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Assignment on Culture and Organizational Structure (Chapter # 8)

IM 502 (Fundamentals International Management)

Prepared by:

Group: 8 (Eight)

Group Members Roll

Md. Al Amin 222

Sagir Hossain 223

Mahabub Alam 224

Prepared for:

Dr. Md. Ataur Rahman

Professor

Department of Management Studies,

University of Dhaka

Date of Submission

24 January, 2012


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Table of Contents

Meaning of culture: --------------------------------------------------------------------------------------- 4

Meaning of Organizational structure ------------------------------------------------------------------- 4

The Importance of an Organizational Structure ------------------------------------------------------ 5

Benefits of Organizational Structure ------------------------------------------------------------------- 7

Types of Organization Structure ------------------------------------------------------------------------ 9

Line Organization Structure --------------------------------------------------------------------------- 10

Functional Organization Structure-------------------------------------------------------------------- 10

Line and Staff Organization Structure --------------------------------------------------------------- 12

Six Elements of Organizational Structure ----------------------------------------------------------- 13

Condition of good structure ---------------------------------------------------------------------------- 15

Causes of poor structure: ------------------------------------------------------------------------------- 16

Functions of Structure ---------------------------------------------------------------------------------- 17

Factors Affecting Structure Other Than Culture --------------------------------------------------- 18

Relationship between Culture and Structure-------------------------------------------------------- 19

Bureaucracy ---------------------------------------------------------------------------------------------- 20

Types of Bureaucracy on the Basis of Cultural Dimensions ------------------------------------ 25

Critical Evaluation of Bureaucracy ------------------------------------------------------------------- 26

Positive Qualities of Bureaucracy -------------------------------------------------------------------- 26


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Negative Qualities of Bureaucracy ------------------------------------------------------------------- 27

Global Structural Integration -------------------------------------------------------------------------- 27

Organizing for Globalization: ------------------------------------------------------------------------- 28

Emergent Structural Forms: --------------------------------------------------------------------------- 29

The Transnational Corporation Network Structure: ----------------------------------------------- 29

Choice of Organizational Form: ---------------------------------------------------------------------- 30

Control System for Global Operations -------------------------------------------------------------- 30

Possible Questions--------------------------------------------------------------------------------------- 31

References ------------------------------------------------------------------------------------------------ 32

Multiple Choice Questions----------------------------------------------------------------------------- 33


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Chapter: 8

Culture and Structure

Meaning of culture:

According to CARLA Culture is defined as the shared patterns of behaviors and

interactions, cognitive constructs, and affective understanding that are learned through a

process of socialization. These shared patterns identify the members of a culture group

while also distinguishing those of another group.

"Culture is learned and shared human patterns or models for living; day- to-day living

patterns these patterns and models pervade all aspects of human social interaction. Culture

is mankind's primary adaptive mechanism" Damen, L. (1987).

Culture consists of patterns, explicit and implicit, of and for behavior acquired and

transmitted by symbols, constituting the distinctive achievements of human groups,

including their embodiments in artifacts; the essential core of culture consists of traditional

(i.e. historically derived and selected) ideas and especially their attached values; culture

systems may, on the other hand, be considered as products of action, and on the other as

conditioning elements of further action. Kroeber, A.L., & Kluckhohn, C. (1952)

Meaning of Organizational structure

An Organization has been defined by E. F. L. Breach as "a system of structural

interpersonal relationships. In it, individuals are differentiated in terms of authority, status

and roles with the result that personal interaction is prescribed, and anticipated reactions

between individuals tend to occur while ambiguity and spontaneity are decreased".

According to Louis A. Allen, Organization is "the process of identification and grouping

the work to be performed, defining and delegating responsibility and authority and

establishing relationships for the purpose of enabling people to work most effectively

together in accomplishing objectives".


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James Mooney defines organization as "the form of every human association for

attainment of a common purpose".

Structures are applicable to people in how a society is as a system organized by a

characteristic pattern of relationships.

Organizational structure refers to the different hierarchies or levels in a company. An

organizational structure appears as a series of boxes, vertical and horizontal lines. The

boxes represent various titles within the organization, and the vertical lines represent to

whom that position reports. Horizontal lines show which employees are on the same level.

The appearance of an organization structure is usually pyramidal because there are fewer

executive-level positions at the top of the company.

An organizational structure consists of activities such as task allocation, coordination

and supervision, which are directed towards the achievement of organizational aims. It

considers as the viewing glass or perspective through which individuals see their

organization and its environment.

The Importance of an Organizational Structure

The importance of an organizational structure involves assisting business owners, CEOs,and entrepreneurs to conceptualize, visualize, and construct a hierarchical system to be

implemented into their organization.

1. Chain of Command

An organizational structure involves a chain of command which determines and defines:

job positions, who makes the decisions, and who's accountable for various duties.

