FUNDAMENTAL OF

ORGANIZATION

DESIGN

SOURCES :

DESIGNING YOUR ORGANIZATIONAMY KATES & JAY R. GALBARTH

OLEH :

ALHADI

BROTO MUDJIANTO

CLARA WASTATI L GAOL

WHAT IS ORGANIZATION?

WHAT IS ORGANIZATION DESIGN?Organization design is the deliberate process of configuring

structures, process, reward systems, and people practices

to create an effective organizations capable of achieving the

business strategy.

A social unit of people that is structured and managed to

meet a need or to pursue collective goals. All organizations

have a management structure that determines relationship

between the different activities and the members, and

subdivides and assigns roles, responsiblities, and

authority to carry out different tasks.

Organizations is used broadly to refer to an entire firm, as

well as to just one part of it

WHAT IS STRATEGY?Strategy is a method or plan chosen to

bring about desired future, such as achievement of a goal or solution to a problem.

The art and science of planning and marshalling resources for their most efficient and effective use. ( Business Dictionary)

A Frame Work For Decision Making

Organization design is a decision making process with numerous steps and many choices to make.

Provides a common language for debating options and articulating why one choice is better than another in objectives, impersonal terms.

Forces design decision to be based on longer-term business strategy rather than the more immediate demands of people and politics

Provides a clear rationale for the choices considered and explanations of those choices as the basis for communication and succesful change management.

Allows decision makers to be able to evaluate outcomes, understand root causes, and make the right adjustments during implementation

Star model

Strategy Strategy is a company formula’s for success

Organizational Capabilities The unique combination of skills, processes, technologies, and human abilities

that differentiate a company

Structure The grouping activities to carry out the task at organization

Process Decision making, role, power and authority

Rewards Behavior that influenced the achievement of goal – motivation tolls

People Skills and abilities of human resources needed by organization

STRATEGY Strategy is a method or plan chosen to bring about

desired future, such as achievement of a goal or solution to a problem.

Strategy is a company formula’s for success

Strategy it sets the organization’s direction and a encompasses the company’s vision and mission, as well as its short-and long-term goals.

The purpose of a strategy is to gain competitive advantage. The ability to offer a customer better value through either

lower prices or greater benefits and services than competitors can ( Porter, 1998).

Key words : Internal organizational capabilities.

Competitive advantage of Michael Porter

Cost leadership strategy Goal : To offer products or services at the lowest cost in the industry

Differentiation strategy Goal : To provide a variety of products, services, of features to

consumers that competitors are not yet offering or are unable to offer

Innovation strategy Goal : To offer new products or notably better

Operational Effectiveness strategy Goal : To perform internal business activities better than

competitors, making the company easier or more pleasurable to do business with than other market choices.

Porter Competitive Model

Intra-Industry Rivalry

Strategic Business Unit

BargainingPower

of Buyers

BargainingPower

of Suppliers

Substitute Products

and Services

PotentialNew

Entrants

Figure 3-1

Source: Michael E. Porter“Forces Governing Competition in IndustryHarvard Business Review, Mar.-Apr. 1979

Two Strategic Objectives

Create effective links with customers and suppliers

Create barriers to new entrants and substitute products

Primary and Supporting Strategies

Differentiation Strategy (Primary)

Low Cost Strategy (Primary)

Innovation (Supporting)

Growth (Supporting)

Alliance (Supporting)

Organizational Capabilities

Organizational Capabilities : The unique combination of skills, processes, technologies, and human abilities that differentiate a company.

Creating superior organizational capabilities in order to gain competitive advantage is the goal of organization design.

Organization design is the series of choices and decisions; in any decision-making-process, clear criteria serve the purpose of allowing alternatives to be avaluated agains agreed-on standards.

The Campbell Soup Company does not necessarily make better soup than its competitors do. Instead, it creates innovative packaging and works effectively with retailers on displays that highlight the convenience of its product.

