This problem and others created by Ciscos overly complex structure were so severe that one columnist wondered aloud has Ciscos John Chambers lost his mind (Blodget, 2009)? In the summer of 2011, Chambers reversed course and decided to return Cisco to a more traditional structure while reducing the firms workforce by 9 percent. Indeed, often the owner of the firm makes all the important decisions. Structures have an impact on responsibilities and superior-subordinate relationships, communication flow, and overall management and growth. Table 9.3 Common Organizational Structures. D) Ergonomics

More generally, because functional structures are slow to execute change, they tend to work best for organizations that offer narrow and stable product lines. E.g. For example, poor coordination caused the evacuation of thousands of people from the New Orleans Superdome to be delayed by a full day. B) Task identity B)have a proactive orientation toward changing the job. What are the advantages and disadvantages of decentralization? 04 Apr. In contrast, flat structures involve a larger number of employees reporting to each manager. It leads to functional specialization. As a small organization grows, the person in charge of it often finds that a simple structure is no longer adequate to meet the organizations needs. WebFunctional structures tend to be effective when an organization does not have a large number of products and services requiring special attention. Using a matrix structure can create difficulties too. A) external job analysts B) Biological approach Specialization. C) supervisors

The specific functional departments that appear in an organizational chart vary across organizations that use functional structures. An advantage of formalization is that it makes employee behavior more predictable. Architects often also act as marketers and accountants when drafting their small business plans. It also allows for employees to be exposed to various other departments and work processes since they have to work so closely to accomplish set projects. On December 27, 2016, S&L purchased Coca-Cola common shares for $875,000 and sold the shares on January 3, 2017, for$880,000. The main advantage of a mechanistic structure is its efficiency. In contrast to mechanistic structures, organic structures are flexible and decentralized, with low levels of formalization. Many organizations start out with a simple structure. In the example offered earlier in this section, a firm was divided into five functional areas: (1) marketing, (2) production, (3) human resources, (4) information technology, and (5) customer service. A clear definition of top management and other specialized departments sets the expectation of who reports to who, and how they can communicate with one another. A) divisional If the publisher is organized using a functional structure, however, every department in the organization will have to be intimately involved in the creation of the new textbooks. We illustrate functional structures in action within two types of organizations that commonly use them. C. This type of structure makes it difficult to have a holistic view. Strategic decision speed and firm performance.

Within functional and multidivisional structures, vertical linkages between bosses and subordinates are the most elements.

b. Because centralized organizations assign decision-making responsibility to higher-level managers, they place greater demands on the judgment capabilities of CEOs and other high-level managers. Compare the Difference Between Similar Terms. While no two organizational structures are exactly alike, four general types of structures are available to executives: simple functional, multidivisional, and matrix. C) need to be high in cognitive ability. C. Also, communication from employees to managers is less likely to be distorted since there are not as many layers that messaging has to travel through. Once a structure is created, it constrains future strategic moves. In tall structures, the number of employees reporting to each manager tends to be smaller, resulting in greater opportunities for managers to supervise and monitor employee activities. A lack of high-level management reduces the number of salaries needed, and it allows decisions to happen at a faster rate since there are fewer people that need to sign off on important choices and inquiries. E) Task significance, Which of the following approaches views job satisfaction as one of the most important outcomes of job design? Each council also averaged fourteen members. In the functional structure, the specialisation is based on functions. WebNote the continuum in Exhibit 4.6, showing the earliest form of organizational structure, functional, evolving with more complex environments to divisional, matrix, team-based, and then virtual.This evolution, as discussed above, is presented as a continuum from mechanistic to organic structuresmoving from more simple, stable environments to complex, Hitting the right balance between decentralization and centralization is a challenge for many organizations. Turban, D. B., & Keon, T. L. (1993). Out of the four organizational structures, functional and divisional structures are the easiest to build financial and forecasting models on, because of the simplicity of the companies departmental structure.

