First National City Bank Operating Group

First National City Bank Operating Group

Introduction

Structuring along the product lines provides clear correlation between the expense and profit of the individual divisions. The business objectives of the division can be formulated more objectively and the expectations can be better agreed. (Anderson 2007) An objective accountability leads to better cohesion within the boundaries of the department; it creates a win-win situation where teams have mutual benefit in collaborating with each other. Active collaborations between different specializations provide employees with opportunities for learning new skills beyond their own area of expertise. It is easier to comprehend the dynamics of a product and therefore is best suited for nurturing general managers in an organization. Since each division is product based and self-reliant, it can respond much quickly to changes in the external environment. (Pang 2002)

Organizational structure formally determines the hierarchy within an organization. In other words, who reports to whom? Some companies refer to this as the organizational chart. (Ramienski 2008) Types of organizational structure include: functional structure, divisional structure, and matrix structure. Divisional structure is further broken down into three sub-types: product structure, market structure, and geographic structure.

Weakness of divisional structure

Resource Duplication: In order to make each division independent, some of the resources which could have been shared are rather duplicated. Specialists with particular domain knowledge cannot be shared across divisional boundaries. (Kogut 2007)

Inhibits career growth of Specialists: While divisional structures are good for nurturing top level managers, they are bad for technical specialists. Technical people feel alienated from their peers in other divisions and have poor exposure to the developments across the organizations. 

Divisional Affiliations: The employees feel more affiliated towards their own department and would still lack the sense of being part of a larger organization, they might know their own purpose but might not understand how they might related to organization's objectives. (Braha 2007)

Difficult Product Integration: When an organization produces multiple products which might be used together or are part of a larger product, the integration task becomes challenging since there is little coordination between the divisions. The product management task across different division requires regular sync-ups but the structure inherently provides little motivation for the product managers to seek this larger goal. Each divisional manager is more concerned about delivering his product and would view the integration as not part of his job or the problem. (Amaral 2007)

Most Effective Conditions

Very Large Corporations: The divisional structure is most effective for large corporations that have indeed multiple products that are poorly interrelated.

Competitive Environment: The ability to respond rapidly to the external changes makes divisional structure best suited for highly competitive external environment. (Capell 2008)

Functional Structure

The functional structure groups employees together based upon the functions of specific jobs within the organization. I used to work for a division of an internet service provider (ISP). The organizational structure at that division was functional. The organizational chart was as follows: (Gummesson2002)

Vice President

Sales Department (sales function)

Customer Service Department (customer service function)

Engineering Department (engineering function)

Accounting Department (accounting function)

Administration Department ...