Toyota is evidently a highly decentralized organization, and power, including those related to the delegation of authority and responsibility, permeates the entire structure. In collaboration with team leaders or supervisors, it is evident that the workforce has broad autonomy to make decisions within their area of work activity. It uses a loosely organized chain of command where the emphasis is on working methods and procedures rather than output or results. The throughput factors are equally significant to Toyota as the production from the final assembly line. The “average” and “level” production methods used by Toyota engineers enable the lines to coordinate output without amassing inventory. They liken assembly to rowing a boat, where everyone must pull on the oars simultaneously (Aswathappa 2006).
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What kind of corporate structure does Toyota have?
For many years, Toyota’s organizational structure was based on the conventional Japanese company hierarchy, where decisions were solely made by the most senior executives. This system, which we now refer to as hierarchical, is distinguished by a top-down, one-way information flow and a lack of significant subordinate autonomy. To address safety concerns, product recalls, and a more general plan to make Toyota more competitive and responsive in the international market, this structure changed in 2013.
The board of directors was streamlined, and the mechanism that let executives to make decisions was scaled back. Additionally, the firm gave international affiliates more decision-making authority; up until that point, power was centralized in Toyota’s Japanese headquarters. In order to ensure that outside or external perspectives were seriously taken into account and, when possible, incorporated into new management techniques, Toyota made considerable changes to its organizational structure.
Currently, Toyota is organized into divisions. Despite the fact that the aforementioned initiatives have somewhat dispersed decision-making, it nevertheless retains some elements of its conventional hierarchical structure.
Describe some instances of both centralization and decentralization.
Decisions in decentralized companies are made by all levels of management with an eye toward the same objective.
The converse is called decentralized management, in which higher levels of management delegate some decision-making authority to lower levels and even to specific individuals. Most decision-making authority is delegated to the lower levels, but top level managers still retain overall authority and continue to create rules that affect the company’s important decisions.
For instance, this type of management would enable a manager at a call center or retail location to make quick decisions that affect their workplace. Since it gives the managers closest to the “Action” greater flexibility, decentralized management is most common in areas with a lot of direct touch with clients and consumers.
Assigning responsibilities to specific members of the management team is not the same as decentralization because it is an individual decision that may not necessarily reflect the company’s overall direction.
Decentralizing is the process of giving lower-level personnel more responsibilities, whereas centralizing is the process of giving them less.
Nike has centralized or decentralized operations.
1. Question: What circumstances led Nike to decide against owning its manufacturing facilities and to continue using a network organizational structure?
Answer:
Nike has maintained its dispersed and networked organizational structure despite changes in the marketplace. The company’s business centers concentrate on their respective areas of operation, such as research, marketing, or production. The business has outsourced manufacturing, which is its most important function. In addition to this, it had also outsourced a number of non-executive and back office positions.
The company’s well-known brand name in the sector is one of the reasons Nike chose to maintain its current organizational structure. The business established a brand identity… show more The company has not been harmed by the product quality.
The business has introduced the Nike range of products, which represent a passion for athletics as well as discipline, ambition, practice, and other qualities.
The corporation made the information public along with a thorough corporate responsibility report that provided an overview of the labor and environmental conditions in its contract factories.
Nike’s Sustainable Business & Innovation Lab invests in outside firms that promote healthy lifestyles, alternative energy sources, and more effective manufacturing processes.
By utilizing a decentralized and networked organizational structure, the company has thus far managed to balance scale and pressure to continue being successful.
3. Solving problems Create a diagram that depicts how Nike’s current organizational structure, in your opinion. Make sure to incorporate all potential parts. As a consultant for organization design, take another look at the diagram. How can this structure be made better, you ask? How can Nike increase operational effectiveness without losing its competitive advantage in terms of consistently producing new, premium, top-design shoes?
For Nike, a matrix structure works best. Functional and divisional structures are both combined in matrix structures. Vertical reporting and horizontal reporting will coexist.
Which businesses employ a centralized structure?
Businesses with centralized structures maintain the decision-making process at the top of the organizational hierarchy (among the most senior management).
Fast-food corporations with thousands of locations, including Burger King, Pizza Hut, and McDonald’s, maintain control over their operations through a mostly centralised structure. The key justifications for this decision are the necessity to assure consistency of customer experience and quality at every site as well as a desire to take advantage of economies of scale.
Following is a summary of this strategy’s primary benefits and drawbacks:
Customer service is not benefited by local decision-making that is quick and flexible.
What does organizational structure centralization entail?
Business decisions are taken at the top of the organization or in the head office and then sent down the chain of command in a centralised system. Chain retail stores frequently employ it. Typically, all branches will run similarly, with store managers having very little control over how their particular location is run.
Businesses with centralized administration tend to be slow to adapt to regional or local developments that may affect its branches.
A centralized management organization has the following benefits:
- uniformity throughout the enterprise
- The company has a well-defined direction
- There is a clear chain of command and responsibility
- Decisions and operations are carefully monitored and regulated.
