Types of Organizational Structures MGT 5391 Session 8 8 Types of Structures http macy

Document Sample
Types of Organizational Structures MGT 5391 Session 8 8 Types of Structures http macy Powered By Docstoc
					    MGT 5391:
    Session # 8

8 Types of Structures



             http://macy.ba.ttu.edu/5491 Week #11organizational structure 1
    Inputs                                                                                                          Outputs
                                           TRANSFORMATION
    Environmental
                                                                                                                    Results From High
       Drivers
                                                                                                                  Performance / Exemplar
                                                                                                                       Organizations
    1. External/                                     THE ORGANIZATION DESIGN PUZZLE:
    Global Business                             HIGH PERFORMANCE LEARNING ORGANIZATION
    Environment
                                                               1. Macro                                                   Organizational
       2.Internal                                             Organizational                                              Effectiveness
      Environment                                               Structures
                                     8. Shared Leadership
       A.Corporate,
         Business,                    & Decision Making                             2. The Job/work                   1. Customers
      Worksite And                         Systems
        Individual:                                                                                                   2. Financial/
     Capabilities And              7. Recognition and       Interdependence                                              Business
     Barriers (Culture)             Financial Reward              and                   3. Technologies
                                        Systems               Design “FIT”                                            3. Employees
                                      6. People and
         B.Vision                     Human Resource                              4. Information and                  4. Organizational
         Direction                       Systems                                      Knowledge Systems                  Innovation
         (VDSP)
                                                        5. Micro Organization                                         5. Societal
    C. Organizational                                   Structures: Team Design
        Strategies


       D. Business                  Organizational Processes (Individual, Group, Organizational and
         Models                       Business Processes (Total Quality, Business Processes, etc.)


        E. Labor
       (Employee)
                                                                           (Feedback)
       Management
        Mutuality
    F. Transformation/                                   Figure 1.
          Change
        Processes           High performing organizations: Overall open systems model of critical
                                                        components
________________
Source: Modified from Macy, et al., (1995). Presented to the National Academy of Management, Vancouver, Canada, August.

                                                                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 2
     The Common Eight Different Options for
            Organization Structure


1.   The Headquarters Structure
2.   The Centerless – Decentralization Structure
3.   The Functional Structure
4.   The Product Structure
5.   The Market (Customer) Structure
6.   The Geographical Structure
7.   The Process Structure
8.   The Hybrid Structure – Combinations of the
     above seven


                               http://macy.ba.ttu.edu/5491 Week #11organizational structure 3
                          OST
           Eight TRANSFORMATION Categories - 1

MACRO STRUCTURE
1. CORPORATE Office
2. S.B.U. (Global and Regional)
3. Value Chain: Demand and
     Supply sides
4. Business/Product Teams
5. Enterprise Teams

Concepts:
•Coordination/interface
• Communication
• Power & Control (Decision Making)-
   Redistribution of Power & Control
• Reporting
• Capabilities
• Conflict
• Complexity
                                             Today’s
• Information
• Centralization
• Span of Control
                                             Focus
• Division of Labor
•Vertical and/or Horizontal Structure
                                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 4
                   Traditional Organization
                          Power       Information
                         Knowledge    Rewards




                                                        Outcomes = Lower Performance
                                                                   (3.8% Financial
                             Performance                            Improvement Per
                                                                    Year)

             High Performance Work System
#1 Macro Structure                                              #4 IS/IT
                           Power       Information              #3 Technologies
#5 Micro Structure
                          Knowledge    Rewards                   #7 Recognition &
#2 Job/Work
                                                                 Financial Reward Systems
#8 Shared Leadership
                                                          Outcomes = Higher Performance
    # 6 Human Resource                                               (10% Financial
    Systems                                                           Improvement Per
                              Performance                             Year)

                                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 5
Organization Structure is
about:
- Power and Control and the
  Re-distribution of Power and
  Control (Less Layers -fewer
  chiefs)
- Decision Making at the
  Lowest appropriate level
                  http://macy.ba.ttu.edu/5491 Week #11organizational structure 6
                    Traditional Organization
                          Environment




                        Boundaries of the System
Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming) Week #11organizational structure 7
                                                                                  http://macy.ba.ttu.edu/5491
Organization Structure is
about:
- Effective Communication
- Effective Coordination
- Speed/Responsiveness to
  the Customer (both internal &
  external)
- Empowerment throughout
  the organizationhttp://macy.ba.ttu.edu/5491 Week #11organizational structure 8
   21ST CENTURY ORGANIZATIONAL STRUCTURE DESIGN BLOCKS:
                  To Deliver Business Results


                                            Corporation Organization

                           Global Strategic Business Unit (S.B.U.)

            Market Focus/Demand Side Alignment
 Enterprise Teams (Customer, Product, Channel, and Process

                          Supply Side Alignment to Manufacturing

                         Business Centers - Lines of Business
                       (Process Product Supply Mini-Businesses)

                                              SDWT’s to Work Teams

                                                             Individuals
Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
                                                                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 9
   Typical Different Levels of 21st Century
       Macro Organization Structures
    1. Corporate Office/G.O. Structure

    2. Regional/Global Structure

    3. Business Teams

    4. Product Teams

    5. Enterprise Teams (Customer & Supplier
       Sides of Value Chain)
Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
                                                                                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 10
     21st Century Organization Design
  GBU’s                                    Markets/ Sales
                                            Orgs. MDO’s
-Bus. “A”                             -Western Europe
-Bus. “B”                             -Central or Eastern Europe
-Bus. “C”                             -Middle East & Africa
-Bus. “D”                             -Northern Asia
-Bus. “E”                             -Greater China
-Bus. “F”                             -North America
-Bus. “ ”                             -Latin America
     8




                                       -South America

                                          -Others




                         http://macy.ba.ttu.edu/5491 Week #11organizational structure 11
  21st Century Organization Design


Global Business Services (GBS) & In/ Outsourcing

 Corporate Functions/ Expertise Centers




                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 12
     21st Century Organization Design
  GBU’s                                               Markets/ Sales
                                                       Orgs. MDO’s
-Bus. “A”                                        -Western Europe
-Bus. “B”                                        -Central or Eastern Europe
-Bus. “C”                                        -Middle East & Africa
-Bus. “D”                                        -Northern Asia
-Bus. “E”                                        -Greater China
-Bus. “F”                                        -North America
-Bus. “ ”                                        -Latin America
     8




                                                  -South America
                                                      -Others…



  Global Business Services (GBS) & In/ Outsourcing
            Corporate Functions/ Expertise Centers
                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 13
                    Question:
Is your Firm a ―Cost Center‖ or a ―Profit Center‖?

