ASSIGNMENT 2

[TYPE THE COMPANY ADDRESS]

MANAGEMENT &
ORGANIZATION
BUREAUCRATIC
VS
MATRIX STRUCTURE

ZAHID NAZIR
Roll No. AB523655
MBA Executive
2nd Semester , Spring 2009

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

COMMONWEALTH OF LEARNING EXECUTIVE MBA PROGRAMME
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ORGANIZATIONAL STRUCTURE
Introduction

Organization is two or more people who work together to achieve

organizational goals and objectives efficiently and effectively. Also it can
identify as nonrandom arrangement of components or parts interconnected in
a manner as to constitute a system identifiable as a unit. In an organization,
they use organizational structures for their works. We can identify there are
three traditional organizational design such as simple, functional, divisional.
Organizations face more strength and weakness in these structures. Nowadays
they try to ignore that weakness and develop these organizational designs as
Team structure, Matrix structure, Project structure, Boundaryless structure and
Learning structure.

Using those contemporary organizational designs organizations gain there are

many advantages. Employees are more involved and empowered, Reduce
barriers among functional areas, fluid and flexible design that can respond to
environmental changes, faster decision making, highly flexible and responsive,
draws on talent wherever it’s found, organization can cope with environmental
changes and employees feel free to make decisions are advantages. So,
contemporary organizational designs are better than traditional organizational
structures to the organizations.

“Organizational structure is the formal framework by which job tasks are

divided, grouped, and coordinated”. When managers develop or change and
organization’s structure, they are engaged in organizational design, a process
that involves decisions about six key elements:
Stephen P.Robbins & Mary Coulter

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• Work Specialization
• Departmentalization
• Chain of Command
• Span of Control
• Centralization and Decentralization
• Formalization
Organizational design is engaged when managers develop or change an
organization's structure. Organizational Design is a process that involves
decisions about the following six key elements:

i). WORK SPECIALIZATION

Describes the degree to which tasks in an organization are divided into

separate jobs. The main idea of this organizational design is that an
entire job is not done by one individual. It is broken down into steps, and
a different person completes each step. Individual employees specialize
in doing part of an activity rather than the entire activity.

ii). DEPARTMENTALIZATION

It is the basis by which jobs are grouped together. For instance every
organization has its own specific way of classifying and grouping work
activities.

There are five common forms of departmentalization:

a). Functional Departmentalization. As shown in the Figure, it groups jobs

by functions performed. It can be used in all kinds of organizations; it
depends on the goals each of them wants to achieve.

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Plant Manager

Manager Manager Manager Manager

Manager HR
Engineering Accounting Manufacturing Purchasing

Figure - Functional Departmentalization

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

• Efficiencies from putting • Poor communication
together similar across functional areas
specialties and people • Limited view of
with common skills, organizational goals
goal
knowledge, and
orientations
• Coordination within
functional area
• In-depth
depth specialization

b). Product Departmentalization.

Departmentalization. It groups jobs by product line. Each
manager is responsible of an area within the organization depending of
his/her specialization.
specialization

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

• Allows specialization in • Duplication of functions
particular products and • Limited view of
services organizational goals
• Managers can become
experts in their industry
• Closer to customers

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Figure : Product Departmentalization

c). Geographical Departmentalization.

Departmentalization. It groups jobs on the basis of
territory or geography.

Vice President
for Sales

Sales Director
Sales Director Sales Director Sales Director
Balochistan
Punjab Region Sindh Region NWFP Region
Region

Figure: Geographical Departmentalization

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

• More effective and • Duplication of functions
efficient handling of • Can feel isolated from

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specific regional issues other organizational

that arise areas
• Serve needs of unique
geographic markets
better

d). Process Departmentalization.

Departmentalization. It groups on the basis of product or
customer flow.

Site Director

Engineering Production Quality Logistics Procurement Finance

Manager Manager Manager Manager Manager Manager

Figure: Process Departmentalization

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

• More efficient flow of • Can only be used with
work activities certain types of products

e). Customer Departmentalization

Departmentalization. It groups jobs on the basis of common
customers.

