Introduction
An organization structure refers to a system that dictates how activities in an organization are directed to achieve the set goals and objectives. The actions may include roles, rules, and responsibilities. Thus, organization structures generally help in the coordination of individual and teamwork within organizations. Activities should always be expertly coordinated to ensure the achievement of the laid down objectives and goals. It is important to realize that structure is a precious tool in the quest for coordination. This is because structure helps to specify the reporting relationships, describe how separate actions of individuals are intertwined, and delineate formal communication channels. Primarily, a typical organization can function within a number of different structures, based on the distinct advantages of the various available structures. However, it is worth realizing that a given structure can be plagued with issues if not properly managed. Time and thought should go into the development of each organizational structure. Usually, the board and the senior leadership in an organization are tasked with the determination of the type of organizational structure that can best support the realization of the core objectives of the business. Caterpillar Inc. and GlaxoSmithKline Pharmaceuticals are some of the organizations that benefit from aligning various organization structures with their operations.
Functional Area Organizational Structure
Functional area organization structures are perhaps the most common organizational structures. This type of corporate structure groups individuals and departments based on the specific functions performed. The common departments that Caterpillar and GlaxoSmithKline have include marketing, finance, customer service, production, sales, and human resources. Organizations under this particular structure usually organize such departments by separating each of them independently of the others to promote efficiency and accountability. Typically, the managers of different departments often report to one director who is tasked with the responsibility for all the operational areas in the organization.
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This type of organizational structure has several advantages. One of the benefits of this particular structure is that expertise generally separates the functions. However, challenges come in mainly when different functional areas turn into silos that limit their focus to their area of responsibility, to the extent that they fail to support the functions of other relevant departments. It is important to realize that, although the departments perform different functions, they are generally interdependent. This is because the activities of the various departments should be well coordinated in such a way that they can achieve the set organizational objectives.
Geographic Organizational Structure
The geographic organizational structure is standard for organizations that cover several geographic regions. Caterpillar and GlaxoSmithKline have found it necessary to organize by region to effectively manage the operations in the various areas they cover. They are organizations with operations around the globe. Geographic organizational structures help in supporting the logistical demands, as well as the differences in geographic customer needs. It is important to note that a structure that is organized based on geographical regions commonly report to a central oversight individual who is tasked with overseeing the regional operations. The design of any organizational structure should be analyzed in detail in terms of its suitability. This is because it is essential to ensure that employees have a clear visual flow regarding how an organization functions. The employees should also be in a position to understand the chain of command. Essentially, there are many benefits associated with operating within a defined structure that fits the needs of the organization. An appropriate organization structure has typically a good communicate process and work-flows. This will effectively facilitate efficient management of the available resources.
Customer Type
Some organizations choose to organize by customer type. This is normally to ensure that the specific customer expectations are effectively met through a customized service approach. GlaxoSmithKline has a customer type organization structure because it operates within the healthcare industry. The organization seeks to meet the needs of the specific segments of customers. For instance, outpatient clients have different needs compared to inpatient clients. As such, the outpatient and inpatient individuals seeking medical care have unique expectations and requirements that should be met. Thus, a customer-centered organization structure goes a long way in creating customized care for such patients. Caterpillar also has different types of customers with different needs. In fact, Caterpillar manufactures different products for different customer segments. Additionally, Caterpillar offers services such as insurance to its customers. Therefore, the organization is in a position to meet the specific needs of each customer type.
Product Group Organizational Structure
The product group structure is another common organizational structure. In this type of organizational structure, each product group is under a reporting structure of a person who generally oversees everything related to that particular product line. For instance, Caterpillar has different products such as machinery, insurance products, and financial products. Therefore, each product group at Caterpillar has its functional reporting structure, and the employees within a specific product group report to the executive that oversees the operations within a particular product line. GlaxoSmithKline also has a product group organizational structure based on the different classes of products it manufactures and markets. The pharmaceuticals generally fall into different categories that fall in different reporting structures. This is aimed at achieving logistical efficiencies in terms of marketing and deliveries. One of the most important advantages about this particular organizational structure is that it helps in organizing products by category, and can create completely separate but effective process from other product groups within an organization.
Caterpillar Inc .
Caterpillar Inc. is an American company that designs, manufactures and sells machinery, engines, insurance, and financial products to customers. The company manufactures and sells its products through a global dealer network. The company traces its origins to the merger of Holt Manufacturing Company and C. L. Best Tractor Company in 1925. Caterpillar Inc. is headquartered in Deerfield, Illinois, United States.
Marketing
At Caterpillar, the marketing department is generally responsible for creating and disseminating ideas, images, and messages that effectively communicate the brand values of the organization. The marketing personnel reach out to customers, prospects, investors, as well as the community, and create the popular image that will represent the company in a favorable light. The marketing carries out advertising activities, and it chooses the appropriate communication channels of communication.
Finance
The finance department at Caterpillar has the responsibility of controlling expenditures and obligations, managing investments, receipting and depositing all revenues, and accounting for all assets. At Caterpillar, the finance function plays a critical role in the process of investment appraisal, particularly through the capital budgeting technique and the investment appraisal technique. As such, the finance department is instrumental in passing every key business project through a furnace to ascertain the viability. As such, the department is tasked with tracking all the business transactions, as well as managing all manner of government reporting.
Customer Service
The customer service department at Caterpillar is in charge of interacting with the organization's customers to provide them with the relevant information. The information shared with the customers is meant to address the inquiries relating to products and services. Moreover, the personnel in the customer service department help in resolving any customer complaints. Thus, the department plays a significant role in the survival and continued functioning of the organization.
