4.2.4 Methods of building management structures

There are the following methods of building organizational structures:

1. Separation by function.
2. Separation by product.
3. Separation by consumer groups.
4. The division of the stages of production.
5. Separation by work shifts.
6. Separation by geography.
7. Combined separation.

1. The method of separation by function. According to this method, the formation of the management unit is carried out according to the functions of the enterprise. This means that for such functions as supply, production, marketing, personnel and financial issues, etc., there is a management unit. Each such unit centrally performs its functions at the enterprise level, including internal divisions and remote branches. It should be noted that each enterprise has its own organizational names for basic functions. For example, in some enterprises, the functions of supply and production are carried out by a management unit called production management. In small enterprises, technical management can perform the functions of production, supply, personnel, or the functions of supply and sales are carried out by a unit called commercial management. At large enterprises, such a distribution is rare, as each management unit is created for each function. In general, it can be said that, taking into account the specifics of each enterprise, the departments and management services are divided into the following main groups: technical, auxiliary, commercial, economic, administrative, and management functions for the social development of the production team. As regards the formation of management units, in this process the same methods are used, or any other methods that meet specific conditions and goals. For example, if the organization of a foreign trade department is based on the fact that the execution of a foreign trade contract is most important for an enterprise producing simple technical goods, then you can use the functional principle to divide the functions of this department into three main groups: preparation for export and work in the market; export; export regulation and control.

There is no doubt that the nature of the enterprise, its goals and strategy ^* determines the nature of the function and their number. For example, making a profit requires studying the market and competitors. To improve product quality, technical research is needed. The advantages of the separation method by function are as follows:

• highlighting the relative importance of each management function;
• use of specialization and its advantages;
• a high degree of consistency and control within one specific function and the possibility of a unified approach to solving any problem related to this function.

The disadvantages of this method are:

• the complication of coherence and coordination between different functional departments;
• the difficulty of centralized control over management functions, especially if they are distributed across different geographic areas;
• the expansion of management functions makes it difficult to select an appropriate manager, since he must have a wide specialization, which, in turn, will make his career more difficult.

However, these problems, while not being intractable, do not detract from the value of the method.

When using the method of separation by function, it is necessary to take into account and solve the above problems, based on the specific conditions of a particular enterprise.

Thus, all structural divisions of the governing body are combined into a chain of main groups (blocks).

The first is the structural units in charge of management objects. The main problem here is not to exceed the scale of manageability, on the one hand, and not to create dwarf units to manage a small number of objects, on the other.

The second is the main functional structural units (planning, control).

The third is a group of divisions in charge of inter-branch economic functions (supply, sales, capital construction, scientific and technological progress, labor and personnel, finance, etc.).

The fourth - auxiliary and service units (office, archive, etc.).

The fifth one is the management (head of the body), his deputies, various leading divisions of the body: board, presidium, council, etc.

2. The method of separation of products. It is practiced by manufacturing enterprises specializing in the production of various types of products using a variety of raw materials and equipment. The division of the product range depends on the technological, transport and functionality. Thus, each management unit specializes in a particular product or group of products. Such a unit performs the functions of production, supply, sale, financing, etc., but independently of other management units. The same method is used for the formation of units within these units, and especially for the formation of sales offices. For example, such an office at a machine-tool plant may have specialized product groups for exporting universal and special machines, as well as for organizing their technical maintenance.

The main advantages of the method are the effective implementation and quality of production, coordination, coordination and the use of the advantages of specialization. The disadvantages of the method are as follows:

• the independence of one unit from another leads to duplication of functions and makes it difficult to coordinate their activities;
• advantages of specialization at the level of the whole enterprise are not used;
• the narrow specialization of the manager of a management unit complicates the management of various functions of the unit.

3. The method of separation into groups (categories) of consumers . Used in businesses dealing with different groups of consumers. Each management unit specializes in a specific group of consumers and performs the necessary functions. Most often, this method is used to form management units that perform such functions as supply, product development, production, advertising ^* , sales, etc., in accordance with the requirements of each group of consumers. This method ensures the effective sale of finished products of the enterprise, allows you to recruit specialists and plan their work in accordance with the requirements of any group of consumers, to coordinate actions within one unit. This method also has such disadvantages as the difficulty of coordinating the activities of various administrative units, the impossibility of using the advantages of one function and the emergence of various kinds of contradictions.

4. The method of separation by stages of production. It is used in industrial enterprises, where the process of production of any product occurs in several stages. This makes it possible to form for each stage a corresponding management unit that performs all the necessary functions independently of the other unit. For example, in a fabric manufacturing enterprise, the production process is divided into such stages as spinning, weaving, preparation for dyeing, dyeing. For each stage it is possible to create a corresponding independent management unit. This method allows you to best use the capabilities of workers, equipment, machine tools, improve the production process and coordinate activities within a certain stage. A high degree of direct control is also achieved here. In the process of any stage, the poor-quality work of the previous one is detected without direct control. The disadvantages of this method include the difficulty of coordinating the activities of management units at various stages due to the interdependence of the stages from each other. The narrow specialization of the head of the unit makes it difficult for him to manage all the functions.

5. The method of separation by work shifts . Most manufacturing enterprises use shift work, especially in such enterprises, where it is necessary for the requirements of the market or due to the nature of the production process. The management functions of the work shifts differ from each other to a greater or lesser extent. Work is divided into day, evening and night shifts. The work is headed by the shift supervisor, who reports to the general director. Administrators of each shift have their own functions and work program, which may differ from other managerial units, which depends on the specific working conditions of the shift and the requirements. This method is used when organizing production management.

6. The method of separation by geography. In accordance with this method, each plant or branch of an enterprise is considered as an independent management unit that performs all the necessary functions. Administrative division and distribution of work is carried out on the basis of internal conditions, without the intervention of the central management, except for cases when the solution of certain issues is within the competence of the central administration. Such issues may include procurement, financing, advertising ^* , etc. The advantages of this method include the following:

• organization of work based on local conditions, which facilitates the execution of work and improves quality;
• coordination and speed of the branch;
• the absence of bureaucratic obstacles that are characteristic of the decisions of the central administration, which leads to unnecessary loss of time and money;
• contributes to the promotion of branch managers to higher positions.

Undoubtedly, this is the most suitable method in the distribution of work by geographic areas. However, extremes in the application of this method lead to fragmentation of the enterprise’s functions by branches, which is the reason for weakening the coordination of activities, reducing the role of the central office and its powers. Separation of functions according to geography is more suitable for the formation of external trade offices. For example, it is possible in this way to divide the foreign trade division by markets in different countries, taking into account the specifics of the market in each specific country for a particular product.

7. The method of combined separation. With the consolidation of the organization, increasing its managerial functions, expanding the scale of its activities, the use of any one method becomes insufficient. In such cases, various methods are used. At the same time, they take advantage of each method and, if possible, avoid its disadvantages, which ensures the most efficient functioning of the organizational structure of management. For example, simultaneously with the use of the division method of production, functions such as financial and procurement are the responsibility of the central administration, which solves them at the level of the entire enterprise.

Most modern firms in the formation of the management structure use different methods of separation, which allows to avoid the drawbacks of each method separately, to effectively use their advantages and to show greater flexibility in further adjusting the goals and strategies ^{* of the} enterprise, changing conditions, etc. Separating the management structure of any organization based on such methods as division by geography, by type of product, by production stages, consumer groups in accordance with nkretnymi conditions of the enterprise. This allows you to use the scientific principles of building management structures.