Different aspects on this type of departmentalization:

Positive Aspects Negative Aspects

• Customers' needs and • Duplication of functions
problems can be met by • Limited view of
specialists organizational goals

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Director of
Sales

Manager Manager Manager

Retail Wholesale Government
Accounts Accounts Accounts

Figure: Customer Departmentalization

iii). CHAIN OF COMMAND

It is defined as a continuous line of authority that extends from upper

organizational levels to the lowest levels and clarifies who reports to
whom. There are three important concepts attached to this theory:

• Authority:: Refers to the rights inherent in a managerial position to

tell people what to do and to expect them to do it.

• Responsibility:
Responsibility: The obligation to perform any assigned duties.

• Unity of command:
command: The management principle that each person
should report to only one manager.

iv). SPAN OF CONTROL

CONTRO

It is important to a large degree because it determines the number of

levels and managers an organization has. Also, determines the number
of employees a manager can efficiently and effectively manage.

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v). CENTRALIZATION AND DECENTRALIZATION

More Centralization More Decentralization

• Environment is stable • Environment is complex,
• Lower-level managers are not as uncertain.
capable or experienced at making • Lower-level managers are
decisions as upper-level managers. capable and experienced at
• Lower-level managers do not want making decisions.
to have say in decisions • Lower-level managers want a
• Decisions are significant. voice in decisions.
• Organization is facing a crisis or • Decisions are relatively minor.
the risk of company failure. • Corporate culture is open to
• Company is large. allowing managers to have a say
• Effective implementation of in what happens.
company strategies depends on • Company is geographically
managers retaining say over what dispersed.
happens. • Effective implementation of
company strategies depends on
managers having involvement
and flexibility to make decisions

vi). FORMALIZATION

It refers to the degree to which jobs within the organization are

standardized and the extent to which employee behavior is guided by
rules and procedures.

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TYPES OF ORGANIZATIONAL STRUCTURES

In making organizational design decisions, managers have some common
structural designs from which to choose. Most commonly we consider about
two organizational designs. These are:

Traditional organizational structure

Contemporary organizational structure.

TRADITIONAL ORGANIZATIONAL STRUCTURE

When we consider the traditional organizational design, especially there are

three major types of structures. They are can be listed out:

• Simple structure
• Functional structure
• Divisional structure
Disadvantages

• Lack of flexibility to changing mission needs/rapidly changing world

• Internal and external communication barriers (ideas are not
communicated)
• Slow/Poor in responding to customer requirements
• Failure to get things done
• Customers/Vendors have a hard time dealing with the organization
(multiple/unknown contacts)

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Due to above reasons they need to move in creative ways to structure and
organize works and to make their organizations more responsive to the needs
of customers, employees and other organizational constituents.

In this century, there are more favorable concepts that have being generated,
especially due to global village concept most of organizations have to revise
their organizational structures in order to achieve their overall objectives
through making employees’ job satisfaction. Therefore the contemporary
structure is used by organizations.

SIMPLE STRUCTURE

A simple structure is defined as a design with low departmentalization, wide

spans of control, centralized authority, and little formalization. This type of
design is very common in small start up businesses. For example in a business
with few employees the owner tends to be the manager and controls all a of the
functions of the business. Often employees work in all parts of the business
and don’t just focus on one job creating little if any departmentalization. In this
type of design there are usually no standardized policies and procedures. When
the company
mpany begins to expand then the structure tends to become more
complex and grows out of the simple structure.

Owner
Dept. Store

Sales Sales Sales Sales Sales

Person Person Person Person Person

Simple Structure

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FUNCTIONAL STRUCTURE

The functional organization, shown in Figure,

Figure is a structure in where authority
rests with the functional heads; the structure is sectioned by departmental
groups. Staff members are divided to groups (e.g. financial, planning, public
relations, engineering, legal etc) according to their specialized knowledge.
Some of these groups can be further subdivided into smaller functional groups.
For example, the Engineering Department may be further subdivided into
Mechanical Engineering and Electrical Engineering Units.

