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FACULTY OF SCIENCE AND TECHNOLOGY

SEMESTER JAN / 2012

BBPP 1103 - PRINCIPLE OF MANAGEMENT

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MATRICULATION NO : IDENTITY CARD NO. : TELEPHONE NO. E-MAIL LEARNING CENTRE : : :

Table of contents
Page

1.0 INTRODUCTION... 3

2.0 TYPES OF ORGANISATIONAL STRUCTURE. 4 2.1 Functional Structure... 5 2.2 Geographical Structure... 11 2.3 Matrix Structure ..... 15 2.4 Product Structure.... 20

3.0 SUMMARY ... 25 References

INTRODUCTION

An organization able to be described as management structure that determine relationships between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carry out defined tasks in a section or department. Organizations able to be seen regardless in large or small scale and old or new concept, organization should be solid, permanent, and orderly structured. Modern organizations are more structured and hierarchical as compared to conventional one. Organizations are observed to exist with various structures. As pointed out by Mohr (1982, pp. 102103), the early theorists of organizational structure, Taylor, Fayol, and Weber had seen vital of structure for effectiveness and efficiency and assumed if there is no any issue rise on the current structure , people could fashion and adapt accordingly. Meanwhile in the 1930s, the rebellion began which defined as human relations theory, no more people should be treated as the artifact, but rather an advocacy of the creation of a distinguish sort of structure, one in which the requirements, knowledge, and opinions of employees might be given greater recognition towards an organization. Nevertheless, a different view arose in the 1960s, recommending that the organizational structure is "an externally caused phenomenon, an outcome rather than an artifact." (Mohr, L. B, 1982). This explains organization may build by the influenced of the environment regardless specific or general issue. In the 21st century, organizational theorists such as Lim, Griffiths, and Sambrook (2010) are proposing that organizational structure development is very much dependent on the management strategies and the workers as a limitation by the power and authority distribution between them, and influenced by their environment and the outcome. In the new centuries, many organizations are designed as hierarchies, with each manager reporting to one and only one manager at the next higher level. Within the hierarchical structure, there is substantial variation in the number of levels and in the set of activities grouped together. The several groupings are pertaining to organization such as functional, product, matrix, geography and customer. For instance, other organizations may apply a matrix structure in which each low-level manager reports to two or more superiors.

In the 21st century, parts of organizations are not purely employed hierarchical structures, many management are still prone to practice the existence of the flat community structure within their organizations (Butler Jr., J.K., 1986, p.5). For functional hierarchy, departments were distributed into styling, engineering, manufacturing, research, public relations, and personnel division (Sloan 1963, p. 190).

2.0 TYPES OF ORGANISATIONAL STRUCTURE

Generally, organizational structures are able to be described based on the type of departmentalization. It means the different organizational units which the division of system and organization that is responsible to resolving the duties given. Differentiation of task or activity into separate segments is called departmentalization. Briefing about grouping tasks in different departments or it can be defined as division of work. The functions reflect the nature of the business. The advantage of this type of grouping is obtaining efficiencies from consolidating similar specialties and people with common skills, knowledge and orientations together in common units. There are several types of departmentalization that being applied in most of the organization in Malaysia which are functional, product, matrix geographical and consumer. Each type of departmentalization will be described as below:

2.1 Functional structure:

Figure 1.0: Functional Departmentalization example

Departmentalization by function organizes by a group of people who have similar skills which has its own functions and objectives to be performed. The functions reflect the nature of the business. The advantage of this type of grouping is obtaining efficiencies from consolidating similar specialties and people with common skills, knowledge and orientations together in common units. Functional departmentalization indicates grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments for example human resources, IT, accounting, manufacturing, logistics, marketing, and engineering. Functional departmentalization can be used in all types of organizations. Figure 1.0 illustrates departmentalization by function.

Figure 1.1 Sourced by: Error! Hyperlink reference not valid.

According figure 1.1, this organization involves in developing and implementing departmentalization by function. In this case, managing director is a top level management followed by business management, corporate function, human resources management and operations as a middle level management. Business management as marketing department is responsible to project BASF PETRONAS Chemicals' manufactured products (OMP) around

the world. Management for corporate functions is divided by three sections. This department responsible for accounting and financial, information technology related services to the various constituents of the business and acquires goods and services through world class procurement of raw materials, technical goods & services and packaging. Human resources management recovers all areas related with recruitment of employees, including delegates from BASF and staff seconded from PETRONAS. Meanwhile, operation management is responsible to apply procedure, technique and specialist knowledge required in a certain task. This management can be categorized as technical division.

