Chapter 6 - Organization structure and management systems. This chapter presents the following content: Evolution of the corporation, principles of organizational design, the role of hierarchy: bureaucratic control vs. modular integration, alternative structural forms, management systems. | Organization Structure and Management Systems Evolution of the corporation Principles of organizational design The role of hierarchy: bureaucratic control vs. modular integration Alternative structural forms Management systems OUTLINE Evolution of the Modern Corporation The business environment Organizational consequences Strategic changes Late 19th century Early 19th century Early 20th century Local markets Firms specialized & Small firms. Transport slow focused on local Simple manage- Limited mechanization markets ment structures Introduction of Geographical and Functional struct- railroads, telegraph vertical expansion ures. Line/staff industrialization separation. Accou- nting systems Excess capacity in Product & Development of distribution. Growth multinational multidivisional of financial institut- diversification corporation ions & world trade Board of Directors President Executive Committee Financial Staff Legal Department General Advisory Staff GM Acceptance Corporation Chevrolet Division Sheridan Division Canadian Division Oldsmobile Division GM Truck Division GM Export Company Cadillac Division Buick Division Inter-company Parts Division Oakland Division Samson Tractor Division Scripps Booth Corp. Source: . Sloan, My Years with General Motors, Orbit Publishing, 1972, p. 57. General Motors’ Organization Structure, 1921 The Basic Tasks of Organization THE ORGANIZATIONAL CHALLENGE: to design structure & systems that: Permit specialization Facilitate coordination by grouping individuals & link groups with systems of communication, decision making, & control Create incentives to align individual & firm goals Achieving high levels of productivity requires SPECIALIZATION Specialization by individuals necessitates COORDINATION For coordination to be effective requires COOPERATION But goals of employees == goals of owners THE AGENCY PROBLEM (a) Self Organizing Team: 10 interactions (b) Hierarchy: 4 interactions Hierarchy Economizes on Coordination . | Organization Structure and Management Systems Evolution of the corporation Principles of organizational design The role of hierarchy: bureaucratic control vs. modular integration Alternative structural forms Management systems OUTLINE Evolution of the Modern Corporation The business environment Organizational consequences Strategic changes Late 19th century Early 19th century Early 20th century Local markets Firms specialized & Small firms. Transport slow focused on local Simple manage- Limited mechanization markets ment structures Introduction of Geographical and Functional struct- railroads, telegraph vertical expansion ures. Line/staff industrialization separation. Accou- nting systems Excess capacity in Product & Development of distribution. Growth multinational multidivisional of financial institut- diversification corporation ions & world trade Board of Directors President Executive Committee Financial Staff Legal Department General Advisory Staff GM Acceptance Corporation .