2 .Span of Control

Span of control determines and quantifies the actual amount of employees a managersupervises.


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3. Departmentalization

Departments within an organization structure are sections of the structure divided into

functional divisions relevant to specific tasks. Determining what activities, tasks, and

talents are to be grouped to best achieve an organization's objective is called the

departmentalization process.

4. Distribution of Authority

Distribution of authority determines if decision-making authority is concentrated among a

few high-level figures or is the authority shared and distributed throughout a variety of

departments working closet to the their corresponding tasks.

5. Organization Height

Organization height defines how many departments, divisions, and layers there are

between the highest levels and the lowest levels of an organization.

6. Change Role Assignments

Another way to change the culture of an organization is to reassign technical specialists in

existing departments. For example, you can decentralize the HR department and move an

HR professional into each major department.

7. Employee Involvement

Some management teams bring the need for culture change to workers, using a grassroots

approach to changing the structure of the company. Managers might present the problem of

wanting to make the company more responsive to the market's changing conditions.

8. Strong Culture

A company with a strong organizational culture can effectively change its culture because

its employees are responsive to their organizational structure. If employees are highly

committed to a work-team structure and their teams desire to shift the culture to focus on

new products or services, they might follow the team.


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9. Function

Organizational structure is particularly important for decision-making. Most companies

either have a tall or flat organizational structure. Small companies usually use a flat

organizational structure.

10. Communication

The importance of organizational structure is particularly crucial for communication.

Organizational structure enables the distribution of authority. When a person starts a job,

he knows from day one to which he will report. Most companies funnel their

communication through department leaders.

11. Evaluating Employee Performance

Organizational structure is important for evaluating employee performance. The linear

structure of functional and product organizational structures allow supervisors to evaluate

the work of their subordinates. Supervisors can evaluate the skills employees demonstrate.

12. Achieving Goals

Organizational structure is particularly important in achieving goals and results.

Organizational structure allows for the chain of command. Department leaders are in

charge of delegating tasks and projects to subordinates so the department can meet projectdeadlines.

Benefits of Organizational Structure

The structure of an organization is meant to complement the company's business goals and

objectives. It is also the foundation of the company's culture and as such affects employee

behavior, performance, motivation and cooperation. Organizational structures should allow

for flexibility, encourage employee creativity and effectively utilize the skills and abilities

of the workforce.

1. Functional Structure

Functional organizational structural group employees based on the positions they hold or

by the tasks, they perform. The benefits of structuring employees by common job titles and


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activities include better communication among specialists, increased teamwork and shared

knowledge, and it allows for quicker decision-making.

2. Divisional Structure

A divisional structure can group employees by product divisions, geographic divisions or,

geographic divisions. The advantages of divisional structures include higher quality

products and customer service because of specialization, facilitated communication and

teamwork within divisions and encouragement of hands-on problem solving.

3. Matrix Structure

Matrix structures group employees by a combination of positions held, tasks performed

and product divisions. A matrix structure results in employees having multiple bosses,

facilitates product development through innovation and creativity, improves

communication and teamwork between divisions and increases responsibility and freedom

of employees.

4. Hierarchical and Horizontal Structures

Communication and decision-making is more efficient and quicker in horizontally

structured organizations compared with communicating up each level of the hierarchy.

Also, the decentralization of a flatter structure allows for greater job responsibility andmotivation.

5. Unified Marketing Message

A company can present a unified front to customers, vendors and investors when a

common marketing message is used throughout the organization. A unified marketing

message can help the entire company better understand its marketing goals, and then work

together to achieve them.

6. Succession

A strong organizational structure is better able to prepare qualified employees for

management. Departments can work together on a developmental plan to help encourage

the training of managerial candidates within any department.


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7. Focus on Strategy

Using a strong organizational structure allows a company to better focus on a single set of

goals instead of each group working towards its own agenda. It helps the company to use

resources wisely in the pursuit of company goals as opposed to doubling efforts or

experimenting with options perhaps not in the company's best interests.

8. Training

A good organizational structure makes employee training easier to administer, and it also

allows it to remain flexible based on the changes within the organization. When

organizational structure regulates the flow of information, then changes within that

information are easier to monitor and better adaptable for a company-wide trainingprogram.

9. Decision Making

An organizational structure can make decision making a more efficient process, according

to Lamar University. When a defined hierarchy is in place, the company is better equipped

to make important decisions and adjust practices to meet the demands of competition.

Types of Organization Structure

Organization structure is defined as "The logical arrangement of task and the network of

relationships and roles among the various positions established to carry out the activities

necessary to achieve the predetermined objectives of business". Internal Organization

structure constitutes the arteries and veins through which the blood of work flows in the

body ofOrganization.