Production
The production department at Caterpillar is an essential functional area that is generally responsible for transforming inputs into finished products through a series of production processes. The production manager at the organization is tasked with making sure that the required raw materials are provided and assembled into finished products within the set budget.
Sales
The roles of the sales departments vary greatly by organization. At Caterpillar, the sales department plays a critical role in the growth of the company. The department is responsible for identifying and contacting prospects, delivering sales presentations, managing the relationship with existing customers, and closing sales deals. This indicates the important role played by the department at Caterpillar Inc.
Human Resources
The main role of the human resources department at Caterpillar is to advise the top management on how to strategically manage people as business resources. The department is in charge of recruiting and hiring employees, as well as coordinating the compensation programs for employees. Additionally, the department develops employee development and training programs that address business needs.
GlaxoSmithKline
GlaxoSmithKline is one of the world's leading research-based pharmaceutical and healthcare company. It is perhaps one of the oldest pharmaceutical companies in India.
Marketing
At GlaxoSmithKline, the marketing department is responsible for reaching out to customers, prospects, investors, as well as the community. It helps to create the desirable image that will represent the company in a positive light. The marketing carries out advertising activities, and it chooses the appropriate communication channels of communication.
Finance
The finance department at GlaxoSmithKline has the responsibility of controlling expenditures and obligations, managing investments, receipting and depositing all revenues, and accounting for all assets. As such, the finance department is instrumental in passing every key business project through a furnace to ascertain the viability.
Customer Service
The customer service department at GlaxoSmithKline is in charge of interacting with the organization's customers to provide them with the relevant information. The personnel in the customer service department help in resolving any customer complaints. Thus, the department plays a significant role in the survival and continued functioning of GlaxoSmithKline.
Production
The production department at GlaxoSmithKline is an essential functional area that is generally responsible for transforming inputs into finished products through a series of production processes. The production manager at the organization is tasked with ensuring that pharmaceuticals are produced at the right volume and within budget.
Sales
At GlaxoSmithKline, the sales department plays a critical role in the growth of the company. The department is responsible for identifying and contacting prospects, delivering sales presentations, managing the relationship with existing customers, and closing sales deals.
Human Resources
The main role of the human resources department in GlaxoSmithKline is to advise the top management on how to strategically manage people as business resources. The department is responsible for recruiting and hiring employees, and coordinating the compensation programs for employees. Additionally, the department develops employee development and training programs that address business needs.
Organizational Charts
Caterpillar Inc.
Functional Areas
Marketing
Manager
Customer Service Manager
Finance Manager
Production Manager
Sales Manager
HRM
Geographic Structure
Vice President
USA
Europe
Africa
Asia
Customer Types
Vice President
Employee Relations
Corporate
Customers
Retail Customers
Insurance
Customers
Product Groups Structure
Vice President
Machinery
Engines
Financial Products
Insurance
Products
GlaxoSmithKline
Functional Areas
C.E.O
Marketing
Manager
Customer Service Manager
Finance Manager
Production Manager
Sales Manager
HRM
Geographic Structure
CEO
USA
Europe
Africa
Asia
Customer Type
CEO
Corporate
Retail
Outpatient
Dealers
Product Groups
CEO
Vaccines
OTC Drugs
Adartel
Prescription
Drugs
Setting Strategic Objectives
The organizations set strategic objectives based on its business needs. When the organization is focusing on growth, it will set targets for all its business units globally. Caterpillar and GlaxoSmithKline have strategies for facilitating business growth and maximum profitability. The objectives set should always be SMART in order to ensure that they can be attained. For instance, the companies can decide to enter new markets as a way of expanding their businesses. This way, they companies can identify the markets, establish premises, and roll out operations. The firms can decide the number of business units to be added and the time within which the projects should be completed.
The mission statement for Caterpillar is “To enable economic growth through infrastructure and energy development, and to provide solutions that support communities and protect the planet”. The company’s overall strategy is to provide work environments, products, services, and solutions that make productive and efficient use of resources as it strives to achieve its vision (Caterpillar Inc.).
On the other hand, the mission statement for GlaxoSmithKline is "To help people do more, feel better and live longer." Thus, the company aims to expand its market reach to serve as many people as possible. The company's overarching strategy is to increase growth, reduce risk, and improve its long-term financial performance.
Functional Area Structure
The functional area structure helps organizations to meet their strategic objectives more efficiently. For instance, when a company targets to increase sales, it will set targets for the sales department. The sales department will focus on increasing the company sales by a given percentage within a specified time and budget. This way, the company will be able to track progress more effectively.
Geographical Area
The geographical area organization structure helps the companies achieve their strategic objectives in a number of ways. Structuring an organization based on geographical location ensures that a company exploits a particular market effectively and efficiently. Therefore, when a company strategizes to expand its operations, the company can simply set the target number of new branches in each geographical region. The organization sets the time within which such a number of new branches should be established.
Customer Type Structure
The customer type organization structure ensures that each identified customer segment is assigned a specialized team. This will make it possible for the company to determine the most profitable customer segment. When the company plans to increase sales, it will identify the customer segment with the vast potential and invest money in terms of advertisement and promotion. As such, the company will be able to increase sales and revenue.
Product Group Structure
The product group structure plays an essential role in developing product improvement and product development ideas. Through this particular structure, a company can identify a product that performs well in the market. This way, the company can invest more in manufacturing and distribution of such a product. Thus, the structure supports the strategic objectives of the organization.
References
Cummings, T. G., & Worley, C. G. (2014). Organization development and change . Cengage Learning.
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