Organizational Strategy & Structure

Presented by

Group 4 _ Section C

Anand Kumar 12P127Bhoomi Ashwin 12P131Chirayu Gandhi 12P135Rakshit Sharma 12P160Saurabh Saxena 12P167Soumyajit Sengupta 12P171

Under the able guidance of Prof. Amit Gupta & Prof. Anil Anand Pathak

Organization Structure is typically the hierarchical arrangement of lines of authority, communications, rights and duties of an organization

It determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management

Organization Structure defines 3 key components It designates formal reporting relationships It identifies the grouping together of individuals It includes the design of systems to ensure effective

communication, coordination and integration across departments

Organization Structure

Organization Structure

Organization Structure is reflected in an Organization Chart

Organization Chart is the visual representation of a whole set of underlying activities and processes in an organization

After the Industrial Revolution, Organization Structure came into existence, largely to increase efficiency

In the modern day, a hierarchical structure is not always viable and different companies adopt different structures

Information Sharing

Organization Design requires both vertical and horizontal flow of information

Vertical flow of information emphasizes on efficiency and control, thus calling for centralized decision making

On the other hand, Horizontal flow of information emphasizes on learning and adaption, resulting in decentralized decision making

Each of these flows makes use of structural devices

Information Sharing

Vertical Information Sharing Hierarchical Referral Rules and Plans Vertical Information Systems

Horizontal Information Sharing Information Systems Direct Contact Task Forces Full-Time Integrator Teams

Grouping Options

Functional Grouping: Places together employees who perform similar functions or work processes

Divisional Grouping: People are organized according to what the organization produces

Multifocused Grouping: Organization embraces two or more structural grouping alternatives simultaneously

Horizontal Grouping: Employees are organized around core work processes

Virtual Network Grouping: Organization is a loosely connected cluster of separate components

Functional Structure

In this activities are grouped together by common function from the bottom to the top of the organization

Most effective when in-depth expertise is critical to meet organizational goals and efficiency is important

It is centralized, as decisions are forced all the way to the top

In the modern world, companies find it hard to be successful with this structure

Organizations compensate by installing horizontal linkages

Functional Structure

STRENGTHS WEAKNESSES

Allows Economics of scale within functional departments

Slow response time to environmental changes

Enables in-depth knowledge and skill development

May cause decisions to pile on top; Hierarchy overload

Enables organization to accomplish functional goals

Leads to poor horizontal coordination among departments

Is best with only one or a few products

Results in less innovation

Involves restricted view of organizational goals

Divisional Structure

It is also sometimes known as Product Structure or Strategic Business Units

Divisions can be organized based on products, services, divisions, etc.

Its distinctive feature is that grouping is based on organizational outputs

Unless effective horizontal mechanisms are in place, a divisional structure can hurt overall performance

STRENGTHS WEAKNESSES

Suited to fast changes in unstable environment

Eliminates Economies of scale in functional departments

Leads to customer satisfaction because product responsibility and contact points are clear

Leads to poor coordination across product lines

Involves high coordination across functions

Eliminates in-depth competence and technical specialization

Allow units to adapt to differences in products, regions, customers

Makes integration and standardization across product lines difficult

Best in large organizations with several products

Decentralizes decision making

Divisional Structure

Matrix Structure

This can be used when both technical expertise and product innovation and change are important to organizational goals

Unique characteristic is that both product divisions and functional structures (horizontal and vertical) are implemented simultaneously

Conditions for Matrix Structure Condition 1: Pressure exists to share scarce

resources across product lines Condition 2: Environmental pressure exists for

two or more critical outputs Condition 3: Environmental domain of the

organization is both complex and uncertain

Companies have found balancing of horizontal and vertical structures

Two matrix structures have evolved: Functional Matrix & Product Matrix

Works best when there is high environmental change and goals reflect dual requirement

Works best when there are few product lines as too many product lines cause difficulty in coordination of both directions

Matrix Structure

STRENGTHS WEAKNESSES

Achieve coordination necessary to meet dual demands from customers

Causes participants to experience dual authority which can be frustrating and confusing

Flexible sharing of human resources across products

Means participants need good interpersonal skills and extensive training

Suited to complex decisions and frequent changes in unstable environment

Is time consuming; involves frequent meetings and conflict resolution sessions

Provides opportunity for both functional and product skill development

Will not work unless participants understand it and adopt collegial rather than vertical type relationship

Best in medium-sized organizations with multiple product

Requires great effort to maintain power balance

Matrix Structure

Horizontal Structure

It organizes employees around core processes

Organizations shift towards this structure by Reengineering, which means redesigning a vertical organization along its horizontal workflows and processes

Process is an organized group of related tasks and activities that work together to transform inputs and outputs that create value for customers