Internal Organization structures can be broadly classified into the following forms:

1. Line Organization structure.2. Functional Organization structure.3. Line and staff Organization structure.4. Product Organization structure.5. Committee and Matrix Organization structure


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Line Organization Structure

Line Organization (also called Military/Scalar Organization) is the oldest and the simplest

form of internal Organization structure. It was first developed by the Roman army and later

adopted by armies all over the world. Factory owners also used line Organization structure

in its purest form in the nineteenth century in England.

In the line Organization, the line of authority moves directly from the top level to the

lowest level in a step-by-step manner. It is straight and vertical. The top-level management

takes all major decisions and issues directions for actual execution. Thus authority moves

downward and also step-by-step. The responsibility, on the other hand, moves in the

upward direction.

Line Organization structure is given in the following chart:

Functional Organization Structure

F.W.Taylor conceived the functional Organization structure. According to him, it is

unscientific to overload a foramen with the entire responsibility of running a department.

He introduced a system of functional foremanship in his Organization. In his functional

foremanship, there will be eight specialists' foremen who will be required to guide, direct


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and control the work. Workers at the plant level will have to follow the instructions of all

these eight specialists called bosses.

In the functional Organization suggested by F. W. Taylor, the job of management is

divided according to specialization. As a result, functional departments are created. In the

functional foremanship, there will be eight specialists/functional heads called bosses. Out

of eight bosses, four bosses will be at the planning level and the remaining four will be at

the slop floor level.

The functional Organization structure is given in the following chart:-

Merits of Functional Organization Structure

1. Facilitates specialization:Functional Organization structure facilitates division of work and specialization. Each boss

has specialized knowledge of his functional area. He is in a better position to guide andhelp the workers.


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2. Benefits of large-scale operations:Functional Organization offers the benefit of economy of large-scale operation. In this

Organization, one administrative unit manufactures all products. The available machinery,

equipment and facilities are used fully for large-scale production.

3. Facilitates effective coordination:Functional Organization facilitates effective coordination within the function. This is

possible as one boss is in-charge of a particular function and he looks after all activities,

which come within that function.

4. Operational flexibility:Functional Organization possesses operational flexibility. Necessary changes can be

introduced easily to suit the needs of the situation without any adverse effect on the

efficiency.

5. Ensures effective supervision:Functional Organization facilitates effective supervision by the functional heads and

foremen. Due to specialization, they concentrate on the specific functional area and keep

effective supervision on their subordinates.

Line and Staff Organization Structure

In the line and staff Organization, line executives and staff are combined together. The line

executives are 'doers' whereas staff refers to experts and act as 'thinkers'. The following

chart shows line and staff Organization structure:


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The line executives are concerned with the execution of plans and Policies. They do their

best to achieve the organizational objectives. The staff concentrates their attention on

research and planning activities. They are experts and conduct advisory functions.

The staff is supportive to line. The staff specialists offer guidance and cooperation to line

executives for achieving organizational objectives. This reduces the burden of functions on

the line executives and raises overall efficiency of the Organization.

Six Elements of Organizational StructureOrganizational structure determines corporate communication and creates a plan for

efficient growth for the future. The six elements of organizational structure come together

to create the blueprint for your company is operated, and determine how your managerial

staff goes about effective change in your organization.

1. GeographyThe more spread out an organization is, the more autonomy each location will need to be

given in order for the company to run efficiently. Managers need to establish a clear line of

communication in order to receive guidance and instruction.


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2. Number of EmployeesA large employee population can necessitate that there be several layers of management for

a company to run efficiently. The organizational structure needs to be elastic enough to

accommodate more employees and the potential need for a larger management structure.

3. Product EvolutionA company may start with a small line of products that cover a general part of the industry.

The need to create specified departments for product development and manufacturing can

have an effect on the company's organizational structure.

4. Distribution of AuthorityA company's organizational structure is affected by whether the company wants centralized

management or decentralized management. Centralized management keeps all major

decisions with one specific executive group, while decentralized management allows

company managers to have more said in the decision-making process.

5. ControlA company that requires a higher product quality will have stricter rules and more

regimented environment equipment. Companies that engage in the mass production of

products may not exert as much control over the quality of their products and may create adifferent organizational structure.

6. MarketplaceThe marketplace has a bearing on how a company is structure. A manufacturer may decide

to sell products through wholesalers and directly to end users. In order for this model to be

successful, the structure of the company would need to be set up to keep these elements

separate, including a separate marketing team and a separate sales force.


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Condition of good structure

1. Simplicity:Line Organization structure is easy to understand and follow by superiors and subordinates.

It is simple and clear as regards authority and accountability.

2. Prompt decisions:Line Organization facilitates prompt decision-making at all levels, as the authority given is

clear and complete.

3. Discipline:It brings discipline in the Organization due to unity of command, delegation of authority

and direct accountability.

