators
Integrating
Departments
5
Integrated Functional Design
General Manager
Engineering Director Manufacuring Director Engineering Services
Product Design Fabrication
Process Design Assembly
Testing
6
Divisional Design
General Manager
Director Director Director
Satellite Division Commercial Antenna Division Consumer Antenna Division
Product Design Product Design Product Design
Process Design Process Design Process Design
Fabrication Fabrication Fabrication
Assembly Assembly Assembly
Testing Testing Testing
7
Bonanza International: Functional Structure
President
General Manager
Real Estate Marketing Stores Franchise Finance Legal
Operation Development
8
Bonanza International: Divisional Structure
President
General General General
Manager Manger Manager
Bonanza Peoples B-80
Real Estate Real Estate Real Estate
Marketing Marketing Marketing
Stores Stores Stores
Operation Operation Operation
Franchise Franchise Franchise
Development Development Development
Finance Finance Finance
9
Some Divisional Organization Types
• Product line (e.g. Chevrolet vs. Pontiac)
• Product part (e.g. chassis vs. engine)
• Geography (e.g., East vs. West)
• Project (e.g., 8-bit vs. 16 bit computer design)
• Client (e.g., Client A vs. Client B)
• Market (e.g., government vs. consumer)
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Client: Ad Agency
Board of Directors
President
Executive Vice President
Account Supervisor Account Supervisor Account Supervisor
Account Executive Account Executive Account Executive
Client 1 Client 2 Client N
•Merchandising •Merchandising •Merchandising
•Media •Media •Media
•Research •Research •Research
•Copy •Copy •Copy
•Art •Art •Art
•Newspaper/Magazine •Newspaper/Magazine •Newspaper/Magazine
Production Production Production
•TV/Radio Production •TV/Radio Production 11
•TV/Radio Production
Geographic: Apple Computer
CEO
Apple Products Apple USA Apple Europe Apple Pacific
Regions West Canada
North Australia
France Japan
South Latin
America
Far East
12
Strengths Weaknesses
• Communication efficiency because • Divisional myopia: poor
information must pass through intrafunctional coordination across
fewer layers divisions; conflict and competition
• Adaptability and responsiveness to across product lines
change • Functional inefficiency: no
• Interfunctional coordination within economies of scale within functions
each division • Generalism: less in-depth
• Client satisfaction because product competence and technical
responsibility and contact points are specialization and shorter functional
clear career paths
• Customization in that units can • Fragmentation: difficult to
adapt to differences in products, integrate and standardize across
regions, clients, etc. products
• Decentralizes decision-making • Information islands: poor
knowledge transfer across functions
Divisional Structure works best for larger organizations facing dynamic
environments and producing several products 13
Horizontal communication
solutions, in order of capacity
Liaison roles
Task forces
Teams
Integrators
Integrating
Departments
14
Integrated Divisional Design
General Manager
Director Director Director Director
Satellite Division Commercial Antenna Division Consumer Antenna Division Business Processes
Product Design Product Design Product Design
Process Design Process Design Process Design
Fabrication Fabrication Fabrication
Assembly Assembly Assembly
Testing Testing Testing
15
Simplified Matrix Design
General Manager
Engineering Director Director Director Manufacturing Director
Satellites Commercial Antennas
Product Design Fabrication
Team 1 Leader Team 1 Leader
Team 2 Leader Team 2 Leader
Team 3 Leader Team 3 Leader
Process Design Assembly
Team 1 Leader Team 1 Leader
Team 2 Leader Team 2 Leader
Team 3 Leader Team 3 Leader
Testing
Team 1 Leader
Team 2 Leader
Team 3 Leader
Function
Project/ 16
Division
Simplified Matrix Design
General Manager
Engineering Director Director Director Manufacturing Director
Satellites Commercial Antennas
Product Design Fabrication
Team 1 Leader Team 1 Leader
Team 2 Leader
team members
Team 3 Leader
Team 2 Leader
Assembly
Team 3 Leader
Process Design
Team 1 Leader
Team 1 Leader Team 2 Leader
Team 3 Leader
Team 2 Leader
Testing
Team 3 Leader
Team 1 Leader
Team 2 Leader
Matrix Boss
Team 3 Leader
Two-Boss 17
Employee
Weaknesses
Strengths • Extremely high communication
• Coordination across both costs: frequent and time-consuming
functions and products meetings and conflict resolution
• Flexible use of human demands
resources across products • Communication intensive: people
need good interpersonal
• Integration within functions
communication skills and training;
• Skill development within requires collegial rather than
functions hierarchical relationships
• Capacity to handle complex • Who’s the real boss? Difficulties
decisions and frequent changes with dual reporting relationships
• Requires dual pressure from the
business environment to maintain the
power balance
• Very tricky to maintain effectively
Matrix Organization works best for medium size organizations
with multiple products in unstable environment 18
