Samsung Company Structure - Case Study Example

Name Course name Professor Date Contents Introduction 4 Organization of the company 4 Classification of Samsung company structure 5 Complexity 5 Formalization 6 Centralization 6 Mintzberg’s Theorem in relation to Samsung Company 6 Simple structure 8 Machine bureaucracy 8 Professional Bureaucracy 8 Divisionalized form 9 Adhocracy 9 Organizational effectiveness 9 Evaluation of effectiveness 10 The global-attainment approach 10 The system approach 10 Strategic constituencies approach 10 The balanced scored approach 10 Problems with existing structure 11 Conclusion 11 References 11 Introduction An organization is a social entity which is designed by people. It is structured and managed towards achieving set objectives and goals. Daft, et al defines an organization as a social entity with links to external environment and is objective oriented[Daf10]. An organizations key element lies in the people who are within it and how they relate with each other and not just the buildings or its policies. In every organization, there is a structural management that determines the roles each member has to perform. The management also determines the relationship between organization members and the different activities it undertakes. This definition applies to almost all the organizations operating in different sectors and industries. For this assignment, the company selected for analysis is Samsung electronics. From its foundation as a small export company in Taegu, Korea, it has evolved to become a global company. It is among the world’s leading companies in the electronic industry[Sam14]. It majors in digital appliances and media, memory, semiconductors, and system integration. Samsung Company started in 1938 with Byung-Chull being the founding chairman. The company has more than 78 different companies and affiliates in the wide range of business. The company’s vision is to come up with innovative technologies and efficient strategies that tap into new markets. It also aims at making lives better and continue to be a digital leader. Samsung Company follows a simple philosophy which is using their talents and technologies in creating superior products and services that help in making the world a better place. The company has 15 regional headquarters, 38 production facilities, 54 global sales offices and 34 global R $ D centers. Moreover, it has 3 main divisions which include consumer electronics, device solutions, and IT and mobile communications[Sam14]. Organization of the company Organizational structure can be defined as the way in which organization’s management allocates power and responsibilities within the organization. The aim of this is to effectively utilize the available resources in order to attain competitive advantage. It refers to the way I which an organization attains formalization, complexity and centralization[Hen12]. Samsung Company has 38 production facilities in which diverse business operations are carried out. Through it simple organization structure, the company is able to run it operations efficiently. At any given point, Samsung Company runs thousands of operations globally. These operations requires effective supervision thus forcing the organization to use functional organizational structure which makes centralized decision making process easy and effective[Sam14]. At the top management is Kim, Cheol-Kyo who the CEO of Samsung company. The company has 5 board of directors including 3 external directors to ensure there is transparence in decision making process and the company is well governed. The company has general managers who head the 34 global R$D centers. It also has departments within this global centers which are headed by managers. This divisions have different tasks to perform. They operations focus on achieving the company’s collective goals and objectives. Classification of Samsung company structure Organizational structure is mainly classified into four different classes. These classes are divisional, functional, network and matrix[Kup03]. Looking at the organizational structure of Samsung Company, it adopts the use of functional organizational structure. It involves grouping the employees into small groups according to their areas of specialization. Examples are finance, marketing and production departments. This kind of organizational structure is very beneficial to the company. It makes management of every department clear and easy. I allows centralized decision making process for both the departments and the whole company. Functional organizational structure also enables employees to work as a team since it groups together employees with similar qualifications and experience and are set to perform the same task. On the other hand, this form of organizational structure has disadvantages. Firstly, it is not easily adoptable, quick or flexible. Secondly, it creates space between the departments which make governance difficult. The organizational structure is also characterized by complexity, centralization and formalization. Complexity Complexity refers to the extent at which a company differentiates its operations. The complexity of an organization is affected by the kind of differentiation it adopts[Hen12]. It can use one of the following differentiation methods; vertical differentiation, horizontal differentiation or spatial dispersion. Samsung being a multinational company, it is much dispersed. Due to this it adopts the use of spatial dispersion which means the extent at which a company’s personnel, activities and facilities are dispersed geographically. Samsung operates in most countries in the world. Horizontal differentiation means the extent at which a company differentiates its operations in its departments. These distinctions are based on the personal skills of its employees, education, nature