Archive for Product Management

ORGANIZATION STRUCTURE AND CHART

Organization structure refers to the formal, established pattern of relationships amongst the various parts of a firm or any organization. The fact that these relationships are formal implies that they are deliberately specified and adopted and do not evolve on their own. Of course, it may sometimes happen that given an unusual situation, new working relationships may evolve and which may later be adopted as representing the formal structure. For example for a blinds company who manufacturing vertical blinds, roman shades, faux wood blinds, formal relation between sales department and production department is must.

 

The second key word in our definition of structure is ‘established’. Only when relationships are clearly spelled out and accepted by everyone, can they be considered as constituting a structure. However, this does not mean that once established, there can be no change in these relationships. Changes may be necessary with passage of time and change of circumstances, but frequent and erratic changes are to be avoided. A structure can be based on relationships only if they exhibit a certain degree of durability and stability.

 

The organization chart is a rather abstract illustration of the structure. To get a more complete picture, the chart may be supplemented by job descriptions of each position. The job description gives in detail the activities and responsibilities expected of the person occupying the position.

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MATRIX ORGANIZATION-2

 

This is the output or transaction side of the matrix. Depending on how many people holding a specialist orientation, either resource or output, the organization needs, these groupings can develop several echelons in response to the practical limits of the span of control of any line manager. At the foot of the matrix is the two-boss manager. This manager is responsible for the performance of a defined package of work. The manager is given agreed-upon financial resources and performance targets by superiors on the output side, and negotiated human and equipment resources from the resource manager. The two streams, taken together, constitute the work package. The manager is responsible for managing these resources to meet performance targets. To perform, the manager must handle high volumes of information, weigh alternatives, make commitments on behalf of the organization as a whole, and be prepared to be judge by the results. A manager of blinds company who are selling vertical blinds and roman shades online, need to use all information related to online business as well as the real customers. This form of organization induces the manager to think and behave like a general manager.

 

Even in a fully developed matrix organization, only a relatively small proportion of the total number of people in the organization will be directly in the matrix.

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Product versus Functional Forms-5

If functional structure is adopted, projects may fall behind; if product/project organization is chosen technology and specialization may not develop optimally. Therefore, the need for a compromise between the two becomes imperative.

 

The possible compromises between product and functional bases include, in ascending order of structural complexity:

 

  1. The use of cross-functional teams to facilitate integration. These teams provide some opportunity for communication and conflict resolution and also a degree of common identification with product goals that characterizes the product organization. At the same time, they retain the differentiation provided by the functional organization.
  2. The appointment of full-time integrators of coordinators around a product. These product managers or project managers encourage the functional specialists to become committed to product goals and help resolve conflicts between them. The specialists will retain their primary identification with their functions.
  3. The “matrix” or grid organization, which combines the product and functional forms by overlaying one on the other. Some managers wear functional hats and are involved in the day-to-day, more routine activities. Naturally, they identify with functional goals and are more involved in the problem-solving activity required to cope with long-range issues and to achieve cross-functional coordination.

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Product versus Functional Forms-4

The discussion in the preceding section and an overview of literature on function vs product choice, permits us to observe that both forms of organization design have their own set advantages and disadvantages. The functional structure facilitates the acquisition of specialized inputs. In permits pooling of resources and sharing them across products or projects.

 

The organization can hire, utilize and retain specialists. However the problem lies in coordinating the varying nature and amount of skills required at different times. The product or project organization, on the other hand, facilitates coordination among specialists; but may result in duplicating costs and reduction in the degree of specialization. For example, a blinds manufacturing company who manufacture roller shades and woven wood shades, need to adopt product forms not functional. It depend on the type of business company is doing. A term life insurance company can go with functional while a motels industry need to select product. Thus, if functional structure is adopted, projects may fall behind; if product/project organization is chosen technology and specialization may not develop optimally. Therefore, the need for a compromise between the two becomes imperative.

 

The possible compromises between product and functional bases include, in ascending order of structural complexity:

 

  1. The use of cross-functional teams to facilitate integration. These teams provide some opportunity for communication and conflict resolution and also a degree of common identification with product goals that characterizes the product organization. At the same time, they retain the differentiation provided by the functional organization.

We will discuss on two other structural complexity in next post.

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Product Versus Functional Forms-3

Today we continue our talk on Product Versus Functional. Walker and Lorsch studies two plants which were closely matched in several ways. They were making the same product; their markets, technology, and even raw materials were identical. The parent companies were also similar; both were large national corporations that developed, manufactured, and marketed many consumer products. In each case divisional and corporate headquarters were located more than 100 miles from the facilities studied. The plants were separated from other structures at the same site, where other company products were made.

 

Both plants had very similar management styles. They stressed their desire to roster employee’s initiative and autonomy and placed great reliance on selection of well-qualified department heads. They also identified explicitly the same two objectives. The first was to formulate, package, and ship the products in minimum time at specified levels of quality and at minimum costs-that is, within existing capabilities. The second was to improve the capabilities of the plant.

 

In each plant there were identical functional specialists involved with the manufacturing units and packing unit, as well as quality control, planning and scheduling, warehousing, industrial engineering, and plant engineering.

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