The History Of Multidivisional Structure Business Essay

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Assignment no. & Title: Assignment 1- Organisational Structure and Culture. Different authors have defined organisation in different ways. The main definitions of organisation are as follows:

According to Keith Davis as cited anon, "Organisation may be defined as a group of individuals, large of small that is cooperating under the direction of executive leadership in accomplishment of certain common object."

According to Chester I. Barnard as cited anon, "Organisation is a system of co-operative activities of two or more persons."

According to Louis A. Allen as cited anon, "Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives."

According to Mooney and Railey, "Organisation is the form of every human association for the attainment of a common purpose."

In short, organizing is the determining, grouping and arranging of the various activities deemed necessary for the attainment of the objectives, the assigning of people to those activities, the providing of suitable physical factors of environment and the indicating of the relative authority delegated to each individual charged with the execution of each respective activity. (Anon.n.d)

ORGANISATIONAL STRUCTURE

The typically hierarchicalarrangement of lines of authority, communications, rights and duties of an organization. Organizationalstructure determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management.

Formal and informal organization

A formal organization structure shows a recognisable chain of command, it also has many levels of management. This make comunication slower and decision making harder to implement.

An informal structure is much more relaxed, with very few levels of management. This makes comunication much easier between levels and decisions anr made faster. (Anon.n.d)

Centralization and de-centralization

Centralized organizational structures rely on one individual to make decisions and provide direction for the company. Small businesses often use this structure since the owner is responsible for the company's business operations. Decentralized organizational structures often have several individuals responsible for making business decisions and running the business. Decentralized organizations rely on a team environment at different levels in the business. Individuals at each level in the busi. (Osmond Vitez, Demand Media. (2009).)

Span of control

The number of subordinates that a manager or supervisor can directly control. This number varies with the type of work: complex, variable work reduces it to six, whereas routine, fixed work increases it to twenty or more.( http://www.businessdictionary.com)

Product Structure

A representation of the way in which the parts of a product fit together and interact, organized in levels of detail based on structure. A product structure is used to manage changes, testing, and problem resolution for complex products with a large number of interdependent parts and functions.

Advantages

1. allows the business to make relatively quick decisions, and locate all personnel related to each other together

2. Clear focus on market segment helps meet customers' needs.

3. Positive competition between divisions

4. Better control as each division can act as a separate profit centre

Disadvantages: Redundancies often exist across product organizations as functional responsibilities are duplicated under each product organization. Economies of scale and scope are more difficult to achieve as this organization structure encourages less cooperation and coordination across the product units.

Regional structure:

The organization or arrangement of a large geographical territory or a designated division of a country or state that may be formulated according to some administrative, biological, political, economic or demographic criteria. (Anon. (2012).

Advantages:

The country organization is capable of sensing and understanding local conditions and is able to formulate strategies which effectively meet the needs of local stakeholders. Policies in areas such as human resource management can be tailored to meet the needs and expectations of local employees, product mix and design can be optimized for local conditions, and the organization can respond more quickly to changing circumstances on the ground.

Disadvantages:

The disadvantages of the area structure are similar to those of the product structure. Economies of scale will be harder to achieve as different localities develop and implement very different product strategies on one hand, and invest resources in developing local functional expertise and effort which may well be duplicated unnecessarily across geographic units.

Function Structure:

The classic organizational structure where the employees are grouped hierarchically, managed through clear lines of authority, and report ultimately to one top person. Anon. (2013).

Advantages

Specialization - each department focuses on its own work

Accountability - someone is responsible for the section

Clarity - know your and others' roles

Disadvantages

Closed communication could lead to lack of focus

Departments can become resistant to change

Coordination may take too long

Gap between top and bottom

Matrix Structure

An organizational structure that facilitates the horizontal flow of skills and information. It is used mainly in the management of large projects or product development processes, drawing employees from different functional disciplines for assignment to a team without removing them from their respective positions.

Advantages:

The matrix allows functional efficiencies to be achieved while also allowing for the management of discrete product lines. Product managers remain focused on specific customer and product issues, yet can tap into the specialized support systems offered by strong functions. Where a geographic dimension is included in the structure, country managers or other local personnel can devote their attention to the development of location specific strategies. Communication and information sharing may be facilitated through the multiple dimensions.

Disadvantages:

The matrix is complex and often involves additional coordination costs. Confusion and ambiguity may result from multiple reporting relationships as a single individual may receive conflicting direction from their various supervisors.

Multidivisional Structure

The organizational structure used in a company is intended to increase productivity, provide direction and motivate employees. Various types of structures are used in organizations, such as functional, matrix or multidivisional. Each structure plays a vital role in the way an organization handles conflict, customer service and employee retention. Multidivisional organizational structure is commonly used in order for the different divisions to make quick changes without having an extensive hierarchy of approval.

Advantages:

Profitable growth: when each division is its own profit centre, individual profitability can be clearly evaluated

Internal labor market: the most able divisional managers are promoted to become corporate managers

Disadvantages

Managing the corporate-divisional relationship: finding the balance between centralization and decentralization

Coordination problems between divisions: divisions start competing for resources and rivalry prevents cooperation

CULTURE

Culture is the characteristics of a particular group of people, defined by everything from language, religion, cuisine, social habits, music and arts. Today, in the United States as in other countries populated largely by immigrants, the culture is influenced by the many groups of people that now make up the country.

Types of Culture

Handy's culture types (1978)

The theorist Charles Handy identified the four main types of culture.

Power culture - wherever power is concentrated in a leader or top of the management team. Quite informal and flexible, it allows trusted staff to get on with the job.

Role culture - where the authority is arranged in a hierarchy and the power depends on formal status. Many rules and procedures can make change difficult. It is Mostly seen in large bureaucratic organizations.

Task culture - is purpose- and project-driven with leadership based on expertise for the task in hand. Often copes well with rapid change but may lack overall cohesion.

Person culture - stresses the individual's right to make decisions with shared rules only for mutual benefit. Effective for professionals and independent workers such as lawyers but may break up as conditions change. ((Kim Ann Zimmermann. (2012))

NESTLE ORGANISTIONAL CHART

Functional

Organization Chart

Product

http://www.nestle.com/asset-library/Documents/Library/Documents/Corporate_Governance/Oganisation_generale_externe_december_2012.pdf

http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2012/2012_sustainability_rpt.pdf

BIBLOGRAPHY

Anon. (n.d). Definition, Meaning & Characteristic of Organisation . Available: http://www.publishyourarticles.net/knowledge-hub/business-studies/organisation.html. Last accessed 9th Februray 2013.

Anon. (n.d). Definition of formal and informal organization?. Available: http://wiki.answers.com/Q/Definition_of_formal_and_informal_organization. Last accessed 9th Feburary 2013'.

Osmond Vitez, Demand Media. (2009). Centralized Vs. Decentralized Organizational Structure. Available: http://smallbusiness.chron.com/centralized-vs-decentralized-organizational-structure-2785.html. Last accessed 9th Februray 2013.

Kim Ann Zimmermann. (2012). What is Culture? Definition of Culture. Available: http://www.livescience.com/21478-what-is-culture-definition-of-culture.html. Last accessed 27TH FEBURARY 2013.

Anon. (2012). regional structure. Available: http://www.eionet.europa.eu/gemet/concept?ns=1&cp=7080. Last accessed 3rd march 2013.

Anon. (2013). functional organization. Available: http://www.businessdictionary.com/definition/functional-organization.html. Last accessed 3rd march 2013.

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