Procter & Gamble has not only a strong research arid development capacity but also the capability of bringing ideas to market

THE IMPLEMENTATION OF STRATEGIC (EXAMPLES)

Part of our success is owed to our ability to maintain such a high standard of quality and service over the years. Yet it is the strategic placement and easy availability of our vehicles that ultimately earn us the reputation as a most reliable transportation partner ( Blue Bird Taxi )

ORGANIZATION’S STRUCTUREFunctional Structure

Grouping of activities according to the functions of an enterprise, such as production, selling and financing

Product Structure Grouping of activities according to products or product lines

Geographic Structure Grouping of activities according to area or territory

Customer Structure Grouping of activities according to that refflects a primary interest in

customers

Matrix Structure The combining of functional and project or product patterns of

departmentation in the same organization structure

Functional StructureA functional structure is organized around major activity groups such as finance, human resources, research and development, manufacturing, and marketing. All employees in each function are managed together in order to promote sharing of knowledge and greater specialization

Product Structure

Separating into product divisions brings three main advantages:Product development cycles can be compressed because all the employees focused on the productare housed together.Focusing more narrowly on one line of products can promote product improvements andinnovations.New opportunities can be more easily puisued because of the autonomy afforded by the divisionalstructure. There is not the constraint of coordinating with other divisions.

Geographic Structure

Geographic Organizational Structure

Advantages & Disadvantages( Management a Global Perspective : Heins Weihrich & Harold Koontz)

Advantages Disadvantages

Places responsibility at a lower level

Places emphasis on local markets and problems

Improves coordination in region

Takes advantages faces communication with local interests

Furnishes measurable training ground general managers

Requires more persons with general manager abilities

Trends to make maintenance of economical central services difficult and may require services such as personnel or purchasing at the regional level

Makes control more difficult for top management

Customer Structure

Advantages & Disadvantages( Management a Global Perspective : Heins Weihrich & Harold Koontz)

Advantages Disadvantages

Encourages focus of customer needs

Gives customers the feeling that they have an understanding supplier (banker)

Develop expertress in customer area

May be difficult to coordinate operations between competting customer demands

Requires managers and staff expert in customer’s problem

Customers group may not always be clearly defined (e.g. large corporate firm vs other corporate businesses)

Matrix Structure

Matrix Organization Structure

Matrix Organization Structure

If your company is facing serious problems

WHAT ARE YOU DOING?

WHICH ONE .... should be changed?

STRATEGY OR ORGANIZATION?

Conclusion 1. Decisions in formulating organizational design should be based on long-

term business strategy of the organization2. Model star ( star model) is a tool that is recommended Amy Kates and Jay R.

Galbraith to face critical challenges in the design of the organization3. Fundamental reasons to execute an appropriate strategy of organizations

required, to achieve organizational goals required a good strategy and proper .

4. Strategy is an organizational tool to achieve success through the organization's capabilities to gain a the competive advantage.

5. Organizational design goal was to create an organization's ability to gain a competitive advantage, while the ability of the organization is a unique combination of skills and integrated, process and human resource capability of the organization.

6. To organize or manage , share tasks and responsibilities within organization, a structured organization established, based on the shape function , product , geography , customer and combined them , can also form a matrix or project

7. Choice of organizational form is based inter alia on the size of the organization, the extent of product, marketing, target market and market segmentation.

Awareness of competitive forces can

help a company stake out a position

in its industry that is less vulnerable

to attack.

Michael E. Porter

Competitive Strategy

CORPORATE STRATEGY

AND STRUCTURE,Historical

Perspektive, Chapter Two

SOURCES :

ALIGNMENTRoberts. Kaplan

David P. Norton

OLEH :

ALHADI

BROTO MUDJIANTO

CLARA

An- Example of Multifunctional (M-Funct) Structure

The Second Industrial Revolution, starting in the middle of the nineteenth century, saw the growth of much more complex capital-intensive industries, such as primary and fabricated metals, chemicals, petroleum, machinery, and transportation equipment.

The Simple Dan Small Organization The Centralized Functional Organization

Some acquired competitors through horizontal combinations.

Several, such as Ford Motor, undertook vertical integration to better coordinate the flow of materials into and out of factories.

Most companies expanded geographically so that they could leverage their physical and organizational economies of scale in their domestic markets to reach customers in more distant markets

THE ENCOUNTERED NEW PROBLEM• Coordination and handoffs between

departments were often inefficient, costly, and time-consuming.

