Organization Structure and Management SystemsEvolution of the Modern CorporationGeneral Motors’ Organization Structure, 1921The Basic Tasks of OrganizationPowerPoint PresentationSlide 6Weber’s Principles of BureaucracyMechanistic and Organic FormsSlide 9General Motors’ Organization Structure, 1997Slide 11Mobil Corporation, 1997Slide 13The Generic Strategic Planning CycleOrganization Structure and Management SystemsOrganization Structure and Management Systems•Evolution of the corporation•Principles of organizational design•The role of hierarchy: bureaucraticcontrol vs. modular integration•Alternative structural forms•Management systemsOUTLINEEvolution of the Modern CorporationEvolution of the Modern CorporationThe businessenvironmentOrganizationalconsequencesStrategic changesLate 19thcenturyEarly19thcenturyEarly20thcenturyLocal markets Firms specialized & Small firms.Transport slow focused on local Simple manage- Limited mechanization markets ment structuresIntroduction of Geographical and Functional struct-railroads, telegraph vertical expansion ures. Line/staffindustrialization separation. Accou-nting systemsExcess capacity in Product & Development of distribution. Growth multinational multidivisionalof financial institut- diversification corporationions & world tradeBoard of DirectorsPresidentExecutive CommitteeFinancial StaffLegal DepartmentGeneral Advisory StaffGM Acceptance CorporationChevrolet DivisionSheridanDivisionCanadian DivisionOldsmobile DivisionGM Truck DivisionGM Export CompanyCadillac DivisionBuick DivisionInter-company Parts DivisionOakland DivisionSamson Tractor DivisionScripps Booth Corp.Source: A.P. Sloan, My Years with General Motors, Orbit Publishing, 1972, p. 57.General Motors’ Organization Structure, 1921General Motors’ Organization Structure, 1921The Basic Tasks of OrganizationThe Basic Tasks of OrganizationTHE ORGANIZATIONAL CHALLENGE: to design structure & systems that:Permit specializationFacilitate coordination by grouping individuals & link groups with systems of communication, decision making, & controlCreate incentives to align individual & firm goals Achieving high levels of productivity requires SPECIALIZATIONSpecialization by individuals necessitates COORDINATIONFor coordination to be effective requires COOPERATIONBut goals of employees == goals of owners THE AGENCY PROBLEM(a) Self Organizing Team:10 interactions(b) Hierarchy:4 interactions Hierarchy Economizes on Coordination Hierarchy Economizes on CoordinationTightly-coupled, integrated system: Change in any part of the system requires system-wide adaptation Loose-coupled, modular hierarchy: partially-autonomous modules linked by standardized interfaces permits decentralized adaptation and innovationHierarchy of Loosely-Coupled Modules Allows Flexible AdaptationHierarchy of Loosely-Coupled Modules Allows Flexible AdaptationWeber’s Principles of BureaucracyWeber’s Principles of Bureaucracy•Rational-legal authority•Specialization of labor•Hierarchical structure•Coordination and control through rules and standard operating procedures•Standardization employment practices•Separation of jobs and people•Formalization of administrative acts, decisions and rulesMechanistic and Organic FormsMechanistic and Organic FormsFEATURE MECHANISTIC ORGANICTask definition Rigid & highly specialized Flexible; less specializedCoordination Rules & directives Mutual adjustment.l& control imposed from the top Cultural control Communication Mainly vertical Horizontal & verticalCommitment To immediate superior To the organization & its& loyalty goals & valuesEnvironmental Stable with low tech- Dynamic, ambiguous, context nological uncertainty technologically uncertainDesigning the Hierarchy: The Basis for Defining Organizational Units and their RelationshipsDesigning the Hierarchy: The Basis for Defining Organizational Units and their RelationshipsUnits may be defined on the basis of Common Tasks, Products, Geographical Proximity, or Process/Function Critical issue: Intensity of Coordination—Employees with the greatestinterdependence should be grouped into same organizational unit. Additional criteria: Economies of Scale, Economies of Utilization,Learning, Standardization of Control SystemsBoard of DirectorsPresident’s CouncilCorporate FunctionsNorth American OperationsDelphi Automotive SystemsInternational OperationsGM Acceptance CorporationHughes ElectronicsMidsize & Luxury Car Group Small Car GroupGM Power Train GroupVehicle Sales, & Marketing GroupDevelopment & Technical Cooperation GroupGM EuropeAsian & Pacific OperationsLatin American, African, & Middle East OperationGeneral Motors’ Organization Structure, 1997General Motors’ Organization Structure, 1997Corporate Executive OfficeChairman & CEO Corporate StaffFinance Business R&D Human LegalDevelopment ResourcesGE AircraftEnginesGE Trans-portationGEIndustrialSystemsGEPlasticsGEAppliancesGESupplyGE PowerSystemsGE MedicalSystemsGELightingGE SpecialtyMaterialsNBCGE Capital26 businesses organized into 5 segments: Consumer Mid-market Specialized Specialty EquipmentServices Financing Financing Insurance ManagementService DivisionsGeneral Electric’s Organization Structure, 2002 General Electric’s Organization Structure, 2002Mobil Corporation, 1997 Mobil Corporation, 1997 Board of DirectorsCEO Executive OfficeNorth America M&RTechnologyWorldwide ChemicalsNorth AmericaEurope & CISAfrica & Middle EastAsia/ PacificNew ExplorationSouth AmericaWorldwide LNG & IPPSupport ServicesCorporate CenterShippingRoyal Dutch/Shell Group, 1994: A Matrix StructureRoyal Dutch/Shell Group, 1994: A Matrix StructureCorporateGuidelinesDraftBusinessPlansDiscusswithCorporateRevisedBusinessPlansCorporatePlanForecasts/Scenarios/Planning assumptionsApprovalbyBoardAnnual Performance TargetsPerformanceReviewCapexBudgetThe Generic Strategic Planning CycleThe Generic Strategic Planning