Analysis Of Organization In The Manufacturing Industries: Geographical And Divisional Based

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 relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems – they affect and are affected by their environment.

Characteristics of manufacturing organizations

Geographical based

Geographically based models are structured as per the physical geographical locations, which may include regions, territories, or districts. Manufacturing organizations that require nearness to customers or supply sources tend to adopt this a lot to minimize time wastage on delivery and immediate support on site. Geographical structures can be adopted by the contractor who runs multiple construction projects in different geographical locations at once, and/or the Ministry of Public Works where they assign various project managers to oversee simultaneous projects at different places. An example is building of a footbridge in South C and also assigning another team to supervise road construction in Nakuru.

The Advantages of Geographical Organizational Structure

• Geographical Organization Helps You Scale Upward

In a traditional hierarchy, there may be a president or CEO at the top of a company, with a variety of managers handling functions such as production, distribution, administration, finance, human resources, sales and marketing. When you expand to the next town over, it’s easy enough to keep central operations at your original location. However, when you scale upward and begin to consider territories, states, regions, and countries, a centralized operation can prove inefficient. Take what you did well at that first location, and copy it to a new location. Consider the success of franchises. You’ll still have a central command, but your next location can run things within your guidelines, while also recognizing the nuances of the new region.

• Honing in on Your Market

A major consideration in expansion is whether or not your products and services will transfer to another location. Once you’ve conducted due diligence to ensure this is so, geographical organization allows you to more accurately hone in on your market. You will better be able to understand demand, and also how to market what you sell. What is intended as humor in advertising in Perth, Australia, many come off as utter disrespect in Beijing, China. With boots-on –the-ground personnel and a structure that supports them to do their best work with some autonomy, you can use target marketing to find and sell to the right customers at the right time.

• Business Operations and Cultural Considerations

You may have only one or two plants producing and distributing products but regional operations and sales teams allow you to seize opportunities and tackle challenges as they occur. Geographical organization means Region A and its clients are in the same time zone. They speak the same language, understand the norms of the region, and can leverage regional knowledge. It may be as simple as understanding city ordinances and how they affect your business or it may extend to cultural considerations. If you want to go global, having a structure that grants a level of autonomy by location allows you to be nimble, able and productive.

• Improved Communication

Taking instruction only from a centralized governing body, with many layers and miles of geography separating the top from all the others can lead to fragmented communication. On the other hand, a structure that considers geography at its foundation, sets up something akin to a company-within-a-company. Paris, France runs operations in Paris, France by communicating openly and frequently with all personnel at that location. Additionally, locations can have a unified and independent voice when speaking to your central office.

The disadvantages of a geographical structure

The main downside of a geographical organisational structure is the potential conflict between local and central management, as individual divisions often take on a great deal of autonomy. Other disadvantages include:

• potential duplication of jobs, resources and functions
• some economies of scale may be lost.

Divisional based

Divisional based structures can also be referred to as product oriented or strategic business factions. With this model, divisions can be organized according to individual services, major programs, product groups, or major profit centers. As opposed to functional structures, divisional based models promotes change and flexibility because the smaller units can easily adapt and change as influenced by external factors of taxation, inflations and competition. Furthermore, this structure the decentralizes the process of decision making, because chain of command is such that each product or department has its own division of reporting before reaching the CEO.

In this type of organizational model, departments represent unique services, customers, products, or geographic locations served by the company. Therefore each unique service or product produced by the company will have a department of its own, within which each, functions like manufacturing, marketing, among other roles are reproduced. Generalization is preferred to the specialization of employees, whereupon employees can perform different tasks within the organization rather than providing specialized services. A good example is where a marketing employee in a divisional based model can also plan promotions, coordinate relations in advertising, plan and also conduct market research for the product handled by their division.

In the construction industry, divisional model can be used Ministry of Public Works where divisions are made in terms of Architects department, Quantity Surveying division, Mechanical and Electrical Engineering departments so that each division again have other subdivisions of research, customer support among others.

Advantages of Divisional Models

• Suited to fast change in unstable environment
• Leads to customer satisfaction because product responsibility and contact points are clear
• Involves high coordination across functions
• Allows units to adapt to differences in products, regions, customers
• Best in large organizations with several products
• Decentralizes decision making.

Disadvantages of Divisional Models

• Eliminates economies of scale in functional departments
• Leads to poor coordination across product lines
• Eliminates in-depth competence and technical specialization
• Makes integration and standardization across product lines difficult.