4. Economical:Line Organization is economical, as experts are not appointed.

5. Quick communication:High efficiency, flexibility and high employee morale are some more advantages of line

Organization structure.

6. Facilitates effective co-operation:Functional organization makes effective co-operation within organization. This is possible

as one basis in-charge of a particular function and he looks after all activities.

7. Operational flexibility:Functional Organization possesses operational flexibility. Necessary changes can be

visible easily to suit the needs of the situation without any adverse effect on the efficiency

8. Training opportunities to employees:Better opportunities of advancement are provided to workers. The scope for learning and

training for promotions are available.


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9. Sound decision-making:Line and staff Organization facilitates sound managements decision because of services of

experts and specialists. The decisions are taken in a democratic method in consultation

with the experts.

Causes of poor structure:

1. Heavy burden on line executives:The line executives are given too many duties and responsibilities. Even the quality of the

decisions of executives may suffer due to heavy burden of duties and responsibilities.

2.Non-availability of services of experts:

There is absence of skilled experts in line organization. Expert assistance is not available

promptly when needed by line executives.

3. Favoritism:There is wide scope for favoritism and nepotism in the line organization. Leadership of

departmental executive is autocratic due to heavy concentration of powers. He may favor

some employees at the cost of others.

4. Too much dependence on limited executives:In the line organization, all powers are concentrated in the hands of a few executives.

Naturally, the success and stability of the entire organization depends on their personal

skill, initiative and interest. Special difficulties arise when one executive is to be

transferred/replaced/promoted.

5. Rigidity:There is rigidity in the working of line organization.

6. Delays in communication:Limited freedom to employees and unsuitability to modern large business units are some

more demerits of line Organization.


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7. Costly:Functional Organization is costly, as more specialists are required to be appointed.

8. Absence of unity of command:Unity of command is absent in the functional Organization as each worker gets orders and

instructions from several bosses.

9. Fixing responsibility is difficult:In functional Organization, responsibility is difficult to fix on a specific person. This is

because the responsibility itself is divided among many.

Functions of Structure

Structure is the formal arrangement of roles, responsibilities and relationships within an

organization. It is a powerful tool to implement strategy. Its functions are divided into two

broad parts- general functions and specific functions. These group-wise functions are

stated below.

1. General Functions:Structure serves general functions of regulating responsibilities and relationships. The

services include the followings.

It regulates the responsibilities assigned to each member for performing specific tasks.

Responsibilities are structured either by common function or by common purpose.

It regulates the relationships that each member has with other members within the

organization.

2. Specific Functions:Besides general functions, structure has some specific functions to carry out within an

organization. Those functions are as follows.

It channels messages around the organization.

It shows the chain of command and determines span of management.


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It designs and groups jobs as well as coordinates and differentiates among jobs.

The structure of an organization generally does the above mentioned functions. But these

functions may vary across different organizations and countries.

Factors Affecting Structure Other Than Culture

Structure is composed of different elements. Besides these elements, it needs to take into

consideration culture and influences other than culture. Because both culture and

influences other than culture influence the choice of structure and how that structure is

implemented. The influences other than culture are succinctly described below.

1. Personality of the Top Manager:Top management is the ultimate decision makers in any organization. Their personalities

shape their attitudes towards vertical differentiation and horizontal differentiation. And

these two issues stand out in influencing structure.

2. Strategic Factors:Strategic factors are those that help to secure the future of an organization. It is known that

future is uncertain. Therefore, an organization that does not adapt its structure to meet

environmental change and to achieve new strategic goals certainly grows inefficient.

3. Industry Factors:Industry is a group of firms offering products or services that are close substitutes for each

other. Industry factors include suppliers, customers, competitors, new entrants, and

substitute products. These factors also influence structure of an organization.

4. Size of the Firm:Generally a new company has very few members. Its responsibilities and relationships

remain flexible. As members grow, the structure becomes more formalized. If structuraladjustments are not made, chaos follows.


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5. Technology:Modern age is the age of technology. Technology changes very fast. It substantially affects

firms operations. An entire industry may be transformed or revitalized due to use of new

technology, let alone structure!

6. Complexity of the Task:A task is a piece of work to be done, especially one done regularly. It may be easy or

complex or in between the two. More complex the task requires more need for supervisory

control. Hence, a complex task influences how the structure is implemented.

Although these factors influence the structure, the influence of culture on structure is the

vital one. It is longer lasting too.

Relationship between Culture and Structure

Although culture and structure are completely separate, we cannot think of their sole

independence. Because members cultural values modify the choice of culture and how it is

implemented.

To prove that there is relationship between culture and structure, we can take a structure

and try to show how it is related to culture. The matrix structure gives a vivid example ofhow culture affects the design and implementation of a structure.