A centralized management organization has the following drawbacks:
- It could reduce output.
- A uniform strategy might not be effective in all company settings.
- It can demoralize workers.
Which businesses operate decentralizedly?
Many people are unaware that Johnson & Johnson also operates a medical device and diagnostics business in addition to its pharmaceutical division. Johnson and Johnson may be best known for its consumer products like baby oil and bandages.
Johnson and Johnson has a reputation for being a decentralized business with more than 130,000 employees worldwide.
For a number of reasons, Johnson and Johnson has chosen local management to run its businesses:
- They are aware of what the government and industry demand.
- They have a better grasp of the customer.
- If they make mistakes, the entire organization won’t be destroyed.
- They are aware of the individuals they are collaborating with.
Johnson & Johnson is aware that American management would find it challenging to oversee operations in other countries because they just lack the necessary knowledge.
According to former CEO William Weldon, the organization trusts its managers to run the operations even if giving up power isn’t always simple for them.
“Men and women who grew up in those areas, understand those markets, and have developed themselves in those markets typically run our businesses globally. Regardless of who the customer is, they may relate to their demands.
Eventbrite
You’ve probably heard of Eventbrite if you’ve ever purchased tickets for nearby events.
Users can explore, create, and advertise local events on the event management and ticketing website Eventbrite.
Because of the company’s decentralized approach, event creators serve as managers for the following reasons:
- Event organizers are more adept at luring attendees than Eventbrite is.
- Eventbrite prefers to have local managers in control who are familiar with the region and its customers, and it has development offices in many different countries.
- Event promoters are additionally event creators.
Eventbrite is aware that event organizers, sometimes referred to as promoters, have a higher probability of obtaining attendance than they do. As a result, they supported more than 949,000 event developers and powered 4.7 million events in 2019.
Starbucks has a centralized or decentralized structure.
An organizational structure is defined as the way that tasks including work allocation, coordination, and supervision are managed in order to fulfill the organization’s goal. Starbucks’ management structure is decentralized in nature. The organization gives each manager the ability to make decisions as its fundamental tenet. Starbucks employs a sizable workforce due to the high number of physical locations it operates throughout the globe. Each store has a manager, a sphere of influence, and a clientele, so each store may have its own set of guidelines. The staff are given more flexibility and independence as a result, which motivates them to work more. Starbucks encourages the idea of innovation so that staff members can also pitch their ideas to higher-ups. There are better chances for the employee’s progress if the concept is accepted. The concept of freedom is particularly powerful since it causes significant changes in the organization’s operations and output.
What factors indicate whether a business is decentralized or centralized?
Strategic planning, goal-setting, budgeting, and talent deployment are often carried out by a single senior leader or leadership team in centralized businesses. In contrast, official decision-making authority is dispersed across several people or teams in decentralized organizations.
Adidas operates centrally or decentrally.
Adidas has often worked decentralizedly, with individual operating units autonomously selecting software that matched their particular needs and geographic location (Tibco, 2007).
Is Starbucks a useful building?
The personnel report to multiple bosses, and messages are transmitted in a variety of methods. Other forms of organizational structures that combine to form the Starbucks organizational structure include team structures, functional structures, geographic divisional structures, and divisional structures based on products.
Starbucks has various groups of employees handling various responsibilities as part of its organizational structure’s functional structure. The finance department, the marketing department, the sales department, and so forth. The firm’s top hierarchy adheres to this structure. All Starbucks cafs must abide by the rules they establish.
Divisional structure based on Geography and Product
Three major regional divisions are created by the geographical divisional structure: China and the Asia-Pacific, North America and Europe, the Middle East, Russia, and Africa. Additionally, there are four divisions in the United States: Western, Northwest, Southeast, and Northeast.
The senior vice president in charge of each division in the Starbucks organizational structure is responsible for running that division and reporting to top management. In this manner, each lower-level manager is subordinate to both the functional head and the geographical head. Each geographic region has the flexibility to design items that suit the local population’s preferences. As a result, many nations offer various product lines.
The organizational structure of Starbucks includes divisions based on products. This organizational structure separates the workforce into many units, with each group working on a particular product. For instance, Starbucks includes departments for bakery items like sandwiches, merchandising items like mugs and books, and coffee and other beverages.
Brand-based divisional structure is part of the Starbucks organizational structure.
Starbucks Brands
Starbucks owns a number of companies, including Starbucks and Seattle’s Best Coffee, which make coffee and other beverages. There are several different types of teas produced by Teavana, French baked goods are produced by La Boulange, juices are produced by Evolution Fresh, and teas, herbs, and spices are produced by Tazo Tea. This organizational structure enables each division to concentrate on particular items to improve them.
The development and innovation of Starbucks’ goods are greatly influenced by its organizational structure.
The lower tiers of the organization, such as the caf’s cooking and delivery operations, typically follow a team structure. This team-based organizational structure at Starbucks enables better, more specialized service for customers.