Organization Fundamentals
Organization Fundamentals
Organization Fundamentals
WHAT IS AN ORGANIZATION
Organizations are social systems that are created to
fulfill certain well-defined goals;
They have a formal structure to facilitate efficient
internal coordination and to be able to respond to the
external environment.
ORGANIZATIONAL SYSTEM
System: Organizational system consists of various
interacting components (people/resources) that acquire inputs
(goals) from the external environments, processes them
(structure & processes) and produces an output
(product/service) to be consumed back by the external
environment (consumers).
Closed system organization is self-sufficient and its operations are not
influenced by external influences like competition, economy, suppliers or
external resources.
Open systems are tightly coupled with the external environment; their
survival depends upon how quickly they anticipate external changes and
how impeccably they adapt to them. Just like biological species become
extinct if they are unable to adapt and process the external changes, so
are the modern organizations.
GOALS
An organization exists to satisfy certain goals or
vision of its establishing leaders.
Advantages § Disadvantages
Highly informal § Employees may not und
erstand their respon
Centralized decision
sibilities
making
§ May take advantage of l
Little specialization ack of regulation
FUNCTIONAL STRUCTURE
Functional Structure
An organizational form in which the major functions of the
firm, such as production, marketing, R&D, and accounting, are
grouped internally.
FUNCTIONAL STRUCTURE
FUNCTIONAL STRUCTURE
Advantages
Enhanced coordination and control
Centralized decision making
Enhanced organizational-level perspective
More efficient use of managerial and technical talent
Facilitated career paths and development in
specialized areas
Disadvantages
Functional manager have to report to central headquarters; it can be
difficult to get quick decisions.
Harder to determine accountability and establish uniform performance
standards.
If a new product fails, who is to blame?
Members of each department feel isolated.
Cost effective and delivery date is ok but quality is not maintained.
DIVISIONAL STRUCTURE
Divisional organizational structure
An organizational form in which products, projects, or product markets
are grouped internally.
Also called multidivisional structure or M-Form.
DIVISIONAL STRUCTURE
Advantages
Coordination easier because all skills, activities and
expertise are grouped in one place under a single head.
Quality and decision making enhanced.
Burden on central management is released
Quick response to important changes in external
environment
Minimal problems of sharing resources across
functional departments
Development of general management talent is
enhanced
DIVISIONAL STRUCTURE
Disadvantages
Can be very expensive
Can be dysfunctional competition among divisions
Differences in image and quality may occur across divisions
Can focus on short-term performance
The interest of the division may be placed ahead of the goals
for the total organization.
MATRIX STRUCTURE
MATRIX STRUCTURE
Matrix organizational structure
an organizational form in which there are multiple
lines of authority and some individuals report to at
least two managers.
MATRIX STRUCTURE
Advantages
Achieves coordination necessary to meet dual
demands from customers.
Flexible sharing of human resources across
products.
Suited to complex decisions and frequent changes
in unstable environment.
Provides opportunity for both functional and product skill
development.
Best in medium size organizations with multiple
products.
MATRIX STRUCTURE
Disadvantages
Can cause uncertainty and lead to intense power
struggles
Working relationships become more complicated
Decisions may take longer
Causes participation to experience dual authority, which can
be frustrating and confusing.
Means participants need good interpersonal skills
and extensive training.
Require great effort to maintain power balance.
Will not work unless participants understand it and
adopt collegial rather than vertical type relationships.
THANK YOU…………
Special Courtesy
Dr. Md. Helal-An-Nahiyan
Professor
Department of Mechanical Engineering
Khulna University of Engineering & Technology, Khulna-9203