Matrix structure is one that simultaneously attains the benefits of functional and divisional

structure. It institutes overlaps among functional and divisional forms. It gives functional,

product and geographic groups a common focus. It has dual reporting relationships than a

single line of command. It is the chosen structure of many project-based organizations

where tasks are non-routine and relationships and responsibilities have to be continually

changed to meet the needs of the new project.

Members of a matrix structure have to cooperate and share information and other resources

in a relationship of trust. This means it works best in cultures with low power distances and

low needs to avoid uncertainties. In other cultural conditions, the matrix structure might


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have different effects. When members have a high need to avoid uncertainty, they are

uncomfortable in dual reporting situations. In high power distance cultures, employees

prefer hierarchical line of control and communication and are reluctant to trust peers.

Form the above discussion; we can safely say that the relationship between culture and

structure is inevitable. We cannot ponder over one singly leaving the other in real life

situation.

Bureaucracy

Definition

Any goal-oriented organization that consists of thousands of individuals would require thecarefully controlled regulation of its activities. To fulfill this requirement, the German

sociologist Max Weber (1864-1920) has developed a theory of bureaucratic management,

simply called Bureaucracy.

Basically, bureaucracy is a system of managing organizations by the officers instead of

individual norms and values. It involves an organization with a legalized formal and

hierarchical structure. It also involves the structural process within the organizations. Here

a strictly defined hierarchy governed by clearly defined regulations and lines of authority is

in operations. All activities and objectives are clearly thought out and divisions of labor are

explicitly spelled out. Technical competence of members is emphasized and performance

evaluations are made entirely one the basis of merit.

Features of Bureaucracy

An organization is a group of people organized in a systematic manner to achieve a desired

end. It is a role relationship among people with a common goal. There are different types

of organizations. Each type is distinguished from the other one because of their features.

The features of bureaucracy are described as below.


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1. Hierarchy of Authority:Hierarchy of authority refers to the line of authority in an organization. It must be strictly

defined in the bureaucratic organization.

2. Division of Work:Division of work is the breakdown of a complex task into components so that individuals

are responsible for a limited set of activities instead of the task as a whole. In bureaucracy,

it is explicitly spelled out.

3. Framework of Rules:Rules are standing plans that detail specific actions in a given situation. In bureaucratic

organization, the work and the people are regulated by rules and procedures to achieve

uniform behavior, control and disciplinary system.

4. Role Structure:In this system, every office or position has specific and well defined functions,

responsibilities and authorities.

5. Impersonality:This organization is run by codes, not by the personal whims or preferences of the office

holders.

Features tell about the important part of something. And the bureaucratic features tell about

the important parts of the bureaucracy.

Principles of Bureaucracy

`Principles are tested guidelines for decision making. They tell about how an organization

works. Since bureaucracy involves an organization, it has got some principles of its own.

Those principles are described as below.

1. Professionalism:Since work is a career, there must be a process of professionalism into the bureaucracy.


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2. Organization of Work:The organization of work shall be clearly defined by the hierarchy of offices.

3. Job Specification:There must bea clearly defined sphere of competence of each office.

4. Technical Competence:Technical qualification shall be the basis of selecting manpower for every office.

5. Discipline and Control:Office holders must be subject to strict and systematic discipline and control.

6. Record keeping:Every action either small or big shall be recorded clearly at concerned offices by concerned

officers.

7. Rewards:Rewards structure must be set on the basis of the hierarchy of positions.

It has been seen that all in all forms of bureaucratic organizations have principles. But

principles may vary from one bureaucratic organization to another one.

Factors Affecting Bureaucracy

The model of bureaucratic rules cannot be applied equally in all companies. Because these

rule are set taking into considerations of some essential factors. The followings are the

factors influencing bureaucracy.

1. Industry:An industry involves similar firms but different needs. The needs of firms in an industry

differ, so does the bureaucracy.

2. Size:The size of a particular firm also affects bureaucracy because a small firm may have less

need for regulation than a large firm.


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3. Individual Power:The power of an individual determines the applicability of rules over him/her. If he/she

holds much power, he/she may exploit the rules applicable and thus, affect the

bureaucracy.

4. Organizational Culture:Organization culture may also work as a factor affecting bureaucracy because informal

norms may be more powerful than formal rules.

5. Exceptional Events:Special events such as political turmoil, civil war, national emergency can also affect the

bureaucracy.

6. National Culture:The dimensions of national culture such as power distance, uncertainty avoidance largely

affect the bureaucracy of that particular nation.

All these factors directly or indirectly influence the forms of bureaucracy an organization

may apply or not.

Model of Bureaucratic Rules

Model of bureaucratic rules means what rules determine throughout the bureaucracy. It is

well accepted that all organizations beyond the very small ones have needs for bureaucratic

rules. These rules are needed to determine the followings.

1. Entry:Rules determine the entry qualifications to the organization. Typical entry qualifications

are age, educational achievements and professional expertise.