of operation, training and, inclination. On the other hand, vertical differentiation refers to the number of levels of decision making between the operatives and the top executives. Samsung has a CEO, General Managers in charge of the departments and managers who head each specific department. This make the organizational structure complex. Formalization Formalization is defined as the levels of standardization of the jobs and procedures that an organization conducts[Oli12]. Samsung Company has a very effective human resource and public relations departments. This two departments ensure that all the operations of the company are standardized. The departments also post all job descriptions which help in ensuring that there is no redundancies and duplication of roles. The aim is to uphold quality of operations within the organization. Centralization This means that all important decisions are made by the top management and flows through the chain of command to reach the operatives[Hen12]. At Samsung, all the decisions are made by the top management that is the CEO, board of directors and general managers. These decisions are then passed through the chain of command to reach employees working at various departments. In this kind of set up, the subordinates are not involved in any form decision making. Their job is to raise issues and wait for orders to come from the top management. Mintzberg’s Theorem in relation to Samsung Company According to Henry Mintzberg, organization’s operation can be differentiated into three dimensions[Min09]. Firstly, there is the major part of the organization which is the part which plays the main role in contributing to either success or failure of the company. Secondly, the major coordinating mechanism. This refers to the method that the organization adopts to coordinate its activities. Lastly, the kind of decentralization that the organization uses. This refers to the extent at which an organization involves its workers in making major decisions[Nel11]. Using these tree basic dimensions, the strategy that the organization may adopt and the extent to which it uses this strategy results to five structural configurations. This configurations are machine bureaucracy, divisionalized form, simple structure, adhocracy, and professional bureaucracy[Mil11]. An organization like Samsung exist to achieve its set objective and goals. The set goals are the broken down into tasks as the basis for jobs. The organization then groups these jobs into departments. At Samsung these departments are mainly characterized by finance, marketing and operation. In each department, there are more distinctions which are found between the operations that each person performs. Lastly these departments are all linked to the organizational structure. The key parts of an organizational structure are shown in figure 1. Figure 1. Key parts of an organizational structure. At the strategic apex are the top management[Min09]. In Samsung Company it includes the CEO, board of directors and the general managers. At the operative core are the employees who carry out the companies set tasks. In Samsung Company they include the subordinate workers who work at each department. The middle line comprises of the middle and low level managers. These are the managers heading specific departments in Samsung Company. The technostructure is made up of analysts. In Samsung Company they include the engineers, researchers, and personal managers who work at the production firms. Lastly, the support staff is made up of people who provide indirect services to an organization. Looking at each specific structural configurations and how they affect the organizational structure of Samsung Company. Simple structure In the simple structure the strategic apex is the key part since it makes all the decisions that affect the operation of the organization[Min09]. It involves both vertical and horizontal centralization. Even though Samsung is a multinational company with many departments, it employs centralization strategy in decision making. All the key decisions are made by the top management. In a way it use simple structure kind of organization since the strategic apex is its main part when it comes to decision making process. Machine bureaucracy In machine bureaucracy, technostructure is the key part of an organization[Min09]. It mainly uses standardization of work and adopts limited horizontal decentralization. It has many characteristics. Firstly, formalization and specialization are highly valued. Secondly, decision making process is centralized. Thirdly, the organization is tall with a narrow span of management, that is, its chain of command has many levels from its top management all the way to its bottom workers. In this structure, very little horizontal coordination is required. At Samsung’s productions firms, this kind of organization structure is employed since it has a large technostructure and support staff. It main goal at this level is to attain internal efficiency. Professional Bureaucracy The operating core is the main part in professional bureaucracy and it mostly standardization of work as the main coordinating mechanism[Min09]. It also uses vertical and horizontal decentralization in decision making process. In this case, the organization relatively formalized. An organization with this sort of structure has little middle managers and a small technostructure. The main objective of professional bureaucracy is to provide top quality services. This kind of structure is no heavily used by Samsung Company because of its inadequacy in technostructure. This is because Samsung Company mainly majors in production process which relies a lot on technostructure level of organization hence professional bureaucracy would limit its operations. Divisionalized form In divisionalized kind of structure, the middle