The main advantage of this organizational

organizational structure is that each functional
group has complete control over its segment of the project, enforcing in this
way the application of standards across projects.
The disadvantages of the functional organization are that of speed, flexibility
and communication
ommunication when attempting cross–functional
cross functional projects. Since in a
functional organization the work is divided between the departments, any
query or request must be passed among department heads for approval,

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causing in this way delays. In addition, the responsibility

responsibility of managing the
project is shared among the functional managers (head of the departments)
and this may cause lack of ultimate responsibility for project management.

DIVISIONAL STRUCTURE
STRUCTUR

A divisional structure is made up of separate, semi

semi-autonomous
tonomous units or
divisions. Within one corporation there may be many different divisions and
each division has its own goals to accomplish. A manager oversees their
division and is completely responsible for the success or failure of the
division. This gets
ts managers to focus more on results knowing that they will
be held accountable for them.

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CONTEMPORARY ORGANIZATIONAL DESIGNS

The flexible structural methods that job tasks are divided, grouped, and
coordinated for response to dynamic environmental factors.

To face highly dynamic and complex environment the contemporary

organizational structure is very important. In response to market place
demands for being lean, flexible and innovative current organization s use
these contemporary structures.

• Team structure
• Matrix structure
• Project structure
• Boundary less organizations
 Network organizations
 Modular organizations
 Virtual organizations
• Learning organizations

TEAM STRUCTURE
In the team base structure, the entire organization is made up of work groups
or teams that perform the organization’s work. In the team base structure,
employee’s empowerment is crucial because there is no line of managerial
authority from top to bottom. Rather, employee teams are free to design work
in the way think is best. However, the teams are also held responsible for all
work activity and performance results in their respective areas.

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In large organizations, the team structure complement what is typically a

functional or divisional structure. This allows the organizations to have
efficiency of a bureaucracy while providing the flexibility that team provide to
improve productivity at the operational level.

Examples for team structure

• In marketing field sales force is use this team based structure. Also forces
use this team structure.
• Team based structure usually practice in unbranded products, like
furniture, electric equipments, and cosmetics.

Advantages

Easy Integration. Since it is the most popularly used form of team organization
it is easy to integrate. This is so, because every developer is experienced with
such a structure and understands their role within it.

Better Management, More Control. Since the entire team is physically within
the same building, communication is at its peak, since face-to-face
communication is by far the best method in all situations. The physicality of this
team structure typically means it is easier to find and solve issues together. It is
also easier to spawn a team spirit, particularly in crunch periods, which can
spark increased motivation.

Greater productivity, in a team based structure there are various skills and
ability persons give their contribution produce a great output.

Disadvantages

Significant Overheads. Of course hiring a full team and owning or renting office
space with all that goes with it (i.e. electricity, computers) a studio is going to
run high overheads. In fact, overheads can amount to a quarter of the budget
on some productions, which is an incredibly high ratio of cost.

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Arising conflicts, team based structure lead to opinion conflicts among team
members.

MATRIX STRUCTURE

The matrix structure of contemporary organizational structures assigns

specialist from different functional departments to work on one or more
projects.

In matrix structure one employee should report to two managers. So the

employee faces conflict when they address their superiors. To whom should I
report firstly, and to whom should I obey or directly responsible. Their
functional departments manager and their product or project manager who
share authority. The project managers have authority over the functional
members who are part of their project team in area relative to the project’s
goals. However decisions such as promotions, salary recommendations and

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annual reviews remain the functional manager’s responsibilities. To work

effectively, project and functional managers have to communicate regularly,
coordinate work demands on employees and resolve conflicts together.

Matrix Organizational Structure

11-14

On the other hand the two managers influence to the employee so the
employee should want to their works in correct way. By using matrix structure
can establish high control and greater supervision throughout the project
period. It may helps to increase project performance and effectiveness.

In matrix structure we can easily get high performance because there is skilled,
ability full and experienced employees come from different functional
departments.

This structure is most effective to achieve overall organizational goals. It leads

to increase job satisfaction, experience and knowledge of the employees.