• The lack of shared information among marketing specialists and salespeople (who dealt with customers), engineers (who designed new products and services), and operating people (who built the products and provided the services) often led to expensively designed products and services that were costly to manufacture and deliver and didn't meet customers' expectations and needs.

• Functional organizations typically were also slow to respond to changes in customer preferences and new opportunities or threats in the marketplace.

• Alfred Chandler summarized the problems faced by these centralized, functional organizations:

As centralized functionally organized companies expanded and diversified

Companies such as DuPont, General Motors, General Electric, and Matsushita

The Multidivisional Structure

Stuktur Organisasi - FungsionalCEO

Engineering Production PersonelFinance and Accounting

Marketing

Keunggulan Strategik Kelemahan Strategik

1. Efisiensi - Spesialisasi Persaingan / konflik antar fungsi

2. Keahlian fungsional Kesulitan dalam koordinasi danpengambilan keputusan antar fungsi

3. Delegasi keputusan operasional Membatasi pengembangan manajerumum

4. Kendali pusat atas keputusan strategik Prioritas pada bidang fungsional

5. Strategi melalui kegiatan kunci unit

Struktur Organisasi Fungsional

Struktur Organisasi Fungsional - Proses

CEO

Engineering Production PersonelFinance and Accounting

Marketing

CEO

PurchaReceiving and

InventoryOrder Entry

Wholesale Sales

Retail SalesAccounting and Billing

Customer Service

Struktur Organisasi Geografis

CEO

General Manager – Western

District

General Manager – Southern

District

General Manager - Central District

Engineering Production Marketing

General Manager - Northern

District

General Manager – Eastern District

Finance/ AccountingMarketing

R&DHRD

Finance/ AccountingMarketing

R&DHRD

Keunggulan Strategik Kelemahan Strategik

1. Memungkinkan penyesuaian strategiterhadap kebutuhan setiap pasargeografis

Menimbulkan kesulitan bagi kantorpusat mengenai keseragaman geografisatau keragaman geografis

2. Delegasi tanggung jawab laba/ rugike jenjang strategik terendah

Lebih menyulitkan dalam menjagakonsistensi citra/reputasi perusahaandari daerah ke daerah

3. Meningkatkan koordinasi fungsionaldi pasar sasaran

Menambah lapisan manajemen yang mengelola unit geografis

4. Memanfaatkan skala ekonomisoperasi lokal

Dapat menyebabkan duplikasipekerjaan staf di kantor dan distrik

5. Memberikan landasan pelatihan yang baik bagi manajer umum ke tingkatyang lebih tinggi

Struktur Organisasi Divisi

CEO

General Manager – Division A

Marketing

Production

Accounting

General Manager –Division B

Marketing

Production

Accounting

General Manager –Division C

Production

Marketing

Accounting

Vice President- Administrative Services

- Operating Support

Keunggulan Strategik Kelemahan Strategik

1. Mendorong koordinasi danwewenang yang diperlukan ke tingkatyang sesuai demi ketanggapan yang cepat

Memupuk persaingan tidak sehat

2. Menempatkan pengembangan danimplementasi startegi dekat denganlingkungan yang khas dari divisi yang bersangkutan

Menimbulkan masalah mengenaiseberapa besar wewenang yang harusdiberikan kepada manajer divisi

3. Membebaskan CEO untukmelakukan pengambilan keputusaanyang lebih luas

Menimbulkan kemungkinan tidakkonsistennya kebijakan di antara divisi

4. Secara tajam memusatkan tanggungjawab atas kinerja

Menimbulkan masalah pendistribusianbiaya overhead korporat yang dapatditerima oleh para manajer yang bertanggung jawab atas laba

5. Mempertahankan spesialisasifungsional dalam masing-masing divisi

6. Memberikan landasan pelatihanyang baik bagi para manajer strategik

Struktur Organisasi Unit Usaha Strategik

CEO

Group Vice President SBU

1

Division A

Division B

Division C

Group Vice President SBU 2

Division D

Division E

Division F

Group Vice President SBU 3

Division G

Division H

Vice President- Administrative Services

- Operating Support

Keunggulan Strategik Kelemahan Strategik

1. Meningkatkan koordinasi antaradivisi yang mempunyai masalahstrategik serupa dan menghadapilingkungan produk-pasar yang sama