2. Rank:Rules determine relationships with superiors, subordinates and peers. If rank needs to be

changed, proper bureaucratic procedures must be followed.


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3. Job Specifications:The member is expected to perform specific duties and not to meddle in the duties of

others. If jobs are to be changed, bureaucratic procedures must be followed.

4. Performance Specifications:There are rules and procedures for doing the jobs. Behavior breaking these rules may be

punished.

5. Remuneration:Pay and allowances are paid for satisfactory service depending on rank, job specification

and length of service. Bonus may be given for good performance.

6. Punishment:Rules make clear what behavior can be punished and what punishments can be imposed.

7. Promotion:Rules determine the criteria for promotion. Typical promotion criteria include length of

service, good performance and qualifications.

8. Timetable:Rules set the length of the working day and week, opportunities for breaks, flextime,vacations etc.

9. Exit:Rules determine how staffs are made redundant and how they are compensated. Exit can be

forced for certain offences.

Model of bureaucratic rules are applicable to all members whatever their identity such as

social status, family membership etc. outside the organization.


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Types of Bureaucracy on the Basis of Cultural Dimensions

The culture is the vital factor that influences how the bureaucracy will be implemented.

Based on power distance and uncertainty avoidance dimensions, Hofstede distinguishes

four types of bureaucracy. The four bureaucratic types are described precisely below.

Marketplace Bureaucracy:

The Marketplace Bureaucracy signifies organization where needs to avoid uncertainty and

power distances are low. Members depend more upon personal than bureaucratic

relationships to achieve results. They may feel free to bypass the hierarchy and cross

departmental boundaries. Job rotation and matrix structure are commonly implemented.

United Kingdom, Scandinavian countries and Ireland etc. practices this type ofbureaucracy.

Full Bureaucracy:

The Full Bureaucracy is just opposite to the Marketplace Bureaucracy. It typifies

organizations where needs to avoid uncertainty and power distances are high. Members

rely more on bureaucratic than personal relationships to achieve results. They strictly

follow the hierarchy and maintain departmental boundaries. Job enlargement and job

enrichment as well as functional structure and departmental structure are commonly

implemented. France, Belgium and Portugal etc. follow this type of bureaucracy.

1. Personnel Bureaucracy:The Personnel Bureaucracy thrives where power distances are high and needs to avoid

uncertainty are low. All things are built around a strong leader who controls through direct

and close supervision and authority. Ranks are tightly differentiated and opportunities for

promotion are restricted. This type of bureaucracy is used in Hong Kong, Indonesia and

India etc.

2. Workflow Bureaucracy:The Workflow Bureaucracy flourishes where power distances are low and needs to avoid

uncertainty avoidance are high. All things are built around professional bureaucrats who


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occupy senior posts in the operation core. Emphasis is given upon standardizing operating

procedures. This type of bureaucracy is applied in Germany, Israel and Costa Rica etc.

It is to be noted that all these four types of bureaucracy can be used in a single country

alone. Other possibilities may not also be ignored.

Critical Evaluation of Bureaucracy

Bureaucracy is commonly found in any large organization. It is designed to make behavior

predictable and to reduce uncertainties and inefficiencies. But unfortunately in the course

of time it has got some drawbacks too. Here is given a critical review of bureaucracy.

Positive Qualities of Bureaucracy

1. ReducingFavoritism:Bureaucracy seeks to bring about objectivity to employee selection by means of

qualifications and the use of performance-criteria for promotion.

2. Nurturing EmployeeCommitment:Employees working in bureaucracies have high job security. This nurture more loyalty and

commitment to the organization.

3. ReducingAmbiguity:While rules and regulations can be restrictive, they perform the function of clarifying what

an employee can or cannot do in any situation.

4. IncreasingUniformityofAction:Employees in a bureaucratic organization are behaving uniformly in a manner under the

control of higher level management.


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Negative Qualities of Bureaucracy

1. Goal Displacement:In bureaucracy, goal displacement occurs when the achievement of subunit goals become

more important than the organizations goals.

2. InappropriateApplicationofRulesandRegulations:This occurs when employees apply formalized rules and procedures blindly in all types of

situations without being aware that conditions have changed.

3. Employee Alienation:Members may have the cog-in-the-wheel feeling. High routine activities breed boredom

and high job specialization makes job-holder feel irrelevant.

4. ConcentrationofPower:Bureaucracies concentrate power in the hands of a few in the higher hierarchy and this

does not appeal to people who perceive that values of democracy should prevail.

5. Non-memberFrustration:Following procedures can be a slow process which will frustrate clients or customers who

require prompt and efficient service.

It is seen that the most of negative qualities of bureaucracy can be avoided by developing

members involved. Because bureaucracy is a system, and it is actually people governed by

rules.

