OH A
C

IN S IG E E C D EN AL L L ON E TI XC Z A E I N A 1 GER RP T

N

WHAT IS ORGANIZATION?

A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems - they affect and are affected by their environment.

THERE ARE A NUMBER OF ORGANIZATION DESIGNS, INCLUDING MANY COMBINATIONS OR HYBRIDS OF MODELS. SEVEN DESIGNS ARE SHOWN BELOW:
Product Function Geographic

Process Centered Hybrid Matrix

Front End / Back End

FUNCTIONAL ORGANIZATIONS
Description: Activities and employees grouped according to their business function Rely on functional expertise to support core competencies Most logical and simple form, focusing on a narrow range of skills / expertise Applicable when technology is routine, small number of products, and / or if interdependence across functional units is minimally required

FUNCTIONAL ORGANIZATIONS
Weaknesses Difficult to manage when numerous product lines / customer services are offered Quick action / decisions may be difficult More difficult to manage performance / accountability relative to contribution to value chain Loyalty to functional silos may cause lack of coordination / cooperation Cost reduction and organizational efficiency may be a challenge

FUNCTIONAL ORGANIZATIONS
Strengths: Ideal when specialized resources are required Can be efficient given economies of scale and cost controls Collaboration and quality within each function Supervision easier Easier to mobilize specialized skills when needed

PRODUCT ORGANIZATIONS
Description: Each unit is responsible for the design, production, and sales of a product / family