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PROJECT STRUCTURE

An organizational structure in which employees continuously work on projects

is a project structure. In a project structure has no formal departments to
which employee return at the completion of a project. Instead employees take
their specific skills, abilities and experience to other work project.

In addition, all work activities in project structures are performed by teams of

employees who become part of a project team because they have the
appropriate work skills and abilities.

Project structure tends to be fluid and flexible organizational designs. There is

no departmentalization or rigid organizational hierarchy to slow down decision
making or taking actions.

Ex-: Information Systems build by using project structure, Constructions

Project structure reduces job boredom, because they work different projects,
and less work specialization. Although the matrix structure work well and
continued to be effective structure design choice for many organizations are
using more advance types project structure, in which employees continuously
work on projects. Unlike the matrix structure, a project structure has no formal

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departments to which employees return at the completion of a project.

Instead, employee take there specific skills, abilities and experiences to other
work projects. In addition, all work activities in project structures are
performed by teams of employee who become part of a project team because
they have the appropriate work skills and abilities.

In this types of structures managers serve as facilitators, mentors and coaches.

They “serve the project teams by eliminating or minimizing organizational
obstacles and by ensuring that team has the resources they need to effectively
and efficiently complete their work.

BOUNDARYLESS ORGANIZATIONS

In a boundaryless organization, the boundaries that divide employees such as

hierarchy, job function, and geography as well as those that distance
companies from suppliers and customers are broken down. A boundaryless
organization seeks to remove vertical, horizontal, and external barriers so that

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employees, managers, customers, and suppliers can work together, share

ideas, and identify the best ideas for the organization.

What are the boundaries?

Vertical - Boundaries between layers within an organization

Classic Example: Military organization
Problem: Someone in a lower layer has a useful idea; "Chain of command"
Mentality

Horizontal - Boundaries which exist between organization functional units.

Each unit has a singular function.
Problem: Each unit maximize their own goals but not the overall goal of the
Organization

External - Barriers between the organization and the outside world (customers,
suppliers, other government entities, special interest groups, communities).
Customers are the most capable of identifying major problems in the
organization and are interested in solutions.
Problem: Lose sight of the customer needs and supplier requirements

Geographic - Barriers among organization units located in different countries

Instead of being organized around functions with many hierarchical levels, the
boundaryless organization is made up of self-managing and cross-functional
teams that are organized around core business processes that are critical for
satisfying customers such as new-product development or materials handling.
The traditional vertical hierarchy is flattened and replaced by layers of teams
making the organization look more horizontal than vertical. Some believe that
the boundaryless organization is the perfect organizational structure for the
21st century.

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Types of boundary less Organizations

Network Organizations

In a network organization, various functions are coordinated as much by

market mechanisms as by managers and formal lines of authority.
Emphasis is placed on who can do what most effectively and
economically rather than on fixed ties dictated by an organizational
chart. All of the assets necessary to produce a finished product or service
are present in the network as a whole, not held in-house by one firm.

Virtual Organizations

The most interesting networks are dynamic or virtual organizations. In a

virtual organization an alliance of independent companies share skills,
costs, and access to one another’s markets. It consists of a network of
continually evolving independent companies. Each partner in a virtual
organization contributes only in its area of core competencies. The key
advantage of network and virtual organizations is their flexibility and
adaptability.

The Modular Organization

A modular organization is an organization that performs a few core

functions and outsources noncore activities to specialists and suppliers.
Services that are often outsourced include the manufacture of parts,
trucking, catering, data processing, and accounting. Thus, modular
organizations are like hubs that are surrounded by networks of suppliers
that can be added or removed as needed. By outsourcing noncore
activities, modular organizations are able to keep unit costs low and
develop new products more rapidly. They work best when they focus on
the right specialty and have good suppliers.