Global Structural Integration

1. Global Product Structure:A global product division is a structural arrangement in which domestic divisions are given

worldwide responsibility for product groups. The manager who is in charge of a particular

product has authority for that product line on a global basis. This manager also has internal

functional support related to that product line. For instance, all marketing, production, and


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financial activities associated with that product division are under the control of this

manager.

2. Global Geographic / Area Structure:A global area division is a structural arrangement where global operations are organized

based on a geographic rather than a product orientation. This approach often requires a

major change in company strategy, because now international operations are put on the

same level as domestic operations. In other words, European and Asian operations are just

as important to the company as North American operations. For example, when British

Petroleum purchased Standard Oil of Ohio, the firm revised its overall structure and

adopted a global area division structure. Under this arrangement, Global division managersare responsible for all business operation in their designated business area.

3. Global Functional Structure:A global functional division organizes worldwide operations based on primarily on

function and secondarily on product. This approach is not widely used other than extractive

companies, such as oil and mining firms.

4. Mixed Organizational Structure:Some companies find neither a global product, an area, or a functional arrangement issatisfactory. They opt for a mixed organization structure, which combines all three into an

MNC that supplement its primary structure with a secondary one and, perhaps, a tertiary

one. For example, uses a global area approach, committee of functional managers may

provide assistance and support to the various geographic divisions. Conversely, if the firm

uses a global functional approach, product committee may be responsible for coordinating

transactions that cut across functional lines. In other cases, the organization will opt for a

matrix structure that results in managers having two or more bosses.

Organizing for Globalization:

No matter what the stage of internationalization, a firms structural choices always involve

two opposing forces: the need for differentiation, focusing on and specializing in specific


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markets and the need for integration, coordinating those same markets. The way the firm is

organized along a localization differentiation integration continuum determines how well

strategies along a localization- globalization continuum are implemented. This is why

the structural imperatives of various strategies such as globalization must understood to

organize appropriate worldwide systems and connections.

Organizing to a globalization strategy typically involves rationalization and the

development of strategic alliances. To achieve a rationalization, managers choose the

manufacturing location for each product based on where the best combination of cost,

quality, and technology can be attained.

Emergent Structural Forms:

1. InterorganizationalNetworks:Whether the ever-expanding transnational linkages of an MNC consist of different

companies, subsidiaries, suppliers, or individuals, they result in relational networks. These

networks may adopt very different structure of their own because they operate indifferent

local context within their own national environments. By regarding the MNCs overall

structure as a network of interconnected relation, we can more realistically consider its

organizational design imperatives at both global and local levels.

2. The Global E- Corporation Network Structure:The organizational structure for global e-business, in particular for physical products,

typically involves a network of virtual e-exchanges and bricks and mortar services,

whether those are in house or outsourced. This Structure of functions and alliances makes

up a combination of electronic and physical stages of the supply chain network.

The Transnational CorporationNetwork Structure:

A multinational structural is an arrangement that combines elements of function, products,

and geographic design, while relying on a network arrangement to link worldwide

subsidiaries.


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Choice of Organizational Form:

Two major variables in choosing the structure and design of an organization are the

opportunities and need for 1) globalization and 2) localization.

Control System for Global Operations

1. Monitoring Systems:Monitoring Systems is the design and application of coordinating and reporting systems for

foreign subsidiaries and activities can take any form that management wishes. MNCs

usually employ a variety of direct and indirect coordinating and control mechanism

suitable for their organization structure.

2. Direct Coordinating Mechanisms:Direct coordination mechanisms are mechanisms that provide the basis for the overall

guidance and management of foreign operations including the design of appropriate

structures and the use of effective staffing practices. Such decisions proactively set the

stage for operations to meet goals, rather than troubleshooting deviations or problems after

they have occurred.

3. Indirect Coordinating Mechanisms:Indirect coordination mechanisms typically include sales quotas, budgets, and other

financial tools, as well as feedback reports, which give information about the sales and

financial performance of the subsidiary for the last quarter or year.

Domestic companies invariably rely on budgets and financial statements analyses, but for

subsidiaries, financial statement and financial performance evaluations are complicated by

financial variables in MNC reports, such as exchange rates inflation levels, transfer prices,

and accounting standard.


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Possible Questions

1. Define broadly the meaning of structure and culture.2. What is the importance of organizational structure?3. What are the conditions of good structure?4. What are the causes of poor structure?5. a) Describe the functions of structure.

b) Explain the influences affecting structure.

6. a) Define bureaucracy. b) What are the essential features and principles ofbureaucracy? c) Do a critical evaluation over bureaucracy.

7. What do mean by global structural integration? Discuss different types of globalstructures

8. What are the different emergent structural forms? Explain with example.9. What is a control system for global operations? How many ways it can be done

explain?


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References

Damen, L. (1987). Culture Learning: The Fifth Dimension on the Language Classroom.