Membentuk lapisan manajemen barudi antara divisi dan manajemenkorporat

2. Mengetatkan manajemen danpengendalian strategik dari perusahaanyang bisnisnya beragam

Dapat menimbulkan persaingan taksehat memperebutkan sumber dayakorporat

3. Memudahkan perencanaan bisnisyang mendalam di tingkat korporat danbisnis

Dapat menimbulkan kesulitan dalammendefinisikan peran wakil presidengrup

4. Menyalurkan tanggung jawab keberbagai unit usaha yang berbeda

Dapat menimbulkan kesulitan dalammenetapkan berapa besar otonomiyang harus diesarhkan kepada wakilpresiden grup dan manajer divisi

CEO

Project Manager A

Project Manager B

Project Manager C

Vice President

Engineering

Vice President

Production

Vice President

Purchasing

Vice President Administration

Struktur Organisasi Matriks

EngineeringStaff

ProductionStaff

Purchasing Agent

AdministrationCoordinator

EngineeringStaff

ProductionStaff

Purchasing Agent

Administration Coordinator

EngineeringStaff

ProductionStaff

Purchasing Agent

Administration Coordinator

Keunggulan Strategik Kelemahan Strategik

1. Mengakomodasi beragam kegiatanbisnis yang berorientasi pada proyek

Dapat menimbulkan kebingungan dankebijakan yang kontradiktif

2. Menyediakan dasar pelatihanmanajemen untuk manajer strategik

Menuntut koordinasi horisontal danvertikal yang luar biasa

3. Memaksimalkan pemanfaatanmanajer-manajer fungsional secaraefisien

Dapat menimbulkan lalu lintasinformasi dan pelaporan yang berlebihan

4. Memupuk kreativitas dan banyaksumber keragaman

Dapat memicu konflik dan kehilangantanggung jawab

5. Memberikan kepada manajemenmenengah kontak lebih luas denganmasalah-masalah strategik

Evaluasi Strategi dan Struktur (Chandler)

Unit Fungsional : Satu Lokasi, Satu Pabrik

Ekspansi Volume : kebutuhan administrasi

Ekspansi Geografis : banyak unit lapangan, lokasiberbeda, standar administrasi, spesialisasi, koordinasi

Integrasi Vertikal : banyak fungsi, arus informasidan bahan, peramalan dan jadwal, koordinasi

Diversifikasi produk : industri lain, pengelolaandivisi produk, investasi modal, tanggung jawab, keputusan manajer umum, otonomi divisi, pengendalian internal

Larry Wrigley : 4 Strategi Pertumbuhan

1. Bisnis produk tunggal Struktur Fungsional

2. Satu bisnis yang dominan, dengan satu bisnismenyumbang 70-95% penjualan Struktur Fungsionaldi Bisnis dominan dan Struktur divisi di bisnis lainnya

3. Bisnis terdiversifikasi terkait, berdasakan satu salurandistribusi / teknologi yang sama, dengan lebih dari 30% penjualan berasal dari luar bisnis utama StrukturDivisi

4. Bisnis terdiversifikasi tak terkait, dengan lebih dari 30% penjualan berasal dari luar bisnis utama Struktur Diisi

Semakin beragam perusahaan perlu divisionalisasi

Richars Rumelt1. Perusahaan produk tunggal / perusahaan bisnis

dominan menggunakan struktur fungsional

2. Perusahaan dalam beberapa lini bisnis yang masihberkaitan hendaknya menggunakan struktur multi divisi

3. Perusahaan yang bergerak dalam beberapa lini bisnisyang tidak berkaitan hendaknya diorganisasiberdasarkan unit usaha strategik

4. Kesesuaian strategi-struktur yang dicapai secara dinidapat merupakan keunggulan bersaing.

Tabel 13.1, Generic Strategy, Structure, And Control

Tabel 13.3, Coorporate Strategy And Structure and Control

BALANCED SCORECARD

BALANCED SCORECARD: SEBUAH SISTEM UNTUK MENYELARASKAN STRATEGI PERUSAHAAN DAN STRUKTUR

Chandler's, Michael Porter, Goold, Campbell, and Alexander

That strategy precedes structure and systemsHow Strategy Maps and the Balanced Scorecards align organization structure with corporate-level strategy

Robert S. KaplanHarvard Business School

What Is a Balanced Scorecard?