Cost center:             P/L Center:

Emphasis on:             Emphasis on:
  – Costs                  •Customer Satisfaction/
                           Loyalty/ repeat business
                           •Quality
                           •Service
                           •Innovation
                           •Production
                           •Costs


                             http://macy.ba.ttu.edu/5491 Week #11organizational structure 14
Four Key Concepts / Issues of Structure
    ( to be analyzed for your case)


• Integration
• Coordination
• Communications
• Power & Control

                       http://macy.ba.ttu.edu/5491 Week #11organizational structure 15
     Time


6th Century – early   GO/ Corporate Office                     P/L
1970



 1970’s-Now                SBU/ GBU
                                                               P/L



 1980’s-Now           LOB’s/ Brands/ Products
                                                                   Modified P/L


                          E&T/ Stores/
 1990’s-Now             Countries/Regions
                                                                  Modified P/L




                                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 16
Fifteen Trends in Organizational Design at the Firm Level

         Creation of a Separate
  1
         “Company”(sell stock)




                                                                                       Innovative Changes Structures and Processes
                                                                        8
  2    Corporate Office (smaller)
                                                                Distributed
  3       Global S.B.U.’s                                            IT
                                                                 Systems
                                                                (Supplier-
  4      E-Commerce SBU                                        Organization
                                                                      -
   5   Total Value Chain Design                                 Customer
                                                                (SAP/EDI)
   6 Global Enterprise Teams (Mini-business
             with P/L Responsibility)

 7      Regional Customer Enterprise Teams
        (Mini-Business with P/L Responsibility)
                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 17
Fifteen Trends in Organizational Design at the Firm Level


        Other Types of Aligned of Enterprise Teams
   9




                                                                                                      Innovative Changes Structures and Processes
        (Product, Channel,or Process)                                           8

     Matrix Enterprise Teams: Product/Channel/                           Distributed
  10 Customer and/or Process                                                  IT
       Some Centralization - Great De-                                    Systems
  11                                                                     (Supplier-
                 Centralization
                                                                        Organization
        Integrative Learning/Coaching and Training                             -
  12    Systems (Learning Contract)                                      Customer
                                                                         (SAP/EDI)
   13      Innovative Pay Systems (Share the Wealth)

  14       Simple & Innovative Business/People
                  Measurement Systems
  15
          Co-location: Customer, Team and Leaders
                                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 18
        The Four Main Questions of Horizontal
                  Design Alignment
                                                                 Corporate
                                                                  Design

                                       Strategic Business Unit (S.B.U./
                                                G.B.U. Design
                                    Supply-Chain/
                                       Product
                                                                                         Demand/Chain
                                       Supply
                                      Alignment

_____
                                                                                                   (forthcoming)
Source: Barry A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA. http://macy.ba.ttu.edu/5491 Week #11organizational structure 19
The Typical Five Different Types Organization Structures in Exemplar Organizations
                        (N=102 North America Organizations)

                                                            1.         Corporate Office

     Macro Business Level                                        2.        S.B.U.’s/GBU’s

                                                                 3. Business Teams                                  Value-Chain Design
           1, 2, 3, 4, & 5
                                                            4.          Product Teams                                Supply                       Demand
                                                                                                                      Side                         Side
                                                            5. Customer Account Teams
                                                                           (Enterprise Teams)




Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
                                                                                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 20
              Multi-International Consumer Products Firm: Current Structure – Sept. 2001




Corporate
            GBU                                                                                          Key
                                            Consumer                 7 Global                         Customers/
                                            Teams (30)                Teams                             Trade
                                                                 Customer Business
                                       External Relations             Teams
  Office     GBS                       *     Teams (6)                 (130)
Top
Management
             Core Functions                                                                             Gov’t.




                                                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 21
       The Common Eight Different Options for
              Organization Structure
       1. The Headquarters Structure
 2. The Centerless – Decentralization Structure
       3. The Functional Structure
 4. The Divisional/Product Structure
  5. The Market (Customer) Structure
       6. The Geographical Structure
 7. The Process Structure
  8. The Hybrid Structure – Combinations of the
             above seven
 Are recommended for Cleansheet Design   http://macy.ba.ttu.edu/5491 Week #11organizational structure 22
The CENTERLESS CORPORATION
       The Real World

                                                   Global
                                                    Core



                                                   Smaller                  Business

                                Power/Control &
                                                  Corporate                   Units
                                                                            (S.B.U.’s/
                                  Governance        Hub                 Lines of Business/
                                                                        Markets/Products)
Source: Booz-Allen & Hamilton




                                                  Centralized
                                                   Services
                                                    Group


                                                                http://macy.ba.ttu.edu/5491 Week #11organizational structure 23
Nike: Another Type of Differentiated Network
(everything outside Nike HQ is outsourced)


   Product                                                  Product
  Distribution                                              Design
                     Nike
                 Headquarters
                   (Broker)
                                                         Product
  Advertising
                                                       Manufacturing

                   Accounts
                  Receivable

                               http://macy.ba.ttu.edu/5491 Week #11organizational structure 24
        Examples of Decentralization (D) and
                 Centralization (C)
               • Sales & Marketing (C)
               • Process Development (D)
               • Process Engineering (D)
               • R&D (C&D)
               • Customer Service (D)
               • General Manager/V.P. (C)
               • Value-Chain/Supply Chain (C-to SBU)
               • Lab/Quality (D)
               • HR (D)
               • Engineering/Maintenance (D)
               • IS/Product Acct./SHE/Training (C&D)
B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)   http://macy.ba.ttu.edu/5491 Week #11organizational structure 25
       The Question of Centralization
           and Decentralization

         Centralized                                                    ―Design Fit‖                                      De-Centralized


                                                                      Not either
                                                                   ―Centralized‖ or
                                                                  ―De-Centralized‖,
                                                                     but design fit
                                                                   (what is best for
                                                                    the business)

