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It is clear that one of the most important parts of the management is organizational structure. Wilson and Rosenfeld (1990: p.215) emphasizes that structure of the organization is a system which is based on right and responsibility. It is the formal model of “interactions and coordination designed by management to link the tasks of individuals and groups in achieving organizational goals.” (Bartol and Martin, 1994: p.82) Due to the different means of management, organization management process always takes many forms. There are four main models which are the bureaucratic structure, the multidivisional structure, the matrix structure and the network structure. Each of these has their characteristics which are applied to different types of enterprise. This essay will introduce the bureaucratic structure and the divisional structure and analyse what are the benefits and drawbacks of each model.
Bureaucratic structure
Personal authority was relied on the enterprise organization management at the early development of the market economy, but with the development of industrial civilization and capitalist economy, it has been changed into a rational management system by enterprise organization, administration and various large organizations. As a result, the bureaucratic structure, which was brought up by Max Weber in the early twentieth century, gradually becomes one of the best-known organizational structures.
It is clear that presence of the bureaucratic structure has specific reasons, but disadvantages are also clear. Power which is in the bureaucratic structure is concentrated by leader. Centralized model is probably beneficial to all department work together and improve the productivity. Smith (2007: p.87) emphasizes that the bureaucratic structure, which has specific responsibilities and clear division, could lead operational efficiency to increase. However, Boddy (1998: p.241) claim that special expertise is engorged and direction of development are defined by this type of structure. One of the most successful examples is United States Steel Corporation, which use this structure, to become the first to have multi-billion dollar business in 1901. Unfortunately, this structure also has one major disadvantage that power is concentrated in the general manager and primary-roots organizations lack the necessary autonomy, it is not only could lead to the development is limited, but also lead to bankruptcy. For example, Japan Airlines Corp (JAP) which was the biggest airline company was declared bankrupt in 2010. The main reason for this is that local airport was constructed deliberately by some bureaucrats and politicians who are canvassing for votes and there are minimal customs prefers to take this new airline. Therefore, a direct result of authoritarian and dictatorship is bankrupt of JAL. In other words, this model has its own limitation which applies to small business and simple organizations only (Boddy, 1998: p.236). In the medium-sized enterprise, it is difficult to take advantage of management. It seems that the most effective solution is decentralisation, such as establish a number of positions of leader to make decision together, establish regulatory authority and establish a broad of arbitration.
There are two different forms about this structure that include tall bureaucracy and flat bureaucracy. Tall bureaucracy is a pyramid-sharp of structure which reflects the hierarchy apparent. Obviously, this model is stable than the others. Senior, B/Fleming,J. (2006: p.83) suggest that legitimate authority is based on bureaucracy. Therefore, the structure of the traditional organization always is pyramid-shaped which expanded gradually from a decision-making, management to operational level and the power reduces progressively. But public servants who are in this hierarchy structure are no powerful. According to this, another drawback of this model is the lack of sensitivity. It is difficult to respond quickly when is an emergency. For instance, employees need to report the situation to their leader when accident occurs, and the leader keeps report on their superior step by step. After that, when the employees receive the reply, it is always late. There are several methods to solve this problem. Firstly, reducing the number of levels in the structure of the organization could solve poor transmission of information which led by excessive layers of management in the company. Secondly, separation of power and making functions more detailed could still solve this problem. Specifically, defining departmental of vision of labor could reduce the procedure to achieve the purpose of acceleration in the transmission of information. Finally, it is clear that establishment of complete institutions could conserve time also.
Flat bureaucracy, which make the division of labor more specialized, is still have defects. Superficial, the feature of this model is that between centralization and decentralization, it is in favor of the latter view which could increase the enthusiasm for the member of organization. Apparently, divide between hierarchy of upper and lower still could not be avoided. Boddy and Paton (1998: p.468) emphasis that independent sector could result in communication difficult, and reduce the manager’s concept of organization. Therefore, the multi-level of the large companies’ is inevitable.
Admittedly, the bureaucracy is an excellent model which is rational and efficient management system and lead to the industrialization process of capitalism is general accelerated. On the other hand, the defect is also clearly. Obviously, in this model, the power of the decision is mastered by the top leader. It seems that blind pursuit of formalism and conformity with rules and regulations could reduce the efficiency. In this case, excessive concentration of power is a factor in poor communication (Senior, B/Fleming,J. 2006: p.83-85). It could not collect information and achieve supervision of subordinate effectively. So, this model is always adapted to small companies which are not requiring a lot of information only. In a certain degree, it might hinder the development of the company.