A Measurement

System?

A Management

System?

A Management

Philosophy?

Translating Vision and Strategy: Four Perspectives

Vision andStrategy

Objectives Measures Targets Initiatives

FINANCIAL

“To succeed financially, how should we appear to our shareholders?”

Objectives Measures Targets Initiatives

LEARNING AND GROWTH

“To achieve our vision, how will we sustain our ability to change and improve?”

Objectives Measures Targets Initiatives

CUSTOMER

“To achieve our vision, how should we appear to our customers?”

Objectives Measures Targets Initiatives

INTERNAL BUSINESS PROCESS

“To satisfy our shareholders and customers, what business processes must we excel at?”

.

The Balanced Scorecard Focuses on Factors that Create Long-Term Value

Traditional financial reports look backward

Reflect only the past: spending incurred and revenues earned

Do not measure creation or destruction of future economic value

The Balanced Scorecard identifies the factors that create long-term economic value in an organization, for example:

Customer Focus: satisfy, retain and acquire customers in targeted segments

Business Processes: deliver the value proposition to targeted customers

innovative products and services

high-quality, flexible, and responsive operating processes

excellent post-sales support

Organizational Learning & Growth:

develop skilled, motivated employees;

provide access to strategic information

align individuals and teams to business unit objectives Processes

Customers

People

The four Balanced Scorecard perspectives provide a natural way to categorize the various types of enterprise value propositions that can contribute to corporate synergies:

Sinergi Keuangan:• Efektif memperoleh dan mengintegrasikan perusahaan lain. • Menjaga baik pemantauan dan pemerintahan proses di berbagai

perusahaan. • Memanfaatkan merek umum (Disney, Virgin) di beberapa unit bisnis. • Achieving skala atau keterampilan khusus dalam negosiasi dengan

entitas eksternal seperti pemerintah, Serikat pekerja, penyedia modal dan pemasok.

Sinergi Pelanggan:• Secara konsisten memberikan proposisi nilai yang umum di seluruh

jaringan geografis tersebar eceran atau Grosir outlet. • Memanfaatkan pelanggan umum dengan menggabungkan produk atau

jasa dari beberapa unit untuk memberikan keuntungan yang berbeda: rendah biaya, kenyamanan atau solusi yang disesuaikan.

Sinergi Proses Bisnis :

• Exploiting kompetensi inti yang memanfaatkan keunggulan dalam teknologi produk atau proses yang melintasi beberapa unit bisnis. mempertimbangkan kompetensi dalam fabrikasi mikroelektronika, Optoelektronik, pengembangan perangkat lunak, pengembangan produk baru, dan just-in-time sistem produksi dan distribusi yang mengarah pada keunggulan kompetitif dalam beberapa segmen industri. Kompetensi inti juga dapat mencakup pengetahuan bagaimana untuk beroperasi secara efektif khususnya wilayah di dunia.

• Achieving skala ekonomi melalui bersama manufaktur, penelitian, distribusi, atau pemasaran sumber daya.

Sinergi belajar dan pertumbuhan

• Meningkatkan sumber daya manusia melalui perekrutan sumber daya manusia yang baik, pelatihan dan praktek pengembangan kepemimpinan di beberapa unit bisnis.

• Memanfaatkan teknologi umum, seperti industri terkemuka platform atau saluran bagi pelanggan untuk mengakses serangkaian luas layanan perusahaan, yang dibagi pada beberapa divisi produk dan layanan.

• Berbagi kemampuan pelatihan terbaik melalui manajemen pengetahuan bahwa proses transfer keunggulan kualitas di beberapa unit bisnis.

THANK YOU