B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)   http://macy.ba.ttu.edu/5491 Week #11organizational structure 26
                          Value Chain

  Back                                                                                                 Front



    Core                                                                                                Market
Technologies   Conceive   Design Develop Procedure Market     Sales Distribute Support                (Customer)




                                                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 27
Organization

 Structure

  Trends
       http://macy.ba.ttu.edu/5491 Week #11organizational structure 28
          Typical Movement from a “National”
         Structure to a “Multi-National” Structure
High
                                                                     5
                                                                  International/
                                                                    Centerless
                                                                Integrated/
                                                                    Structure
                                                                Centerless
                                                     4           Structure
                                                    GBU
                                                 GBU
                                                 Structure
                                           3   Structure
Market
                                          SBU
Share                                   SBU
                               2       Structures
                                     Structures
                           International
                          International
                    1         Division
                             Division
                             Structure
                            Structure
                  National
                   National
                   National
                  Structure
                  Structure
                  Structure
Low

          Early                     Time
                                      Time                                               Very Mature
                                                http://macy.ba.ttu.edu/5491 Week #11organizational structure 29
Traditional vs. Innovative System
           Changes - 1
          STRUCTURE :




  TALL                               FLAT


                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 30
Trends in Organizational Shapes




 Yesterday               Today


                  http://macy.ba.ttu.edu/5491 Week #11organizational structure 31
Traditional vs. Innovative System
           Changes - 2

           TASK ORIENTATION:




INDIVIDUALIST/                TEAM/
SPECIALIST                    GENERALIST

                         http://macy.ba.ttu.edu/5491 Week #11organizational structure 32
 Traditional vs. Innovative System
            Changes - 3

          DECISION-MAKING:




CENTRALIZED                DECENTRALIZED

                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 33
   Traditional vs. Innovative System
              Changes - 4

                PHILOSOPHY:




AUTHORITARIAN                 PARTICIPATIVE


                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 34
Traditional vs. HPO Changes - 5
          PARTICIPATIVE/
          EMPOWERMENT
          PHILOSOPHY:




POWER &                 REDISTRIBUTION
CONTROL                 OF POWER AND
                        CONTROL
                   http://macy.ba.ttu.edu/5491 Week #11organizational structure 35
Four Elements for Structural Design
                   Hierarchical
                   Groupings


                    Structural
                     Linking
                   Mechanisms

Formal Processes                          Informal
  and Systems                           Organizations
                             http://macy.ba.ttu.edu/5491 Week #11organizational structure 36
 Eight Primary Options

  For Choosing Macro

Organizational Structure


              http://macy.ba.ttu.edu/5491 Week #11organizational structure 37
  Choosing Macro Organization Structures -1
                                   1. The Headquarters Structure Model

• Power and Control and Decision Making at Headquarters
• Communication flows from H.Q. to the field; from field to H.Q.
• Coordination at H.Q.; NOT between and among the
  Field units
• Efficiency is main goal
           2. The Centerless-Decentralized Structure Model
  • Integrated Network
  • Differentiated Network
  •S.B.U., LOB’s, and field units is where the Power and
    Control and Decision Making resides
  • H.Q. acts as a ―holding company‖
  • Communication flows from the S.B.U.’s, LOB’s, and
    field units; also into H.Q.
  • Coordination is within and across the S.B.U.’s, LOB’s,
    and field units
  • Effectiveness is the goal                http://macy.ba.ttu.edu/5491 Week #11organizational structure 38
Choosing Macro Organization Structures -2
                3. “Functional Structure”

 •Small-size, single-product
 •Undifferentiated market
 •Scale or expertise within the function
 •Long product development and life cycles
 •Common standards

                4. “Product Structure”
 •Product or Groups of Products focused
 •Multiple products for separate customers
 •Short product development and life cycle
 •Minimum efficient scale for functions or outsourcing
                               http://macy.ba.ttu.edu/5491 Week #11organizational structure 39
Choosing Macro Organization Structures - 3
                          5. “Market (Customer) Structure”
 •Key market (customer) segments
 •Products and/or services unique to segment
 •Buyer (customer) strength
 •Customer knowledge advantage
 •Rapid customer service and product cycles
 •Minimum efficient scale in functions or outsourcing
                              6. “Geographical Structure”
 •Low value-to-transport cost ratio
 •Service delivery on-site
 •Closeness to customer for delivery or support
 •Perception of the organization as “local” (not global)
 •Geographical market (customer) segments needed
                                 7. “Process Structure”
 •Best seen as an alternative to the functional structure
 •Potential for new processes and radical change to processes
 •Reduced working capital
 •Need for reducing process cycle times http://macy.ba.ttu.edu/5491 Week #11organizational structure 40
Choosing Macro Organization Structures - 4
                        8. “Hybrid Structure Model”

 • Best seen as a combination option to the above seven different types
    of structures

 • A combination of one to three of the above seven types of structure

 • Perception of the organization as being both “global” and “local”

 • Horizontal S.B.U.’s, LOB’s: Integrated/Differentiated Networks

 • Matrix Design

 • Market/Customer Focus Enterprise Teams

 • Used where the need for great flexibility (market/customer and innovation)
  is demanded.

 • Potential to maximize learning (information and knowledge sharing)
                                             http://macy.ba.ttu.edu/5491 Week #11organizational structure 41
                      Dell’s Fast-Cycle Segmentation
In 1994, Dell was
a $3.5 billion company                                                                      Small customers
                                    Large customers
                                                                                        (Business and consumer)




In 1996,
$7.8 billion
                                                              Government
                        Large            Midsize                                                         Small
                                                                 and
                      companies         companies                                                      customers
                                                               education




In 1999,
$18 billion
                Global                                             State
                              Large      Midsize                                                      Small
               enterprise                           Federal         and         Education                            Consumers
                            companies   companies                                                   companies
               accounts                                            local




                                                                     http://macy.ba.ttu.edu/5491 Week #11organizational structure 42
                The Headquarters Structure Model

        •Power and Control and Decision Making at Headquarters

        • Communication flows from H.Q. to the field; from field to
           H.Q.