Multidivisional structure
Multidivisional structure is another management model which is divided up into function, product and service and location. It has been brought up by Alfred Sloan who is the CEO in General Motors Corporation in 1924. Division system is always adapted to large enterprises which are large-scale, wide range and complex of technicality. Control of classification, accounting classification and responsibility for one's own profits and losses are forms of this structure (Boddy, Paton, 1998: p.470). For example, a company divides into several divisions by product or location. Therefore, whole authorities of design for product purchase raw material, cost accounting, manufacture of product and product sales are controlled by them.
Smith (2007: p.88-89) claims that departmentalization by function is one of the most famous types of structure when early of foundation establishment. There are some advantage and disadvantage of this structure. Specifically, independent of sales system and professional skills of technical could enhance the competition to promote enthusiasm for producing. Also it still could lead to problems of plethora types of product, uncoordinated collaboration by each department and narrowness of viewpoint. Functional structures “limit the opportunity for the development of general managers.” (Smith, 2007: p.88)
The definition of the departmentalization by product is that establishment of management department and division of management unit is based on product. Such as putting production and marketing in the same department. According to Smith (2007: p.88), the benefit of the departmentalization by product is helping employees fulfill their potential. It is easy to communicate information to each department which could lead to making responsibility definitely and increasing profits easily. This structure still has some disadvantages. Firstly, this model requires a great deal of employees who has strong ability to work, but it is quite difficult to accomplish. Secondly, controlling become more difficultly for senior management can be an inevitable consequence of authority is increased in each department. (Senior, B/Fleming,J. 2006: p.92) Therefore, the company might become too autonomous. Finally, it seems that, departmentalization by product also is subject to “empire building” (Smith, 2007: p.88).
According to the location of the company to divide department is another method which is quite generally by corporation and Multinational firms. It is not only frequent in organizations involved in selling, delivering and transport but also in service organization such as infirmary, highway maintenance and education institution (Smith, 2007: p.88). Organizational structure into location has a key advantage that information and request for customers are familiar to employers and employees who are working in this area. Further, it always makes transport cost decrease. Unfortunately, location structure is similar to product structure at talent needs. Lower utilizing rate of resources and lack of co-ordination in work between departments could waste a great deal of resources.
Due to poor management and impact of the economic crisis, General Motors Corporation filed for bankruptcy protection in 2009. Then, ironically, Multidivisional Structure was brought up by General Motors Corporation and eventually destroyed it. Therefore, there are still many aspects need to be improved. Through analysis, this structure can be improved in two aspects. To start with improve functions of head office. One of the most important things to improve functions of head office is that managerial hierarchy should be divided clearly. For example, head office decides the development direction and area of operation, and the competitive strategy is determined by branch office. Simultaneously, monitoring and adjustment in the process of policy implementation are equal importance. Supervision of planning, budget and finance could make branch office effective working, following in the petrochemical complex which is successful around the world. Adjustment to the range of function is another method to appropriate. Reduction the power of decision in head office to profession team and using Matrix structure in each team could respond to making decision faster. It is clear that establish monitoring mechanism will benefit company. For instance, periodic assessment by department could increase the efficiency. Moreover, giving more authority for the marketing, sales, etc. department may take more profits. Specifically, making policy, making one's own management decisions and taking full responsibility for one's own profits and losses could strengthen team spirit and enhance efficiency.#p#分页标题#e#
To sum up, both of bureaucratic structure and multidivisional structure have their own limitations, and are also constraint on the restriction of objective factors. For example, bureaucratic structure is more suitable for small and medium enterprises, and multidivisional is more suitable for large companies and transnational companies. Therefore, according to their own management needs, the model which is suitable for the development of the company should be selected and with the development of the company, the policy should continue to be adjusted. It can be confirmed that, there is no one model can be applied to all enterprises. It seems that, organizational structure model has been created for more than 200 years and each model conforms to the economic development. As a result, it believes that a new management model which combines all advantages of model will be made in the future.
Reference:
Buddy, D. 1998. Management an introduction. Europe. Prentice Hall.
Senior, B and Fleming, J. 2006. Organizational change (3rd Ed.). Pearson: Chapter 3.
Smith, M. 2007. http://www.ukassignment.org/ygkczy/Fundamentals of Management. Education. McGraw-Hall.
Boddy, D. and Paton, R. 1998. Management an introduction. Europe. Prentice Hall.
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