line is the main part of an organization[Min09]. It employs standardization of output has its main coordinating mechanism. It also does not involve a lot of vertical decentralization. Separate divisions have little coordination meaning that division its self is centralized. It is very similar to machine bureaucracy. In this kind of organizational structure, technostructure is placed at corporate headquarters. The reason for this is so that it can give services to all divisions in the organization. It has support staff in every division. Samsung Company being a large corporate employs this form of organizational structure. This is because one of the main objective of the firm is to standardize its outputs and this is highly valued by this kind of structure. Adhocracy Support staff is the main part in adhocracy[Min09]. It employs selective patterns of decentralization and use mutual adjustment as it main form of coordination. Its tecmostructure is small. This is because it has its technical specialists locate at the organi8zation’s operative core. The main goal of this kind of structure is innovation and quick adaptation to the changing environment. It also aims at using resources efficiently. It is difficult for Samsung to employ this structure because of its large techmostruture. Organizational effectiveness Organizational effectiveness can be defined as the means of evaluating whether an organization achieves its short-term and long-term goals[Daf10]. In determining organizational effectiveness, short-term goals are ends focus. On the other hand, long-term goals are the means focus. Samsung Company has achieved all its short-term goals and is now focused at achieving it long-term goals. Samsung Company recognizes the need to address challenges that are brought by climate change. It aims at attaining it long-term goal of supporting the globally set target of reducing greenhouse gas emission by at least 50 percent before the year 2050[Sam13]. By 2020 the company aims at being among the world’s top 10 companies with the best workplace. It also aims at being the world’s number one creative leader building new markets. Moreover, by 2020 it aims at becoming the leader in the IT industry and being among the top ten global companies. It also targets at making 400 billion dollars in sales[Tom14]. Evaluation of effectiveness The global-attainment approach This approach measures an organization’s effectiveness by determining whether it has achieved its goals and objectives[Daf10]. It is more effective in the case where an organization has achieved its short-term goals and now focusing on its long-term goals. Samsung company has a achieved its short-term goals and is now focusing on it long-term goals.by achieving its short-term goals it portrays is effectiveness as accompany. The system approach In this system, an organization is assessed its ability of acquiring inputs, processing them, channeling output and ensuring balance and its stability[Daf10]. Samsung Company requires a wide range of raw materials to be used in manufacturing of electronics. After it has manufactured the end products it distributes them to the market all over the word. Strategic constituencies approach In this approach, an organizations effectiveness is assessed by its ability to satisfy the people within its environment that is stakeholders have to be satisfied for an organization to be effective[Daf10]. Samsung Company has a lot of stakeholders. They include suppliers, community and customers. The company making specific decisions that are made to satisfy the needs of specific stakeholders. For example it has corporate social responsibilities to satisfy the community around its firms. The balanced scored approach This approach balances demands on the organization with the organization’s ability to satisfy the demands[Daf10]. It has four perspectives of looking at the organizations ability. They are financial capability, customers, internal resources and, innovation and learning. At Samsung Company, financial perspective looks at its profits. Customer perspective is concerned with customer satisfaction. Internal perspective looks at its operations aimed at attaining its objectives. Lastly, innovation and learning looks at how the company improves it operation to ensure sustainability. Problems with existing structure Samsung Company employs centralization organizational design. In this kind of organization design, only the top most management make decisions that affect the company’s operations. This kind of structure has disadvantages. Firstly, it is not easily adoptable, quick or flexible. Under this kind of organizational structure, solving issues that occur during operations takes time since the decision on hoe to go about has to come from the top managers. Secondly, it creates space between the departments which makes it difficult for them to share ideas[Sam14]. Conclusion Samsung Company is highly complex because of its many departments, a large number of distinct products, its many offices locate all over the world and the number of employees it employs. It is also highly formalized. This can be seen because of its standardized operations. The company employs centralization processes in decision making. Decisions are made by the top most management and then flows through the chain of command to reach the bottom most operatives. It uses machine bureaucracy because of its large number of technostructure level workers. The company employs balanced scorecard approach because it recognizes the four perspectives that make it sustainable. References Daf10: , (Daft, 2010), Sam14: , (Samsung, 2014), Hen12: , (Hendricks, 2012), Kup03: , (Kuprenas, 2003), Oli12: , (Oliveira, 2012), Min09: , (Mintzberg, 2009), Nel11: , (Nelson, 2011), Mil11: , (Miles, 2011), Sam13: , (Samsung.com, 2013), Tom14: , (Samsung, 2014), Read More