        • Coordination at H.Q.; NOT between and among the
          Field units

        • Efficiency is main goal

        • Usually, early on in the Organizational Life Cycle


Source: B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)   http://macy.ba.ttu.edu/5491 Week #11organizational structure 43
        The Headquarters Model



             Headquarters




Field           Field                                Field
  A               B                                   C
                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 44
Centralized Headquarters Model


      A               B                       Mainly Flows
                                              of Goods
            H.Q.
F                                          C


       E               D             Tight, Simple
                                     Controls; (key
                                     strategic decisions
                                     made centrally)

                   http://macy.ba.ttu.edu/5491 Week #11organizational structure 45
CHARACTERISTICS OF CENTRALIZED HEADQUARTERS
                   MODEL

  Strategic   Key           Configuration        Role of                   Development
  Approach    Strategic     of assets and        Global                    and diffusion
              capability    capabilities         operations                of knowledge

  Global      Global-      Centralized        Implementing Information and
                                                           Knowledge
              scale        and globally       parent -     developed and
              efficiency   scaled             company      retained at the
                                              strategies   center; Not in
                                                           business/product
                                                           units




                                                                                               8


                                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 46
A 2nd Option: Coordinated Headquarters Model


                                                               Mainly Knowledge
           A                           B                       Flows
                                                               (Technology products,
                                                               processes, systems
                          H.Q.
   F                                                         C



           E                             D
               Formal System controls;
               (planning, budgeting,
               replicating parent company
               administrative system
                                                                                      5



                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 47
      2. The Centerless- Decentralized
              Structure Model
• S.B.U.’s, LOB’s and field units is where the
   Power and Control and Decision Making resides
   (Networked)

• H.Q. acts as a ―holding company‖

• Communication flows from the S.B.U.’s, LOB’s,
   and field units; also into H.Q. (Networked)

• Coordination and integration is within and across
   the S.B.U.’s, LOB’s, and field units (Networked)

• Effectiveness is the goal   http://macy.ba.ttu.edu/5491 Week #11organizational structure 48
Centerless-Decentralized Structure
                              Mainly Financial Flows
                              (Capital out; dividends back)




            Headquarters: Loose, simple
            Controls; (Strategic
            decisions decentralized)
                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 49
    The Peer-to-Peer Model
              HQ

             Unit
             Peer - 1




 HQ                                                  HQ

Unit                                               Unit
Peer - 2                                           Peer - 2




              HQ

             Unit
             Peer - 3

                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 50
CHARACTERISTICS OF CENTERLESS-DECENTRALIZED
                 STRUCTURE

Strategic   Key           Configuration    Role of                   Development
Approach    Strategic     of assets and    Global                    and diffusion
            capability    capabilities     operations                of knowledge

Multi- National       Decentralized       Sensing &                  Information and
-national Responsive- and                 exploiting                 Knowledge
          -ness       nationally          local                      developed and
                      self-sufficient     opportunities              retained within
                                                                     each global
                         (very local)
                                                                     business/
                                                                     product unit




                                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 51
    Integrated Network Model
                                Distributed, Specialized
                                Resources and capabilities




                                     Large Flows of
                                     Components,
                                     Products, Resources,
                                     People, Information
                                     and Knowledge
Complex Process of Coordination      Among
and cooperation in an environment of Interdependent
Shared Decision Making               (Networked) Units

                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 52
     Differentiated Network Structure

• A recent innovation in organizational
  architecture is the use of differentiated
  network structures.

• A network structure design is a cluster
  of different Organizations (Units, S.B.U.’s,
  LOB’s) whose actions are coordinated
  by contracts and/or mutual agreements
  rather than through a formal hierarchy.

                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 53
         Re-conceptualizing the Structure of an Multi-National Corporation
                           as a Differentiated Network
                                                                     Differentiated structures
                                                                     within each S.B.U./Subsidiary
                   S.B.U. /SUBSIDIARY 1                                                                                 S.B.U./SUBSIDIARY 2




                                                                                                                                               Differentiated
Inter-linkages                                                                                                                                 relationships
    across                                                                                                                                     between the
Business Units                                                              Much Smaller                                                       headquarters
                                                                            Headquarters                                                       and each
                                                                                                                                               Business
                                                                                                                                               Unit




S.B.U./SUBSIDIARY 4                                                                                                                      S.B.U./SUBSIDIARY 3
____________________________
Source: B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)   http://macy.ba.ttu.edu/5491 Week #11organizational structure 54
Nike: Another Type of Differentiated Network
(everything outside Nike HQ is outsourced)


   Product                                                  Product
  Distribution                                              Design
                     Nike
                 Headquarters
                   (Broker)
                                                         Product
  Advertising
                                                       Manufacturing

                   Accounts
                  Receivable

                               http://macy.ba.ttu.edu/5491 Week #11organizational structure 55
The Typical Structure Path for a Multi-National Corporations


       High
                         Worldwide                                           Global
                          S.B.U.                                             Matrix
                                                                                      (Differentiated
                                                                                      Network)
                                               Alternative
Foreign                                         Path #2
Product
                                     Alternative
Diversity
                                      Path #1

                                                                        Regional
            International                                                S.B.U.
        Low   Division
             Low      Foreign Revenue as a                                            High
                   Percentage of Total Revenue
    Source: Stepford & Wells, 1972                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 56
The CENTERLESS CORPORATION
       The Real World

                                                   Global
                                                    Core



                                                   Smaller                  Business

                                Power/Control &
                                                  Corporate                   Units
                                                                            (S.B.U.’s/
                                  Governance        Hub                 Lines of Business/
                                                                        Markets/Products)
Source: Booz-Allen & Hamilton




                                                  Centralized
                                                   Services
                                                    Group


                                                                http://macy.ba.ttu.edu/5491 Week #11organizational structure 57
         3. “Functional Structure”
•Small-size, single-product

•Undifferentiated market

•Scale or expertise within the function

•Long product development and life cycles

•Common standards

• Usually, early on in the Organizational Life Cycle
                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 58
      Functional Organization Structure


                    General manager



          Finance                  Human resources



Research and                                                        Product
                      Operations
development                                                        marketing




                                   http://macy.ba.ttu.edu/5491 Week #11organizational structure 59
Hybrid Beatrice International: One Functional Automobile Products Business




                                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 60
       4. “Product Structure” Model

•Product or Groups of Products focused

•Multiple products for separate customers

•Short product development and life cycle

•Minimum efficient scale for functions or
   outsourcing


                         http://macy.ba.ttu.edu/5491 Week #11organizational structure 61
Moving to a Product Divisional (S.B.U., LOB)
Structure:

•The structure adopted to solve the control,
 communication, coordination and
 integration problems of functional
 structures

  (many kinds of products,
    many different locations,
      many types of customers/clients)

  is the divisional or S.B.U. structure.
                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 62
• Product Divisional = S.B.U. structure—a
   structure in which functions are grouped
   together according to the specific
   demands of products,markets, or clients/
   customers.


