Session III

The Art and Science of Organization Design

Outline for Today

1. What is organization structure?
2. Different types of structure

functional
multidivisional
matrix
network: combines formal and informal organization
hybrid forms

3. Pros and cons of each structure

4. The Jacobs Suchard case

Functional Structure

President

VP,
Finance

Accounting
Staff

VP,
Operations

Foreman

Scheduler

VP,
Human Resources
Management

VP,
Research
and Development

Chief
Engineer

Head
Designer

VP,
Marketing

VP,
Public
Relations

Public
Relations
Staff

Functional Organizational
Structure
l

Organized According to Bureaucratic Principles

Differentiation of offices by functions
Ex: Sales, Marketing, Finance, Production, Engineering, R&D

Integration at level of senior management

Attention of departments to functional requirements
l

Adapted to stable environments

Multidivisional Organization
President

Corporate
Vice President,
Personnel

Medical Products
Division

Corporate
Vice-President
Finance

Dental Products
Division

Corporate
Vice-President
Planning

International
Divisions

Pharmaceutical
Division

Corporate
Vice-President
Public Affairs

Hospital Support
Services Division

Tyype
pne
aelm
tihehreer

Multidivisional Structure
l

Combines bureaucracy within divisions with internal capital

markets and financial controls
Differentiation of offices by divisions
Product and geographical divisions Ex:: J&J

Integration of business strategy at level of divisions

Decentralization of business strategies and implementation
Resource allocation of capital, technology, and human resources by
senior management

Attention of divisions to markets, technology, and financial

controls
Limits emphasis on cost improvements, productivity
l

Adapted to innovations in technology and marketing

Internal selection process of divisions

Typenamehere

Typenameheer

Type name heer

Typetitlehere

Typeeltihere

Typetitlehere

Multidivisional Organization with

Lateral Relations
President

Corporate
Vice President,
Personnel

Medical Products
Division

*Members of task force

Corporate
Vice-President
Finance

Dental Products
Division*

Corporate
Vice-President
Planning

International
Divisions*

Pharmaceutical
Division*

Corporate
Vice-President
Public Affairs

Hospital Support
Services Division

Basic Design Options for

Multinational Corporations
ons
i
t
c
Fun

Product Line

Place

Country or Region
Organization

Matrix

Global Product
Organization

Country Responsiveness

Global Integration

Country Adaptation

Global Products

Country Competitors

Global Competitors

Country Manufacture

Global Factories

Country Customer

Global Customers

Week IX

ons
i
t
c
Fun ting
rke
Ma
ing
r
u
t
ac
nuf
a
e
M
anc
n
i
e
F
urc
o
s
e
nR
a
m
Hu hers
Ot

Source: Adapted from J.R. Galbraith and R.K. Kazanjian, Strategy Implementation: Structure
Systems and Process, 2d ed. St. Paul: West, 1986, 159.

D30 Murmann

Sara Lee Bakery World-Wide

Sara Lee
Corporation

Sara Lee

Sara Lee Meats

Bakery

(Jimmy Dean,

Hanes Knitwear

Hillshire Farm)

Foodservice

Retail

Bakery/Deli

Direct/Thrift

International
& Subsidiaries

Coach Leather

Sara Lee: Old Organizational

Structure
Food Service Sr
VP
General Manager

VP Field Sales

Field Sales
Force

Dir. Field

Dir. Natl. Acct.

Promotions

Finance/admin.

Dir. Natl. Acct.

Marketing

Marketing

Manager

Manager

Natl. Acct. Sales

Force

Product
Managers

Natl. Acct.
Mktg. Mgrs.

Sara Lee Food Services: New

Marketing Matrix Structure
Segment Mgmt

Product Mgmt
Breakfast Desserts Pies Promotions

Health Care
Lodging
Business &
Industry
Colleges &
Universities
Quick Service
Restaurants

Matrix Structure
l

In theory, combines advantages of functional and

divisional form with dual focus
Differentiation by division and by function
Integration process unclear and highly political
Attention: Dual focus

In practice, largely unsuccessful in U.S. and Western

countries
High political conflict, administrative costs, advantages of
functional and divisional structures not realized

Network Organization
l

Departs from traditional bureaucratic model

No stable, clearly defined hierarchy
Complex networks of vertical and horizontal relationships
Intra and interorganizational networks
Differentiation and integration both through temporary crossfunctional project teams
Reliance on strategic alliances and joint ventures

Combines formal and informal organization

Example: Hollywood Film Production, Benetton, Corning?

Hybrid Structures
l

Most organizations combine various forms

In U.S. multidivisional form increasingly combined with network
forms
Cross-functional teams
Informal relationships
Temporary workgroups

No Optimal Structure
Constant changes in structure
Emphasis on action and getting things done

Recent trends
Increased importance of interorganizational networks and alliances
Increased externalization of work