San Francisco, CA: Jossey-Bass. D) Biological approach E) are less sensitive to individual differences between workers. Initechs use of a matrix structure meant that each employee had multiple bosses, each representing a different aspect of Initechs business. 2011, July 25. London: Tavistock. Both these problems plagued Sears Holdings in 2008, leading executives to reorganize the company. Matrix structures are also used to organize research and development departments within many large corporations. The type of employee who will succeed under each structure is also different. Relationships of tall and flat organization structures to the satisfactions of foreign managers. Job costing systems are used in all business sectors. A. Porter, L. W., & Siegel, J. Because divisional structures have duplicated positions across each division, the repetition of resources is more expensive. Companies are divided into departments of specialization, and then within those units, they are separated further into projects and products.

In these structures, employees act like generalists as opposed to specialists. On the other hand, divisional structure, the specialisation depends on product lines. A divisional structure is a system that creates divisions for each organizational function, such as geographical regions or product lines, with enough core functions and resources to support them. An additional benefit of such moves is that consistency is created across divisions. Properly managed organizational structures can result in higher employee motivation and reduced costs. 2017. Another downside of multidivisional structures is that they tend to be more costly to operate than functional structures. In the functional structure, the specialisation is based on functions. Chapter 4 Fall 2020 Quiz Questions & Answers. An important benefit of adopting a functional structure is that each person tends to learn a great deal about his or her particular function. Web. Harvard Business Review, 84(4), 6070. Brazil, J. J. Research shows that when managers supervise a large number of employees, which is more likely to happen in flat structures, employees experience greater levels of role ambiguitythe confusion that results from being unsure of what is expected of a worker on the job (Chonko, 1982).

Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing and sales whereas divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. Instead of performing specialized tasks, employees will be in charge of performing many different tasks in the service of the product. (adsbygoogle = window.adsbygoogle || []).push({}); Copyright 2010-2018 Difference Between. Chotchkies organizational structure involved simpler working relationships, but these relationships were strained beyond the breaking point by a managers eccentricities. Finally, while employees report that flat structures are better at satisfying their higher-order needs such as self-actualization, they also report that tall structures are better at satisfying security needs of employees (Porter & Lawler, 1964). Learn more about how Pressbooks supports open publishing practices. When GE makes a strategic move such as acquiring the well-support division of John Wood Group PLC, only the relevant division (in this case, Energy) needs to be involved in integrating the new unit into GEs hierarchy. As of July 2011, Searss stock was worth just over half what it had been worth five years earlier. You may want to pawn your rare coin collection. This allows for teams to easily share information between one another and further optimizes the department they are a part of. Functional Structure. T/F: If an organization decides to compete on costs, and hires low-cost labor, it needs to have a decentralized structure to enable autonomy in decision-making by the workers. Seeking to overcome this centralization paralysis, Caterpillar underwent several dramatic rounds of reorganization in the 1990s and 2000s (Nelson & Pasternack, 2005). T/F: Feng shui can be an argument to examine the ergonomics of an employee's workstation. (1981). Higher specialization also allows for a greater division of labor, which is linked to higher productivity. Functional structures can cost significantly less since roles and positions duplicate less often and get shared across the company. Askenas, R., Ulrich, D., Jick, T., & Kerr, S. 1995. Higher specialization also allows for a greater division of labor, which is linked to higher productivity.

Functional Structure vsDivisional Structure, Difference Between Communication and Business Communication, Difference Between Transformational and Situational Leadership. This creates confusion for employees because they are left unsure about who should be giving them direction. Key Difference Functional vs Divisional Structure The key difference between functional and divisional structure is that functional structure is an organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing and sales whereas divisional Which of the following is the process of defining the way work will be performed and the tasks that will be required in a given job? In 2005, boundaries between organizations hampered rescue efforts following Hurricane Katrina. It may involve employees reporting to different bosses depending on their current assignment. A)it can be very expensive compared to a functional organizational structure. Formation. C) functional As one employee noted, We vote with our feet. Using a functional structure creates advantages and disadvantages. Englewood Cliffs, NJ: Prentice-Hall. Sine, W. D., Mitsuhashi, H., & Kirsch, D. A. The main disadvantage of this structure is that it is easy for office politics to take hold and for one divisional team to undermine and compete with another for resources.

