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Structuring Organizations for Today’s Challenges (MANAGING THE…

- - - - Employees can develop skills in depth and progress within a department as they master more skills.
      - The company can achieve economies of scale by centralizing all the resources it needs and locate various experts in that area.
      - Employees can coordinate work within the function, and top management can easily direct and control various departments’ activities.
    - - Employees may identify with their department’s goals rather than the organization’s. The purchasing department may find a good value somewhere and buy a huge volume of goods. That makes purchasing look good, but the high cost of storing the goods hurts overall profitability.
      - The company’s response to external changes may be slow.
      - People may not be trained to take different managerial responsibilities; rather, they tend to become narrow specialists.
      - Department members may engage in groupthink (they think alike) and may need input from outside to become more creative.
      - Departments may not communicate well. For example, production may be so isolated from marketing that it does not get needed feedback from customers.
- - - - • It gives managers flexibility in assigning people to projects.
      - • It encourages interorganizational cooperation and teamwork.
      - • It can produce creative solutions to product development problems.
      - • It makes efficient use of organizational resources.
    - - • It’s costly and complex.
      - • It can confuse employees about where their loyalty belongs—with the project manager or with their functional unit.
      - • It requires good interpersonal skills as well as cooperative employees and managers to avoid communication problems.
      - • It may be only a temporary solution to a long-term problem.