Strategic Management Activity, Summaries of Strategic Management

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STRATEGIC MANAGEMENT

PART III

STRATEGY IMPLEMENTATION

Richel Royce T. Chan, PhD

CHAPTER 6: ORGANIZATIONAL SYSTEMS

Learning Outcomes Particularly at the end of this chapter, the students should be able to:

• Discuss the different types of organizational structures;
• Cite examples to illustrate each of the different types of organizational structures;
• Explain the factors that may influence a company’s decision to adopt a type of organizational structure;
• Assess each of the organizational components in terms of the value they contribute to the business entity;
• Demonstrate the role of leadership in an organization; and
• Show the importance of organizational policies in running an organization.

Organizational Structure

• Organizational structure refers to the system or mode by which a group of individuals is able to achieve its desired goals. The organizational structure of an organization/company is subject to many factors like technological breakthroughs by competitors, changes in customer lifestyles, and those that are environmental in nature.
• Management, employees, suppliers, customers, government, and society are examples of internal factors that may significantly affect organizations one way or another.

Types of Organizational Structures

• An examination of the different organizational charts of popular and successful companies will show a variety of organizational structures. Depending on their organizational goals and specific objectives, these built-to-last companies adopt appropriate organizational forms that may range from functional to territorial, or from product to market-centered to matrix.

Functional Organizational Structure

• A functional organizational structure is a team

structure that groups employees into different

departments based on areas of expertise. This type of

structure is one of the most common types in

business, especially in larger companies, where

groups of employees are organized according to the

function they perform.

Territorial Organizational Structure

• It facilitates the expansion of the business into

various regions throughout the nation. There is better

coordination of activities through the setting up of

geographical divisions. It helps to meet local demands

more effectively. There can be real and face to face

communication with the local clients.

Territorial Organizational Structure

Product Organizational Structure

• Product organizational structure is a framework in which a business is organized into separate divisions, each focusing on a different product or service and functioning as an individual unit within the company.

Product Organizational Structure

Market-Centered Organizational Structure

• Amazon is an example of a market-oriented company. As it has grown and developed, it has consistently added processes and features that clearly address concerns and desires expressed by consumers. For example, many consumers, especially city dwellers, worry about getting packages delivered when they're not at home.

Market-Centered Organizational Structure

SBU Organizational Structure

• There are three levels in a strategic business unit

structure: At the top sits the corporate headquarters

that monitors performance and process. The next

level has SBU groups that carry their status. At the

bottom are divisions assembled according to the

similarities with SBUs.

SBU Organizational Structure

• The best example of SBU are companies like Proctor and Gamble, LG etc. These companies have different product categories under one roof. For example, LG as a company makes consumer durables. It makes refrigerators, washing machines, air-conditioners as well as televisions.