• The type of divisional (S.B.U.) structure
   selected is driven by the specific type of
   control, communication, coordination
   and/or client/customer problems
   experienced.
                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 63
Product Group Structure of a Consumer Products Company


                                 CEO

      Corp. Headquarters Staff




  Toiletries            Soap           Paper                                 Food
   S.B.U.               S.B.U.         S.B.U.                                S.B.U.

                                               R&D
                                               Towel
                                               Tissue
                                               Diapers
                                               Sales

                                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 64
                       Product Structure
                                  CEO



                   Finance                   Human resources



   Electronic                    Medical
                                                                            Computers
  instruments                  instruments




R&D   Operations   Marketing
                                             http://macy.ba.ttu.edu/5491 Week #11organizational structure 65
H. J. Heinz Product Division; ( S.B.U.) Structure
                                       CEO




   Vice President     Vice President         Vice President             Vice President
     Sales and        Research and              Materials                  Finance
     Marketing        Development            Management




     PDM                  PDM                   PDM                             PDM




   Canned               Frozen                Frozen                          Baked
   Soups               Vegetable              Entrees                         Goods
   Division             Division              Division                        Division


 Centralized support functions
 Divisions/S.B.U.’s
                                                http://macy.ba.ttu.edu/5491 Week #11organizational structure 66
• Multidivisional – S.B.U. Structure —a
  structure in which staff/support functions
  are decentralized and placed in
  self-contained divisions.

• Typically used by an organization whose
   products are very different and that
   operates in several different industries.

• Some staff/support functions might remain
  centralized at the H.Q. (e.g., both a
  centralized R&D and a decentralized R&D)
                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 67
Multidivisional – S.B.U. Structure: G.E., I.B.M., Matsushita

                                                           CEO



                                               Corporate Headquarters Staff


      Senior               Senior VP        Senior VP            Senior VP               Senior VP
      Corporate            Marketing        Finance              Materials               Research and
      VP’s
                                                                 Management              Development




      S.B.U./
      Divisional      Division A           Division B                Division C                Division D
      GM’s/
      Presidents




      Functional
      Managers


                   Support functions   Support functions         Support functions         Support functions



                                                                   http://macy.ba.ttu.edu/5491 Week #11organizational structure 68
Product Team Structure: Xerox, Hallmark and Chrysler

                                                        CEO



            Functions




             Vice President        Vice President   Vice President       Vice President          Vice President
             Research and          Sales and        Manufacturing        Materials               Finance
             Development           Marketing                             Management




            Product
            Development
            Teams
                                     PTM                PTM                         PTM


          Matrix
                                    Product            Product                    Product
                                    Division           Division                   Division


                   Functional specialist
            PTM Product Team Manager


                                                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 69
   Hybrid Product and Function Structure

                                   Commercial airplane
                                       S.B.U.




      Product 1:                       Product 2:                                    Product 3:
       Narrow                            Wide                                          Central
        body                             body                                        fabrication



Engineering Quality   Operations



                                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 70
Apple Before and After Restructuring
                                                              Channel:

                                                                      Dealers
                         Product 1:
                         Desktops
                                                                       Mass
                                                                      retailers
                         Product 2:
Mac            Dealers
                          Laptops
                                                                  Direct sales
                         Product 3:
                         Palmtops
                                                                   Mail Order



      Before Design                            After Design
                             http://macy.ba.ttu.edu/5491 Week #11organizational structure 71
Fourteen Trends in Organizational Design at the Firm Level

          Creation of a Separate
  1
          “Company”(sell stock)




                                                                                             Innovative Changes Structures and Processes
                                                                              8
  2    Corporate Office (smaller)
                                                                      Distributed
  3         Global S.B.U.’s                                                IT
  4               M&A and JV                                           Systems
                                                                      (Supplier-
      E-Commerce SBU (inside or outside firm)                        Organization
  5                                                                         -
                                                                      Customer
  6    Total Value Chain Design                                       (SAP/EDI)

  7   Global Enterprise Teams (Mini-business
              with P/L Responsibility)

 8      Regional Customer Enterprise Teams
        (Mini-Business with P/L Responsibility)
                                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 72
  5. “Market (Customer) Structure” Model

•Key market (customer) segments
•Products and/or services unique to segment
•Buyer (Customer) strength
•Customer knowledge advantage
•Rapid customer service and product cycles
•Minimum efficient scale in functions or
  outsourcing



                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 73
        Market (Customer) Structure

• When an organization experiences control,
  communication, coordination, and
  integration problems that are a function of
  the differences in the various customer/
  client groups being served, a market
  (customer) structure is used.

• Such a structure aligns functional skills
  and activities with different client/customer
  needs.
                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 74
Market (Customer) Segments and Lateral Functions
                                S.B.U. General manager



 Sales/marketing           Information        Finance          Human                   Operations
                           technology                         Resources


                    Financial             Governments                         Distribution
Health
                    services

     Sales                  Sales                 Sales                                     Sales


     Marketing             Marketing              Marketing                                  Marketing

     Information           Information            Information                              Information
     technology            technology             technology                               technology
     Installation          Installation           Installation                             Installation
     and repair            and repair             and repair                               and repair
      Network              Network                 Network                                 Network
      operations           operations              operations                              operations
                                                  http://macy.ba.ttu.edu/5491 Week #11organizational structure 75
  Mellon Bank Market Structure

                         CEO



               Central Support Functions




Commercial   Consumer          Government                 Corporate
 Division     Division          Division                   Division




                                    http://macy.ba.ttu.edu/5491 Week #11organizational structure 76
         A Front-end Focus
•Customers buy all products.