Figured 1.2 - Sourced by: http://www.mpc.gov.my/home/?cont=ds&item=d3

The Malaysia Productivity Corporation (MPC) known as the National Productivity Corporation which is a cooperative project between the United Nations Special Fund and the Federal Government, with the International Labour Organisation acting as its executing agency. Based on figure 1.2, development, measurement and certification management were put together in a line of authority to provide value-added information on productivity, quality, competitiveness and best practices through research activities and databases. In addition, MPC also is responsible to develop human capital and organizational excellence for building a knowledge-based society through training, systems development and best practices.

WINTRAD INDUSTRIES SDN BHD

Figure 1.3 - Sourced by: http://www.wintrad.com.my/chart.htm

The management is illustrated in figure 1.3, WINTRAD INDUSTRIES SDN BHD which known as a professional company in designing, manufacture and supply of Low Voltage Switchgear. As a top level management, managing director as well as general manager is responsible to be as an advisor and negotiator for new tender and role as a leader for this organization. Middle level management, manager for each functions are responsible as a spokesperson to general manager and managing director from lower level management

and as a leader for lower level management to ensure the organization move towards achieving its objectives. Manufacturing division, sales and marketing division, finance and administration division as a lower level management responsible to focus on objectives organization and controlling work daily to ensure achieve organization target.

Figure 1.4 - Sourced by: http://www.murata.com.my/Portal/MMEPortal.nsf/dx/organization-structure.htm

Murata Electronics (Malaysia) Sdn. Bhd.(MME) is an overseas subsidiary of Murata Manufacturing Co. Ltd. in Japan. The objective of the organization is solely on production base and sales footing of the Murata Group in Malaysia and Southeast Asia. According figure 1.4, managing director as a top level management responsible as figurehead entertaining his clients and act as channel for communication between his department and outside his organization. There are divided by seven department management for implementation, this section responsible carry out time planning and effectively organize the sources and information.

2.2 Geographical structure:

Manager

South region

North Region

Central region

Figure 2.0 Geographical Structure example

A geographic structure is typically found in companies with operations in large region, such as national or international organizations. Each location will have its own internal structure and management, allowing them to conduct business activities in certain geographical locations. The advantage of this structure is most beneficial in international locations, where companies need help in transitioning their operations to specific international markets. In addition the organization can organize effective and efficient to the requirements of the specific market and advantage to market to different countries. Other than that, the organization can reduce of costs management to allocate any organization to entire location. The disadvantage for the geographical structure is the organization difficult to make centralized of decision-making. This difficult will be arising in coordinating between department as the departments in geographic structure cause of location far from each others. Manager must give responsibility to another authority to take actions and improve organization rather than giving a directive from the head of organizations.

Figure 2.1 - Sourced by : http://www.cosway.com.my/

COSWAY (M) Sdn Bhd is a Malaysian-based is multi-level network marketing. They began their operations in December 1979. It is a simple concept of distributing quality product and unique network marketing system. Concept for the business, to allocate the hundreds of COSWAYs stockiest centre throughout the country which ensure that there will always be a centre close to where you work or live via a network. Today, it has grown to become one of Asias, Brazils and Mxicos largest network marketing companies. The consumer product related home care, personal care, food, auto care, healthcare and fashion.

Figure 1.2 - Sourced by: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence

According figure 2.2, Samsung Electronics has a total 196 subsidiaries around the world including production subsidiaries, sales subsidiaries, distribution subsidiaries and research laboratories. Samsung Electronics produce the product of consumer electronics, semiconductor, telecommunication, digital media and digital convergence technologies. In this organization, management is the ability to react effective and efficient within the scope of requirement and more important when the products and services that are produced are marketed to different countries. Samsung global network also includes one global headquarters in Korea and nine regional headquarters in North America, Europe, China, Southeast Asia, Southwest Asia, Latin America, CIS, Middle East, and Africa.

Figure 2.3 - Sourced by: http://renchin.com/?tag=7-eleven

7-Eleven operating as a franchise, is the world's largest operator, franchisor and licensor of convenience stores. Private labels for 7-Eleven are slurpee and big gulp. In addition, 7-Eleven would come to own or operate several brands of food and concepts. Concept for the business, operating in 24 hours per day and easy for customer to buy any food and beverages located in any places. The main objectives for the organization are to fulfill the needs of customers.