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LEARNING ORGANIZATIONS

The concept of a Learning Organizations doesn’t involve a specific

organizational design. Learning Organizations is an organization that has a
developed the capacity to continuously adopt and change because all
members take an active role in identifying and resolving work related issues. In
a Learning Organizations, employees are practicing knowledge management
continually acquiring and sharing new knowledge and are willing to apply that
knowledge in making decisions or performing works. Some organizational
designs theorists even go so far as to say that an organization’s ability to do
this-that is, to learn and to apply that learning as they perform the organization’s work
may be the only sustainable source of competitive advantage.

In a Learning Organization, it is a critical for members to share information and

collaborate on work activities throughout the entire organization, across
different functional specialties and even at different organizational levels. This
can be done by minimizing or eliminating the existing structural and physical
boundaries. In this type of boundaryless environment, employees are free to
work together and collaborate in doing the organizations work the best way
they can and to learn from each other. Because of this need to collaborate,
teams also tend to be an important feature of a learning organization’s
structural design. Employees work in teams on whatever activities need to be
done, and these employee teams are empowered to make decisions about
doing their work or resolving issues.

With these empowered employees and teams, there’s little need for “bosses”
to direct and control. Leadership plays an important role as an organization
moves to become a learning organization. Leaders should facilitate the
creation of a shred vision for the organization’s future and then keeping
organizational members working towards that vision.

Also organizational culture is an important aspect of being a learning

organization. A learning organization’s culture is one in which everyone agrees

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on a shared vision and everyone recognizes the inherent interrelationship

among the organization’s process, activities, functions and external
environment. In learning organizations, employees feel free to openly
communicate, share, experiment, and learn without fear of criticism or
punishment.

Learning can’t take place without information. For a learning organization to

“learn”, information must be shared among members, that is organizational
members must engage in knowledge management.

BUREAUCRATIC STRUCTURE

A structure with highly routine operating tasks achieved through specialization,

very formalized rules and regulations, tasks that are grouped into functional
departments, centralized authority, narrow spans of control, and decision
making that follows the chain of command.

In large organizations and under well defined conditions, organization

structure may be bureaucratic. The essential elements of a bureaucratic
organization are:

• the use of standard methods and procedures for performing work; and
• a high degree of control to ensure standard performance.

Mintzberg (1981) has identified two types of bureaucracies. They are standard
and professional bureaucracy. Standard bureaucracy is based on efficient
performance of standardized routine work. Professional bureaucracy depends
upon efficient performance of standardized but complex work. Thus, it
requires a higher level of specialized skills. The structure of standard
bureaucracy is based on functions, large technical staff and many mid-level
managers. In contrast, professional bureaucracy has few mid-level managers.

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BUREAUCRATIC ORGANIZATIONAL STRUCTURE

Director

Admin Research Extension

Accounts Livestock Consumers

Seeds Agri-
Personnel Processing

Purchase Pesticides Producers

Strengths

• Functional economies of scale

• Minimum duplication of personnel and equipment
• Enhanced communication
• Centralized decision making

Weaknesses

• Subunit conflicts with organizational goals

• Obsessive concern with rules and regulations
• Lack of employee discretion to deal with problems

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PRACTICAL STUDY
OF ORGANISATION

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WATEEN TELECOM

COMPANY’S OVERVIEW
Wateen Telecom UK Ltd embarks on providing leading international voice retail
and wholesale communication services to its esteemed customers through its
ability to seamlessly connect and enable smarter, faster, cost-effective and
flexible solutions.

Wateen continues to build on the heritage of its parent company - The Abu
Dhabi Group. We believe in leadership through people. Our technology and
service-delivery strengths stems from our valued employees who have joined
Wateen from all over the world to earn customer trust and loyalty with a
continuing commitment to the deployment of innovative products and
services, reliable, high-quality service and excellent customer care.

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MISSION STATEMENT

• To provide affordable communication

services that meets and exceeds
customers' requirements
• To deliver high-quality, flexible and
innovative solutions that are cost
effective and conducive
• To provide complete customer
satisfaction on time, every time

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VISION
To introduce Wateen Telecom in the
European and North American markets
and provide the leading
telecommunications international voice
services through a world-class cutting-
edge network to deliver a broad range of
reliable, affordable and quality customer-
centric services.