Many companies are now moving towards the Horizontal Structure

STRENGTHS WEAKNESSES

Promotes flexibility and rapid response to changes in customer needs

Determining core processes is difficult and time consuming

Directs the attention of everyone towards the production and delivery of value to the customers

Requires changes in culture, job design, management philosophy, and information and reward systems

Each employee has a broader view of organizational goals

Traditional managers may balk when they have to give up power and authority

Promotes a focus on teamwork and collaboration

Requires significant training of employees to work effectively in a horizontal team environment

Horizontal Structure

Strategy & Structure

Strategy is a company’s plan to achieve a set of goals

Strategy & Structure of an organization are intricately bound and should be closely linked to achieve chosen results

Once the organizational strategy is in place, the company can choose the optimum structure to go about implementing it

About

Tata Consultancy Services is the most leading IT services, business solutions and outsourcing organization in India

It organizes its global operations into integrated, customer-centric units to enhance customer focus, drive operational agility and address new growth opportunities in the market

TCS has over 263,000 of the world's best trained IT consultants in more than 50 countries and year-end revenues of more than $10 billion

With such a large employee base, it needs a structure that allows us to build a nimble organization to capture new growth opportunities

The Changing Structure

The IT firm tweaked its management structure to bring in greater vertical focus within the firm

The company has a vertical structure under which the company has 23 separate business units, and each unit’s head reports directly to the CEO

The heads will own the profit and loss aggregated from those of the individual ISUs within their stack; country heads don't own P&Ls

It is not a major change, similar to Infosys executive council model focusing more on vertical structure

TCS has tried to find the middle ground between the 'Vertical vs. Horizontal' structure, with clients clustered vertically within the business so that they can benefit from shared expertise in each ISU, supported by horizontal groups focusing on strategic and tactical company-wide initiatives

It makes the company 'stove-piped', resulting in reduced economies of scale, flexibility and agility but its process/technology excellence, resource management, and strategic initiatives as horizontal units is clearly trying to counter this risk

Major verticals have their own ISUs but clients could just as well be clustered, not by industry vertical, but by the problem they are trying to solve, or the technology utilized, or geographic region.

Organizational Structure

Growth and empowerment

The model provides customers with a single view of TCS encompassing project delivery and relationship management and enable a sharper focus on the customer

It will provide more opportunities for leadership growth at all levels to run business units with growth and profit responsibilities

The modular structure will simplify the customer interface to adapt to specific customer and market requirements while ensuring a uniform global service delivery

The structure will also support greater focus for strategic initiatives that will help drive non-linear revenue growth and leverage TCS sales, delivery and customer relationships as required

Starbucks - Matrix Structure

Form in which there are multiple lines of authority and some individuals report to at least two managers.

Made up of cross functional work teams that have the ability to report to heads of the organization other than the primary supervisor.

Successful communication upward, downward, and laterally with its employees.

All channel communication allowing employees to communicate actively with each other, making all members free to contribute 

District managers oversee regional groupings of stores. These district managers report directly to the Starbucks

Corporation. At each store, a store manager acts as the chief. Under this store manager are a collection of shift supervisors who

act as managers on duty when the store manager is out. Below the shift supervisors are the rest of the employees, referred

to as baristas.

Love Coffee Love People !

Organizational Distribution

Three-region organizational structure: China and Asia Pacific: All Asia Pacific markets and China Americas: United States, Canada, Mexico and Latin America EMEA: Europe, U.K., Middle East, Russia and Africa

A president for each region will oversee the company-operated retail business, working closely with both the licensed and joint-venture business

They will also work closely with Starbucks Global Consumer Products and Foodservice team.

All three new regional presidents – Burrows, Culver and Gass - along with Hansberry and Young-Scrivner will report to Schultz, CEO.

Love Coffee Love People !

Employees as “Partners”

 While Starbucks workers also have more specific titles, including barista and shift supervisor, the Starbucks corporation has long referred to their workers as "partners."

This term is intended to make clear how integral Starbucks employees, no matter how low on the chain, are to the company's success.

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Effects of Matrix Structure

Productivity - implementing the concepts of lean manufacturing to raise the efficiency and productivity of its stores. 

Empowerment - delivering great customer experience, supporting in doing the right thing and conducting business with integrity.

Responsibility - playing a critical role in ensuring that Starbucks is a great work environment and in protecting culture, reputation and brand.

Mutual Help – Making resources available in times when needed, including the Standards of Business Conduct and the Business Conduct Helpline.

Voicing Opinions – Sharing concerns and believing in opinions, knowing that Starbucks wants to hear them and value them all.

Love Coffee Love People !

Brief Interaction with Starbucks Employees at CP(on a scale of 1-10)

Freedom of Employees? 8

Standardization? 9

Coordination? 8

Recognition? 7