2.3 Matrix Structure:

Figure 3.0 Matrix Structure example

As above illustration figure 3.0, the matrix structure defined as a product manager (A until D) can report more than two different of managers. The type of this structure combines two or more types of departmentalization at the same time. For example, in this organization, product manager A has to produce the sample product which is ordered from design vice president. When the product has been produce, product manager A must report the progress of the product to three of vice president from manufacturing, marketing and controller to evaluate cost of the product and customer satisfied. Advantage for matrix structure, the organization can manage effective and efficiency in a large scale production. Furthermore, organizations can achieves synchronization necessary to meet dual demands from customer, easy to make decisions and frequent changes in unstable environment. Apart from that, matrix structure provides opportunity for both functional and product skill development and exceptional for medium size organization with multiple product to produce. The disadvantage of this matrix structure is employees must have excellent interpersonal skills and extensive training to conduct the big projects that have many phases to be completed. This situation can make conflict of authority and confusing among employees to make report more than one supervisor and managers. Besides from that, the

matrix structure will not functioning unless participants understand it and adopt collegial rather than vertical-type relationship.

Figure 3.1 - Sourced by: http://www.townplan.gov.my/english/image/service_regionalplan_chart.jpg

Based on figure 3.1, this is the chart of organization department of town country planning in peninsular Malaysia, Ministry of Housing and Local Government. The objective for this department requires the setting up of a Regional Planning Committee (RPC) for a region in an area consisting of two or more States. Example for matrix structure determined in regionals planning committee secretariat department and projects of national priority department, those lower-level management have to report more than one supervisor or manager.

Figure 3.2 - Sourced by: http://www.chemlab.com.my/organization.asp

Chemical Laboratory or CHEMLAB is a member of the KAM Holdings Group of Companies. The objectives this organization to specializing in many aspects of scientific and technology services in this part of the world. This requires technical people excellence in assisting its clients to operate extra optimally and profitably, even as complying with existing and future government regulations. Figure 3.2 shows the matrix structure able to be implemented by regions manager to report two or more different managers. As an example, Johor and Kuching region managers must report to quality assurance manager, senior manager, sales manager and quality director.

PERUNDING DMA SDN BHD

Figure 3.3 Sourced by: http://www.pdma.com.my/ver1/?mobj=001&mact=content&pid=14

According figure 3.3, PERUNDING DMA SDN BHD was incorporated on 1st August 1995 in Kuala Lumpur, and the objective for the organizations is a chartered quantity surveyors consultant firm. The matrix structure for this organization interconnected with low level management. As a professional surveyor consultancy firm, most of surveyor related to each other to make right decision to preparation tender report and tenders document. Human relations skill needed to build long term relationships and increase the number of clients who value the services we provide to their business and their success.

Figure 3.4 - Sourced by: http://www.snia.org/about/organization/staff/org_chart

The missions for this organization to association with local industry to developing and achieve standards, technologies, and educational services to authorize organizations in the management of information. Via looking at the figure 3.4, even though they implement the departmentalization by function, in certain cases, they are also applying matrix structure as well. For instance, by referring to business services director which is indicate in orange box, the membership manager is not only able to report to his director, he can report directly as well to the executive director. Besides, the Marketing Programs and Design Manager also can have an interconnection with the Online Programs and Website Manager

2.4 Product Structure:

Company ABC

Shampoo

Toothbrush

Facial Wash

Figure 4.0 Product Structure example

The intention for product structure is to focus of producing a product and services. Based on figure 4, the organizations have to produce three different products with three different structure organizations. Employees in different units that is responsible to accomplish the duties given. In such an arrangement, the top manager of the product group typically has considerable autonomy over the operation. The advantage of this type of structure is that the personnel in the group can focus on the particular needs of their product line and become experts in its development, production, and distribution. A disadvantage, at least in terms of larger organizations, is the duplication of resources. Each product group requires most of the functional areas such as finance, marketing, production, and other functions. The top leadership of the organization must decide how much redundancy it can afford.

Figure 4.1 Sourced by: http://www.berjaya.com/corporate-structure.html

Tan Sri Dato' Seri Vincent Tan Chee Yioun as a owner The Berjaya Corporation Group, with a total employee strength of 16,000. In figure 4.1, the Group is a diversity in a consumer product, financial services, hotels and recreation development, property investment development, gaming and lottery development, food and beverages, technology development and investment holdings. By the nature of their businesses, Berjaya encouraged its staff to share their skills and talents in accomplish organization objectives. Beneficial for Berjaya Corporation Berhad organization allows to expand their experience and expertise, related to the overall activity of the product and services.