Reading, MA: Addison-Wesley.

Daniel, John, D., Radebaugh, Lee, H., & Sullivan, Daniel, P. (Eds). (2010). International

Business: Environment and Operations. Pearson Education International

Griffin, Ricky, W. (Eds). (2008). Management. Boston New Yoek: Houghton Mifflin

Company.

Helem Deresky, (2006) International Management Managing Across Borders and

Cultures, Pearson.

Kroeber, A.L., & Kluckhohn, C. (1952) Culture: A critical review of concepts and

definitions. Harvard University Peabody Museum of American Archeology and Ethnology

Papers 47

Mead, Richard. (Eds). (1998). International Management: Cross-Cultural Dimensions.

Great Britain: Blackwell Business

Richard M. Hodgetts, Fred Luthans, and Jonathan P. Doh, (2006), International

Management-Culture, Strategy, and Behavior, Tata McGraw Hill Edition.

Stoner, James, A.F., Freeman, R., Edward & Gilbert.JR., Daniel, A. (Eds). (2004).

Management. Engewood Clifffs: Prentice-Hall

Websites:

Job Dig: Organizational Structure Can Be Underlying Cause of Workplace Issues

N. Dean Meyer and Associates: Organizational Structure: Frequently Asked Questions

Wiriadinata, Michael. (2011). Bureaucracy: Advantages and Disadvantage. Available at

http:// mamikikeyu.wordpress.com

www.practical-management.com/org


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Multiple Choice Questions

1. Many departments, divisions and layers are between highest level and lowest levelof an organization is called ------------

a) Distribution of authority b) Departmentalization c) Organization Height

d) Chain of Command

2. What are basis of the divisional structure of organization?a) Product divisions b) Geographic divisions c) Market division d) a+b

3. Who developed the Line Organization Structure at first?a) U. S army b) Egypt army c) Roman army d) Spain army

4. What are the elements of organizational structure?a) Geography b) Product Evolution c) Number of Employees d) All of them

5. When bureaucracy is badly used, the result is another system. What is that system? a) Plutocracy b) Theocracy c) Autocracy d) Oligarchy

6. What makes a bureaucratic organization impersonal?a) Rules b) Social status c) Family membership d) Benevolence

7. Which is not the disadvantage of bureaucracy?a)ConcentrationofPower b) GoalDisplacement

c) Employee Commitment d) Employee Alienation

8. In which type of bureaucracy vertical communication is not strictly the norm?a)Full Bureaucracy b) Marketplace Bureaucracy

c) Personnel Bureaucracy d) Workflow Bureaucracy


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9. Max Weber is called the father of bureaucracy. Which country he belongs to?a) Germany b) Belgium c) Austria d) France

10.Bureaucracy is needed to get which of the following needs fulfilled?a) Rationalizing roles b) Rationalizing relationships

c) Achieving efficiency d) All of these

11.Which organizational structure, simply called structure, allows an employee toreport to two superiors?

a) Functional structure b) Divisional structure

c) Matrix structure d) Mixed structure

12.Which statement of the followings is not relevant?a) Structures are of various forms satisfying different needs.

b) Structures may be superficially the same but implemented differently.

c) Full bureaucracy is built around a strong leader.

d) Structures may be formal or informal or both.

13.Divisional structure regulates roles and responsibilities of executives in terms of ---a) Inputs b) Outputs c) a + b d) None

14.Matrix structure institutes a dual hierarchy that is a sheer violation of whichfundamental management principle?

a) Unity of Command b) Unity of Direction c) Discipline d) Esprit de corps

15. Which of the following is a global structure?

a) Global product structure b) Global functional structure


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c) Global area structure d) All of them

16. _ _ _ _ _ _ _ is a global functional division organizes worldwide operations based

on primarily on function and secondarily on product.


c) Global area structure d) None

17. _ _ _ _ _ _ _ is a global area division is a structural arrangement where global

operations are organized based on a geographic rather than a product orientation


c) Global area structure d) None

18. _ _ _ _ _ _ is a structure that is a combination of a global product, area, or

functional arrangement.

a) Vertical structure b) Transnational network structure

c) Mixed organization structure d) None

19. _ _ _ _ _ is a multinational structural arrangement that combines elements of

function, products, and geographic design, while relying on a network arrangement to

link worldwide subsidiaries.

a) Interorganizational structure b) Transnational network structure

c) Interorganizational division d) None

20. Which of the following is not a control system for global operations?

a) Monitoring systems b) Indirect coordinating mechanism

c) Direct coordinating mechanism d) None


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Answer:

1 C 6 A 11 C 16 B

2 D 7 C 12 C 17 C

3 C 8 B 13 B 18 C

4 D 9 A 14 A 19 B

5 D 10 D 15 D 20 D

g08 culture and organizational structure 22 23 24

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