What type of structure best describes the organization of your college or university? 5. A. It has been argued that due to the change in the nature of crimes, the FBI needs to gather accurate intelligence before a crime is committed; this requires more centralized decision making and strategy development (Brazil, 2007). al., 2002). B) need to be more experienced. false. Mechanistic structures are rigid and bureaucratic and help companies achieve efficiency, while organic structures are decentralized, flexible, and aid companies in achieving innovativeness.

Journal of Applied Psychology, 85, 294304. Academy of Management Journal, 49, 121132. Strategic process and content as mediators between organizational context and structure. false. Successfully using a matrix structure requires excellent communication among various managershowever, excellence that Initech could not reach. In particular, the French division of McDonalds ran a surprising advertisement in a magazine called Femme Actuelle.

Meaning. As parodied in the move. Out of the four organizational structures, functional and divisional structures are the easiest to build financial and forecasting models on, because of the simplicity of the companies departmental structure. T/F: Due to their work-flow focus and proximity to a homogeneous consumer base, divisional structures tend to be less flexible and innovative.

Both functional and divisional structures are two of the most common organizational structures. WebFunctional structures tend to be effective when an organization does not have a large number of products and services requiring special attention.

Side by Side Comparison Functional vs Divisional Structure Out of the four organizational structures, functional and divisional structures are the easiest to build financial and forecasting models on, because of the simplicity of the companies departmental structure.

Web. High specialization can be seen in functional organizations since the use of shared functions. When it comes to examining and understanding skill levels for a particular job, ________ may be the best source. These elements of structure affect the degree to which the company is effective and innovative as well as employee attitudes and behaviors at work. How much work can a man accomplish with eight bosses breathing down his neck? For example, a structure might need to be adjusted if decisions with the organization are being made too slowly or if the organization is performing poorly. It is easy for a group to feel their product or project is more important than another because of the amount of time and dedication they spend working on it. false. In the above example, assume that 2 out of the 5 product categories are sold in two different countries. In the functional structure, the specialisation is based on functions. Within a functional structure, employees are divided into departments that each handle activities related to a functional area of the business, such as marketing, production, human resources, information technology, and customer service (Table 9.5 Functional Structure). Office Space illustrates the importance of organizational design decisions to an organizations culture and to employees motivation levels. WebA functional structure allows for a higher degree of specialization and deeper domain expertise than a simple structure. Functional structures rely on a division of labor whereby groups of people handle activities related to a specific function of the overall business. This structure requires two sets of leadership at the same level which is double the salaries and benefits. New businesses often suffer from a lack of structure, role ambiguity, and uncertainty. 2. A matrix structure can facilitate resource sharing and collaboration but may also create complicated working relationships and impose excessive stress on employees.

B)there is a strong tendency for divisions to focus on short-term performance. At December 31, the shares had a fair value of $873,000, and S&L has the intent and ability to hold the investment until fair value recovers. Decisions can be made more quickly, and employees often believe that decentralized companies provide greater levels of procedural fairness to employees. Retrieved from http://www.businessinsider.com/henry-blodget-has-ciscos-john- chambers-lost-his-mind-2009-8. E) are mutually exclusive of those of job design. B. Functional structure refers to grouping of jobs of similar nature under one department. This structure is an advantage for them because it allows McDonalds to produce a uniform product around the world at minimum cost. Joanna, a waitress at nearby restaurant Chotchkies, had only one managera stark contrast to Gibbonss eight bosses. A) Traditional approach B)there is a strong tendency for divisions to focus on short-term performance. Because of the specialized departments, management can forget to implement mechanisms for units to communicate across one another or collaborate when appropriate. 1. We illustrate a number of businesses that commonly rely upon a simple structure below. It has a tendency to be highly sophisticated, and as a result of that, it will take a lot of planning to implement it correctly. E) Job analysis. WebMore generally, because functional structures are slow to execute change, they tend to work best for organizations that offer narrow and stable product lines. Everyone in a company that works on marketing the companys products, for example, would report to the manager of the marketing department. Thus when relying on a simple structure, the owner of a firm must be sure to communicate often and openly with employees. Companies are divided into departments of specialization, and then within those units, they are separated further into projects and products. N.p., n.d. And unfortunately for the books authors, the publication process will be halted whenever a functional area does not live up to its responsibilities in a timely manner. (1988). If done correctly, flatarchies can increase employee morale.

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