Figure 4.2 Sourced by: http://thinking-brands.blogspot.com/2010/09/nestle-brand-portfolio.html

Family branding or corporate branding in word of Nestle is attached all the brands in all categories. Figure 4.2 illustrates, every food product meets the needs of customer demands. In this era, customer more likely to buy the product based on branding name and not compromise on price. Advantages for the product, if customers constantly to use the nutrition products for their child, customer will continuously used the next level product to make them
satisfy if the company has a well managed product portfolio.

Figure 4.3 - Sourced by: http://www.terusmaju.com.my/chart.html

Teras Maju Services Sdn Bhd actively involved in the transportation bus industry. Main service for this organization, to provide transportation as a factory buses for their clients. Refers illustration figure 4.3, specialist employees develop that are well trained to provide specific services for buses maintenance. Advantage for the organization, no cost rises to hire external expertise to service the buses maintenance.

Figure 4.4 - Sourced by: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence

Refer figure 4.4, Samsung Electronics is worldwide supplier in consumer electronics. There are the largest technology company in the world, Samsung is guided by a simple philosophy, strong values and high ethical standards that authority of departmentalization. The most important for the organization, the line authority and staff authority have cooperation to each other to ensure the effective and efficient of an organization.

SUMMARY
This study attempts to explain organization structure based on rationalization coordination of interactions among activities. Many organizations are designed as hierarchies, with each manager reporting to one and only one manager at the next higher level. Therefore, the function of organization structure is work arrangement by division or management to individual or grouping intended for achievement of an organizations objectives. The important potency to accomplish organizational structure is organizational strategies, size of organization, technology and environmental factor. Combination between people, hierarchies and system may recognize as a departmentalization. Departmentalization can be described as a distribution of work and employees to different organizational units that are responsible for resolving the duties given. There are few types of departmentalization had been applied by variety of companies. It can be observed through their types of organization chart. As above mentioned, those types of structure are functional, geographical, matrix and product base. Functional structure is the most common type departmentalization whereby it is quite straight forward in coordinating the interactions between top management and each specific department representative which is normally department managers. This typical structure allows one company to have in depth knowledge and skills on each function. However, there is still some limitations if they are facing with global and environment changes which it might slow the response time on it. Depending on the types of businesses, some companies able covers certain region, meanwhile the others cover all areas of market demand. For the companies that apply geographical structure, most likely they will determine the regions either by cardinal directions or by name of the states. Cardinal point of directions such north, south, east and west are normally being applied by major players. It is much easier for them to monitor and track performance and market demand analysis instead of by product or services itself. Matrix structure presents complex design of hierarchy whereby the authority and responsibility of manager is bigger than the functional structure. Those companies that apply matrix structure are more fragile and flexible in terms of reporting matters. Even though, staff works in the different department, they are able to cross report to another department. This

structure is normally applied within production department by the maintenance people. For those who applied this structure are able to create huge network within multidisciplinary department. However, management of this company has to ensure that their staffs are self driven to carry out major tasks and deal with the multi cross-sectional network. Product structure is normally applied by those companies who have numbers of products as their bullet to succeed. In order to penetrate current global changes, certain companies have to survive to run their businesses. Varieties of product almost certainly have variety of margin and able to analyze market trend which one is worth to be sold and vice versa. Limitation on product structure is the companies have to spend their time on market analysis and determining thoroughly the market trend as well as their benefits on it. However, in order to fulfill customer demand, an organization is required to study the market trend and observe the best in class or multinational company best practices. They might assist new born company and developing company to take a step further in establishing their own businesses.

2961 words

References

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not valid.. n.d.

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PERUNDING DMA SDN BHD. [Online]. Available: http://www.pdma.com.my/ver1/?mobj=001&mact=content&pid=14. n.d. SAMSUNG. [Online] Available: http://www.dolcera.com/wiki/index.php?title=Samsung#Geographical_Presence. [2011, July 28]. Sloan, Alfred P., Jr. (1963). My Years with General Motors. Doubleday, NewY ork. SNIA Organization Chart. (2011). [Online]. Available: http://www.snia.org/about/organization/staff/org_chart. [2012, February 1]. WINTRAD INDUSTRIES SDN BHD. [Online] Available: http://www.wintrad.com.my/chart.html. n.d.