Contemporary Management

Structure of Organization & Basics of Planning

Lecture 3 By: Azhar Adil
March 2, 2012

What Is An Organization?
(One role managers must undertake is that of organizing) Organizing: The process by which managers establish working relationships among employees to achieve goals. An Organization Defined A deliberate arrangement of people to accomplish some specific purpose (that individuals independently could not accomplish alone). Common Characteristics of Organizations Have a distinct purpose (goal) Composed of people Have a deliberate structure

Source: Robins & Coulter

Organization Structure
Formal pattern of interactions and coordination designed by management to link the tasks of individuals and groups in achieving organizational goals Organizations also have informal structures or patterns of interaction which are not designed by management but usually emerge because of common interests or friendship. The process of developing an organization structure is referred as Organization design

Major Types of Organizational Structure

Managers must make choices about how to group people together to perform their work. Five common approaches- functional, divisional, matrix, team and networking help managers determine departmental groupings (grouping of positions into departments) Five organizational structures are
Functional Structure Divisional Structure Matrix Structure Team setting Networking

i)

Functional Structure

Is a type of departmentalization in which positions are grouped on the basis of similar activities, skills, expertise and resources. Positions are combined according to their main functional (or specialized)area. E.g Production or Operation comes under Manufacturing or Sales and Promotion come under Marketing.

ii)

Divisional Structure

Is a type of departmentalization in which positions are grouped according to similarity of products, services or markets. With divisional structure, each division contains major functional resources it needs to pursue its own goals with little or no reliance on other divisions.
President

Vice President (Product A)

Vice President (Product B)

Manufacturing

Research

Marketing

Manufacturing

Research

Marketing

iii) Matrix Structure

Is a type of departmentalization that superimposes a horizontal set of divisional relationships with a hierarchical functional structure. Thus a structure is both a functional and divisional organization at the same time.

iv) Team Structure

Team structure organizes separate functions into a group based on one overall objective. These cross functional teams are composed of members from different departments who work together as needed to solve problems . Intent is to breakdown functional barriers among departments and create more effective relationships.

v)

Networking Structure

Network structure relies on other organizations to perform critical functions on a contractual basis. In this setting, managers can contract out specific work to specialists. This provides flexibility and reduces overhead because the size of staff and operation can be reduced.

The Changing Organization

Source: Robins & Coulter

Functions of Organisations
As we have seen, businesses exist to provide products or services that people want to consume They do this by organising the firms resources to meet customers needs Many organisations arrange these resources into different business functions Whatever the business, all organisations have to manage the following functions: Sales . Marketing Accounts . Finance Human Resources (staff) Administration

Functions of Management
Planning, Organizing, Leading; & Controlling (PLOC) Planning
defining goals and objectives deciding what type of activities the company will engage in determining the resources needed to achieve the organizations goals & objectives.

Functions of Management
Leading
Attracting people to the organization. Specifying job responsibilities Grouping jobs into work units Marshalling and allocation of resources Creating good working conditions

Functions of Management
Organizing
Directing, motivating, and communication with employees, individually & in groups. Conflict resolution.

Controlling
Monitoring performance of people & units. Provision of feedback or information about progress. Identification of performance problems & actions to correct problems.

Concepts: Mission, Vision & Objectives

A companys mission is a statement of
the basic purpose or reason for its existence its values (role to stakeholders - customers, employees, society, etc.).

The vision goes beyond the mission statement

clarifies the long-term direction of the company (where the company is going) reflects managements aspirations for the company

Mission, Vision & Objectives

Objectives are yardsticks for tracking a companys performance or end result.
Financial performance objectives (e.g., ROA, ROI, ROE, Dividend growth, Stock price, etc.). Strategic performance objectives (e.g., market share, growth, innovation leader, customer service, community & environmental responsibility, etc.)

Examples of Mission & Vision

Coca Cola Company:
Mission: To refresh the world, To inspire moments of optimism and happiness, To create value and make difference. Vision: Be a highly effective, lean and fast-moving organization.

Apple Computer:
Mission: To bring the best personal computing products and support to consumers around the world. Vision: One person, one computer.

Concept on Planning
Selecting missions and objectives as well as the actions to achieve them, which requires decision making, that is, choosing a course of action from among alternatives. Planning involves selecting missions and objectives and deciding on the actions to achieve them. Planning requires decision making from available alternatives. Planning bridges the gap from where we are to where we want to go.

Types of Plans
Plans can be classified as
i. Mission or Purposes ii. Objectives or goals iii. Strategies iv. Policies v. Procedures vi. Rules vii. Programs viii. Budgets

Types of Plans
i) Mission or Purposes
The mission (or purpose) identifies the basic purpose or functions or tasks of an enterprise/organization. Mission must be meaningful

ii)

Objectives or Goals

Objectives (goals) are ends towards which activity is aimed. This represent not only the end point of planning but also the end toward which organizing, staffing, leading and controlling are aimed.

Types of Plans
iii) Strategies
This is a Military term which means grand plans. Can be defined as the determination of the basic long term objectives of enterprise/organization and adoption of courses of action and allocation of resources required to achieve goals

iv)

Policies

Policies are plans which are general statements or understandings that guide or channel thinking in decision making.

Types of Plans
v) Procedures
Plans that establish a required method of handling future activities. They are chronological sequences of required actions. They are guides to action, rather than to thinking and they detail the exact manner in which certain activities must be accomplished.

vi)

Rules

Rules spell out specific required actions or non actions, allowing no discretion. E.g: No Smoking

Types of Plans
vii) Programs
A complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action.

viii) Budgets
May be called quantified plan Budget is a statement of expected results expressed in numerical terms. May be expressed in financial terms; in terms of labor hours, units of product, or machine hours or in any other numeric terms.