•Customers want a single contact point.

•Customers want a sourcing relationship.

•There are opportunities for cross-selling and bundling.

•More value-added is customer-specific.

•Advantage of customer knowledge.
                                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 77
                     Front-End Structure
                                     CEO

                             Staff


Paper   Toiletries   Soup                                             Front end
group    group       group


                             Regional team                                                   Customer team
                                                                                         Finance




                                                                          Distribution




                                                                                                   technology
                                                                                                   Information
                                            Operations




                                                                                                                 Operations
                                     Vons




                                                         http://macy.ba.ttu.edu/5491 Week #11organizational structure 78
                      Dell’s Fast-Cycle Segmentation
In 1994, Dell was
a $3.5 billion company                                                                      Small customers
                                    Large customers
                                                                                        (Business and consumer)




In 1996,
$7.8 billion
                                                              Government
                        Large            Midsize                                                         Small
                                                                 and
                      companies         companies                                                      customers
                                                               education




In 1999,
$18 billion
                Global                                             State
                              Large      Midsize                                                      Small
               enterprise                           Federal         and         Education                            Consumers
                            companies   companies                                                   companies
               accounts                                            local




                                                                     http://macy.ba.ttu.edu/5491 Week #11organizational structure 79
Three Potential Sources of Leverage in
     Leveraged Business Groups

        Back                            Middle                          Front
      (Offering)                    Infrastructure                (Market/Customer)




•Creation of                       •Means used to                      •How the Business
 products/offerings                 produce and deliver                 goes to market?
                                    products and
•“Platforms for                     services to
  manufacturing                     customers                          •How the
  products                                                              organization
                                                                        responds to the
                                                                        customer?
•Technologies
                                                                        •The customers
 underlying products
                                                                         interface – typically
                                                                        Enterprise Teams
                                         leverage
Each component is a potential source of http://macy.ba.ttu.edu/5491 Week #11organizational structure 80
    6. “Geographical Structure” Model
•Low value-to-transport cost ratio

•Service delivery on-site

•Closeness to customer for delivery or support

•Perception of the organization as local

•Geographical market (customer) segments needed




                                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 81
           Geographic Structure
• When an organization experiences control,
   communication, coordination and
   integration problems that are a function
   of geography, a geographic divisional
   (S.B.U., LOB) structure is used.


• Such a structure organizes divisions/
   S.B.U./LOB’s according to the
   requirements of different locations (Local).
                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 82
                 Geographical (Pre-Restructuring)


                                        CEO
                                    Industrial Gases




  AFROX             CIG         U.K. Gases      AirCo                     North                    Process
(South Africa)    (Australia)                   (U.S.A)                   Pacific                   Plants




                                                       http://macy.ba.ttu.edu/5491 Week #11organizational structure 83
          Geographical Structural Change (Post-
                    Restructuring)
                                                    CEO
                                            Industrial Gases


                                                                                         North              Process
                         South Africa   Australia     Europe       Americas
                                                                                         Pacific             Plants



             Food



           Chemicals
Global
Market
Sectors
           Electronics



             Steel



                                                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 84
Geographic Structures: Crown Cork
& Seal, Neiman Marcus and
Wal-mart                                Regional
                                       Operations




                                         CEO
                        Regional                                   Regional
                        Operations                                 Operations
                                     Central Support
                                       Functions




                  Individual
                  stores
                                       Regional
                                       Operations




                                                http://macy.ba.ttu.edu/5491 Week #11organizational structure 85
       Apple: Geographical Structure
                              CEO
                           John Sculley



 Apple        Apple          Apple                                Apple
Products      USA           Europe                                Pacific

                                   Europe
                                                                        Canada
                                    West


                                   Europe
                Sales                                                  Australia
                                    North
             Service and
              Marketing                                                  Japan
                                   France
             To Regions

                                   South                                 Latin
                                   Europe                               America

                                                                          Far
                                                                          East
                             http://macy.ba.ttu.edu/5491 Week #11organizational structure 86
Geographical Structural Design: Xerox
           1991 (Before)
                                 Chairman




                                 Marketing and
               Development                                Chief Staff                  Chief Financial
Research                          Customer
             and Manufacturing                             Officer                         Officer
                                  Operations




             U.S. Operations                                                             Other
World Wide                                                American                         Other
               (Sales and         Rank Xerox                                          Geographic
marketing                                                 Operations                         Other
                                                                                            Other
                                                                                        Geographic
                Service)                                                             Operating Units
                                                                                          Geographic
                                                                                         Geographic
                                                                                      Operating Units
                                                                                        Operating Units
                                                                                       Operating Units

                                                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 87
Xerox 1992: Hybrid Organization Structure (After)


                   Business Division 1



                  Business Division 2
  Technology                                                    Customer
  Management                                                    Operations
    Process                                                      Divisions
                   Business Division 3



                   Business Division 4



                   Business Division 5
                      Strategic
                      Services                                  Governance
                                  http://macy.ba.ttu.edu/5491 Week #11organizational structure 88
          7. “Process Structure”

•Best seen as an alternative to the functional
  structure

•Potential for new processes and radical change
  to processes

•Reduced working capital

•Need for reducing process cycle times


                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 89
       Process Organization Structure

                    General manager




New product              Order                                    Customer
development            fulfillment                              acquisition and
  process               process                                  maintenance



New product teams      Product teams                                  Customer teams

                                       http://macy.ba.ttu.edu/5491 Week #11organizational structure 90
Work Flows Across Functional Structure
                                                                           Scarce resource:
                                                                           management time

                         General manager




               Finance




   Product                                                           Sales and
                            Operations
 development                                                         marketing
               Human resources




               Work flow process to customer
                                         http://macy.ba.ttu.edu/5491 Week #11organizational structure 91
Lateral Processes Across Departments

              General
              manager




              Lateral process


                            http://macy.ba.ttu.edu/5491 Week #11organizational structure 92
          A Generic Horizontal Organization with
              Multiple Core Process Groups
                                Vice President



            General             General                 General                         General
            Manager             Manager                 Manager                         Manager
             R&D               Operations               Strategy                        Finance



              Manager           Manager            Manager




Process                   CORE PROCESS GROUP
 Owner                                                                            Performance
 Team                 Team 1    Team 2           Team 3                            Objective

Process                   CORE PROCESS GROUP
 Owner                                                                            Performance
 Team                 Team 1    Team 2           Team 3                            Objective

                          CORE PROCESS GROUP
Process
 Owner                                                                           Performance
 Team             Team 1       Team 2        Team 3                                 Objective
                                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 93
          Process Structure

Reengineering Functional Structures: Re-
engineering is the process of redesigning
  how tasks are bundled into roles and
  functions to improve organizational
  effectiveness.




