1. Organizational Design and Structure (Advantages and Disadvantages)



Individual Assignment 3 (OB)
Dec. 28. 2013

1. Organizational Design and Structure (Advantages and Disadvantages)

 Each person assumes a role within the organization, and the organizational structure determines the reporting relationship between the individuals. The organization's strategy determines the organizational structure that will work best for a business at a particular point in time. For example, a small business that hires only experienced personnel, who require limited supervision, will likely adopt a different organizational structure than will a business that hires a number of recent college graduates, who require extensive supervision. (McShane and Steen, p. 362). In this assignment I would like to offer to your attention an ABC Ltd. IT company, it’s organizational structure, job design and other segments of corporate system. All organizational structures include two fundamental requirements: the division of labour and the coordination of that labour so that employees are able to accomplish common goals. (McShane and Steen, p. 364). ABC Ltd. is a large IT company with divisional organizational design. ABC’s design is organized around products, projects, and markets. Each division includes its own functional specialists typically organized into departments. A company has North American division, exploration division, marketing division, production divisions and others. Divisions are relatively autonomous and consist of products and services and are different from those of other divisions. Divisions executives help determine product-market and financial objectives, manage their own hiring, budgeting and advertising. Using this structure, division heads have decision-making power, which they rely on to respond to changes in their particular markets or areas of responsibility quickly. In addition, one division might compete with another division for resources and market standing, just as one company competes with another. A divisional organizational structure helps ABC Ltd. to segregate large sections of the company's business into semi-autonomous groups. These groups are mostly self-managed and focused upon a narrow aspect of the company's products or services. As with any organization structure, divisions have both strengths and weaknesses (advantages and disadvantages). Advantages:

A divisional structure provides some distinct advantages for large organizations. Each division can specialize and focus its efforts on its particular product, service or market and not be distracted by competing interests. Since each division is semi-autonomous, operational decisions that you need to make are made by employees closest to the specific issues and problems. Not only are these employees closer to the problem, they also tend to have the specialized knowledge and skills best suited to resolve the problem. The divisional structure also provides a great deal of flexibility for the overall organization because each division operates separately and focuses on the most pressing issues facing it rather than being triaged by a central authority. In other words, the leader of each division can focus on the specific goals of his division and leave the overall strategic management of the company to the folks at the corporate headquarters. Additionally, it may be easier to pinpoint problems in the overall organization and hold specific divisions, and their leadership, accountable. Finally, a hierarchy is still maintained by a central authority, but it is limited to providing the strategy for the entire organization and coordinating its implementation across divisions. In other words, a corporate headquarters will generally let you do what you have to do to achieve your divisional goals, but will work with you to implement general corporate strategy and help you work with other divisions as necessary. Disadvantages:

In spite all the strengths of the divisional structure, it also has...
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