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CORPORATE VALUES

Simplicity :Practical and easy-to-use

Satisfaction: Customer satisfaction is
foremost
Quality : Premier services; no
compromises
Innovation : Always at par with the latest
technology
Honesty : Practice what we preach:
integrity, ethics and open communication

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WATEEN’S ORGANIZATIONAL STRUCTURE

As shown in Figure , Wateen’s organizational structure can be divided into 2
parts: one is Business Units where the sub-units are separated based on
Product Departmentalization, and the Administrative Units are categorized
based on Functional Departmentalization.

Business Units are the "money-making" departments or divisions that are

directly involved with the products of the company; and the Administrative
Units are the departments that coordinate Wateen’s daily business operation
activities.

Wateen
Telecom

Figure : Wateen’s Organizational Structure Chart

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Within the Business Units, there are 8 sub-units:

• QCT (Wateen CDMA Technologies) develops and suppliers CDMA-based

integrated circuits and system software for wireless voice and data
communications, multimedia functions and global positioning system
product.

• QTL (Wateen Technology Licensing) grants licenses to use Wateen's

intellectual property, including certain patent rights essential to or useful
in the manufacturing, sale and use of CDMA-based products.

• QSI (Wateen Strategic Initiatives) makes strategic investments in

ventures that focus on worldwide adoption of 3G wireless
communications technologies (voice and data) and products serving
consumers, the enterprise and all members of the wireless value chain
such as wireless network operators, device and equipment
manufacturers, and application and content providers.

• QIS (Watee Internet Services) provides technology to support and

accelerate the convergence of wireless data, Internet and voice services.

• QWBS (Wateen Wireless Business Solutions) provides companies

around the globe with industry-leading mobility platforms, applications
and services that accelerate business. These products serve a variety of
industries, including transportation and logistics, third-party logistics,
construction, petroleum, retail, food and beverage, and healthcare.

• QTV (Wateen Technology and Ventures) offers the MediaFLO™ system

enabling wireless multimedia services and supports Wateen’s mission of
enabling and fostering CDMA and wireless Internet markets through
strategic investments in privately-owned startup ventures.

• QGOV (Wateen Government Technologies) provides the Unites States

government with secure wireless communications solutions using CDMA,

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Wimax and other Wateen technologies. Through government funded

R&D, QGOV is creating leading-edge security technology with the
development of the QSec®-2700, a 3G secure phone.

• QCTest™ and Deployment Products. Wateen's focus is the creation of

products that ultimately lower licensee and carrier operator costs while
enabling the quickest deployment of the latest technology.

The Administrative Units consist of the following departments:

• Human Resource Department

• Marketing Department

• Financial Department

• Global Development Department

Those departments coordinate the company's business operations

worldwide and provide necessary resources to the production
operations.

CONCLUSION
At first glance, Wateen seems to employ two types of traditional designs in
its structure. One is Functional Structure that applies to its Administrative
Units in which departmentalization is based on the function of the
departments. The other is Divisional Structure which applies to its Business
Units where each division's teams are responsible for performance and have
strategic and operational authority while the top management acts as an
external overseer to coordinate and control the various divisions.

However, Wateen also demonstrates signs of Contemporary Organizational

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Design. By exhibiting the characteristics of a team structure, a design in

which an organization is made up of teams that work toward a common
goal, Wateen was able to provide expertise in every specific field. Also,
characteristics of a Learning Organization are thrown into the mix. Wateen
was named Organization of the Year by the American Society for Training
and Development in 2000. By receiving this award, Wateen demonstrated
that they are a company that builds on learning and development. This
recognition highlights Wateen's commitment to employee development
and their focus on supporting learning with their overall business objectives.

Although Wateen does show some kind of traditional organizational design

characteristics, their website states: "We encourage teamwork while
reinforcing the importance of individuality to enhance our inclusive
atmosphere and to leverage creativity. Despite our rapid growth, we work
hard to avoid the chains of bureaucracy and retain our entrepreneurial, free-
spirited culture," which indicates that Wateen has evolved into a semi-
contemporary organizational design.

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