                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 94
            Process Structure

• Reengineering involves shifting the focus
   from functions isolated from each other
   into horizontal/lateral business processes.

• A business process is any activity that cuts
   across functional boundaries.

  -Order fulfillment
  -Inventory control
  -Product design
  - R&D
                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 95
Example Business Processes & Teams
                                              Top Management



 Process          Team                 Team                      Team
 Coordinator




               New Product Development Process
 Process
 Coordinator       Team                 Team                       Team




                     Order Fulfillment Process
 Process
 Coordinator       Team                 Team                       Team




               Procurement, Logistics process
                                                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 96
      8. Hybrid Structure Model – Combinations of
          Some of the above Seven Structural Types

• Best seen as a combination option to the other seven
  different types of structure.
• A combination of one to three or more of the above
  seven types of structure.
• Perception of the organization as being both
   ―global‖ and ―local‖.
• Horizontal S.B.U.’s, LOB’s: Integrated/Differentiated
  Networks
• Matrix Design
• Market/Customer Focus Enterprise Teams
• Used where the need for great flexibility (market/customer
  and innovation) is demanded
• Potential to maximize learning (information and
  knowledge sharing)                http://macy.ba.ttu.edu/5491 Week #11organizational structure 97
 Organization Form Options (or Grouping Alternatives)


                            •Function
                            •Work Process
1.       Activity
                            •Knowledge/skills/discipline
                            •Time

                             •Product
2.       Output              •Service
                             •Project


                             •Market segment
3.    User/Customer          •User/Customer need
                             •Geography


       Multifocused         •Any Combination of
4.     Organization          Activity/Output/User
                                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 98
Grouping by Output (AT&T Early 1990’s)


                            Chairman




Communications   Communications                                      Network Systems
                                  Computer (NCR)
Services Group   Products Group                                          Group




                                       http://macy.ba.ttu.edu/5491 Week #11organizational structure 99
                 ABB (Simplified Structure)-1
                                          CEO
                              (Percv Bamevik) (previous CEO –
                                  Thought up this structure)


                                         Executive
                                         Committee



                           Power           Power                                           47 Other
                                                                    Robots
                        Transformers      Generation                                    Business Areas



             Germany



              U.S.A
 National
Companies
              Norway


            137 Other
             National
            Companies
                                                   http://macy.ba.ttu.edu/5491 Week #11organizational structure 100
       ABB: Four Types of Organization Structures - 2
                                                         Corporate Office                                     A
                                                                  (Very Small)




                                                                                                                                                 a Single Financial Performance Measurement System
                                                                                                                                                 Tight/Clear Accountability/Responsibility Through
                                 3 Regions and 4 Businesses Areas (BA’s)          B
                                                       Regions-National Companies
                                                                  1                1
                                                                                   1       2
                                                                                           2        3
                                                                                                    3
                                                                  1
                                     Global
                                     Business                     2
    Corporate                                                     2
    Structures                       Areas                        3
                                                                  3
                                                                  4
                                                                  4


                                                     Company Presidents                                       C
 Local Country    (some are also Country Managers) - 1 or 2 levels
 Companies and
                                5,000 Profit Centers
  Many Profit           (lead by Profit Center Managers;  D
Center Structures           3 levels to lowest person)
  ________________
  Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
                                                                                        http://macy.ba.ttu.edu/5491 Week #11organizational structure 101
       ABB - Fall of 1998 - 3
          What They Did:
              • Break-up existing regional (local) S.B.U.’s
                into smaller, more focused global
                business S.B.U.’s
              • 5,000 P/L Centers
          Why?
              • Streamlining the organization to tap
                 the trend towards greater globalization
              • Shorten the decision process
              • Flatten (once more) the structure
              • Increase speed of decision making

____________________________
                                                                                           CA (forthcoming)
Source: B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, http://macy.ba.ttu.edu/5491 Week #11organizational structure 102
                  ABB-4
• The fundamental building block of this
  Company are 5,000 small profit centers
  ($10-12MM Sales/40-50 People).
  Resources are placed within these units.
  There are only 150 Corporate staff
  (centerless – decentralized holding
  company).
• H.Q. has 7/24/365 ―real-time‖ information
  system across the ―A, B,C, & D‖ parts of
  their structure (all have four common
  measures)                                                                abb-2-28 slide1
                          http://macy.ba.ttu.edu/5491 Week #11organizational structure 103
                      Asea, Brown, Boveri (ABB): One Business Area:
                               Relay Business Overview - 5

                                                            4 Global
  Corporate                        3                        Business                    Corporate
                                Regions                     Areas


                                                           Business
                             President-
   Regions                                                  Head
                                US                                                        Capability
                                                           Worldwide
                               Power                                                      Developer
                                                            Relay


      Local/Country                         General                                 Entrepreneur
      Specific                              Manager-
                                            Relays
B.A. Macy, Successful Strategic Change,
San Francisco: California:
Berret-KoehlerPublisherss (forthcoming)   Profit Centers                                                   abb-2-28 slide5
                                                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 104
                     ABB-10
       The Partnership Between Financial
       Wealth and Changes in Organization
        Structures, Systems and Processes
Corporate                Global                    Regions of                Local                      One Customer                         Customers
  Office                 Businesses                the World                 Control                    Contact Point


   Small                 Think                      Act                    • Many          • Enterprise  Rapidly
                         Globally                   Locally                “Companies”       Units/Teams Changing
                         (Matrix)                   (Matrix)               (ABB-1,000)       (CATS)      Needs,
(ABB - 150
                                                                           • Many Profit                 Wants, &
Xerox -                                                                      Centers                     Desires
Europe - 300)                                                              (ABB -5,000)
                                                                           • Tight
                                                                           Accountability/       The Mirror
                                                                           Responsibility
                                                                           • Alignment
                                                                                                    Concept
 ________________
                                                                                                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 105
 Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
Another Hybrid:

Procter & Gamble

     (P&G)


          http://macy.ba.ttu.edu/5491 Week #11organizational structure 106
 P&G’s Organization Structure: 2001
             Corporation Functions

             >18 mos.
                       < 18 mos.
               GBU
Idea                  CBD (Sales)
              (SBU’s)
                             MDO           PRODUCTION/PROMOTION
Innovation   Product                       CUSTOMERS/CONSUMERS
                             Global MDO/
              P&L            CBD Teams


                       GBS                                    F
                                                              U          • Marketing
                                                              N          • R&D
                                                              C          • IT
                                                              T
                 Country MDO                                  I          • HR
                                                              O          • Sales
                                                              N          • Product Supply
                                                              S
                                                                         • Finance

                      CBD
                     Teams


                 Retail Customers

                                                http://macy.ba.ttu.edu/5491 Week #11organizational structure 107
                  The Key Pillars of a
                 Horizontal Organization


                                                                Global                           Retail
  Demand                      Fulfillment                       Sales                            Sales/
Organization                 Organization                    Organization                      Customers                     Consumers




             Service
           Organization

  Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
                                                                                      http://macy.ba.ttu.edu/5491 Week #11organizational structure 108
   Enterprise Units: The ―Mirror‖ Design Concept

                                                                 The ―Mirror‖: One Contact Point

                                 The Various                         Enterprise                   Customers/
Corporate                                                                                                    Consumers
                                   Global                              Units/                       Retail
 Office
                                   SBU’s                              Team(s)                       Stores

                                          1
                                          2
                                          3
                                          4
                                          5
                                          6
                                          7
                                         etc.
                                                       (feedback)


Source: B.A.Macy, Successful Strategic Change Berrett-Koehler Publishers, San Francisco, CA (forthcoming)
                                                                                     http://macy.ba.ttu.edu/5491 Week #11organizational structure 109
                  P&G’s Enterprise Teams
             (Customer Business Development)


GBU                                    Customer              67%
                                       *Teams                                                    Customers/
                                                       Customer Teams                              Trade/
GBS                               External Relations         *                                     Retail
                                                                                                   Stores
                                  *     Teams            (Exemplar)
Core Functions
                                                                                                 Gov’t.

                                   Dec. 2000




Note: GBU’s = Global S.B.U.’s
      GBS = Global Business Services




                                                           http://macy.ba.ttu.edu/5491 Week #11organizational structure 110
Another Hybrid Example –

            HP

(from a Product Structure to

      A Hybrid Model)

                 http://macy.ba.ttu.edu/5491 Week #11organizational structure 111
           THE OLD HP: 83 Product Structures
Each product unit was responsible for its own profit/loss performance



     HOME PCs,
                            CEO                           SCANNERS,
    HANDHELDS,                                         LASER PRINTERS,
      LAPTOPS                                           PRINTER PAPER




                 EXECUTIVE COUNCIL


     CONSULTING                                      INK CARTRIDGES,
      SERCURITY                                      DIGITAL CAMERAS,
     SOFTWARE,                                        HOME PRINTERS
    UNIX SERVERS
                                       http://macy.ba.ttu.edu/5491 Week #11organizational structure 112
   Carly to HP: Snap to It = Three Phase Plan for Transition


NOW 2000: Improve growth and profits in core
businesses

  - CONSOLIDATE
    Folded HP’s 83 product divisions into four units: two product
    development units that work with two sales and marketing groups--
    one aimed at consumers, the other corporations.

  - SET STRATEGY
    Create a nine-person Strategy Council to allocate resources to the
    best opportunities rather than leaving strategy to product chieftains
    (see pages 195) .

  - WHACK COSTS
    Lower expenses by $1 billion by revamping internal processes
    to tap the power of the Web.


                                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 113
                                           THE NEW HYBRID HP
                                                                             CARLY FIORINA               •AUTHORITY
                                                                                                         •RECOMMENDATIONS
STRATEGY COUNCIL                                                                                         •IDEAS & INNOVATIONS
Nine fast-rising managers who advise                                                                     •PRODUCTS & INFORMATION
the executive council on allocating
money and people to growth                                          EXECUTIVE COUNCIL
initiatives.                                                  Eight top lieutenants, including heads
                                                              of the four front-and-back-end groups.
       FRONT END

     CORPORATE SALES                                                                            FRONT END
     $34 billion in annual revenues
                                                                                                      CONSUMER SALES
     JOB Meet near-term financial targets                                                           $15 billion in annual revenues
     by selling technology solutions to                                                        JOB Sell consumer gear with focus on
     corporate clients. Keep back-end                                                         meeting current-year earnings and revenue
     units abreast of what’s, how’s.                                                           goals. Let back end know of must-have
                                                                                                        products and features

            BACK END                                                                                          FRONT END
            PRINTERS
            43% of annual production                                                             COMPUTERS
            JOB Build new printing and                                                     57% of annual production
            imaging products to ensure HP’s                                            JOBS Focus on future success by
            long-term growth. Track trends with                                        making computers that companies
            help from front-end units.                                                  and consumers want, with sales
                                                                                              input from front-end




                                              CROSS-COMANY INITIATIVES
        Personnel from the front-                                    WIRELESS SERVICES
        and back-end groups          DIGITAL IMAGING                 Develop wireless                 COMMERCIAL
        collaborate on projects      Make photos, drawings,          technologies that will           PRINTING
        aimed at sniffing out new    and videos so easy to           fuel sales of HP-made            Divert printing jobs
        markets what will create     create, store and send          devices, ranging from            from offset presses to
        growth.                      as e-mail.                      handhelds to servers.            Net-linked HP printers
                                                                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 114
     The Common Eight Different Options for
            Organization Structure


1.   The Headquarters Structure
2.   The Centerless – Decentralization Structure
3.   The Functional Structure
4.   The Product Structure
5.   The Market (Customer) Structure
6.   The Geographical Structure
7.   The Process Structure
8.   The Hybrid Structure – Combinations of the
     above seven


                              http://macy.ba.ttu.edu/5491 Week #11organizational structure 115

				
DOCUMENT INFO
Description: Types of Organizational Structures document sample