Discussion 3

Topics: Management, Decision making, Organization Pages: 7 (2090 words) Published: May 26, 2015

An organization is made up of many departments. Every department must be in good working standards in order to be effective. The article “A new organizational model for airlines” by Mckinsey, explains that the airlines switched from the functional organization to a business unit organization. Business unit structure is a horizontal design allows each airline group to work independently by focusing on the essential capabilities to increase the effectiveness as a whole. Moreover, business unit provides its own departments such as call service center, catering, rental, finances and so on (Mckinsey, 2006). This helps the leaders to concentrate more on the productivity and profitability of the company. In addition this model is beneficial for the cost reduction, advance manager strategies. Issue that can be raised with the hybrid model within the airline organizations is that it can generate duplication within the departments (Jones, 2013, p.334). This could bring unnecessary roles and functions to the industry and generates coordination problems. This is costly and produces a lost towards to the cost-savings in the departments.

Nevertheless, the functional airline structure is a vertical design holds a CEO with the main dependent functional groups. It does not permit various mangers to work together where CEO is usually responsible for the day-to-day operations. There are no essential responsibilities for productivities and profitability of the senior level managers for the daily operations and tasks. According to Jones, 2013, an advantage of the functional model is that it pulls together the groups with the same skills and capabilities to learn from each other to work effectively (P, 404). This strategy works well in a low- cost airlines that are involved in outsourcing. Organizational functions start distancing from each other (Jones, 2013, p. 405). Airlines arise the communications issues within the airline departments. They would have difficulties finding where is the loss money and profits originating. Airlines would face the customer relation issues. (p.405) Lack of communication within the managers by being busy solving the issues, increases the complexity and bottleneck in manager’s decision-making for the higher-level leaders (Mckinsey 2006, p.2).  

Based on the Heynold and Rosander, the article indicates that Hybrid model would have too much differentiation, if it were not coordinated successfully. It is important to establish strong methods of responsibilities and roles to build communication skills among the different departments and units (2006,p.4). According to Jones, as an organization grows larger, leaders need to find a way to have a good control and manage the activities of their departments to generate value (p.344). Stability is essential for integration and differentiation, as an organization gets larger and more complex (p. 354).

The functional structure is mechanistic model; it is a centralized authority for decision-making to all the units and departments. It is designed to advance workers abilities to higher performance skills and cannot be altered to adapt to a new environment. The CEO is responsible for communication and coordination of operation. The hybrid model is an organic structure. It is much more complex and high in differentiation and units work independently for success. Hybrid structures are decentralized in decision-making authority and it fits to an existing demands (Jones, 2013,p.362). The support structure remains the same at the corporate level. By hybrid model is centralized, this helps for the structure to be coordinated within the airline business units. Departments such as accounting call center, marketing, and HR needs to be coordinated within the Airline Business unites structure to achieve their goal Both structures have some advantages and disadvantages. Smaller organizations can use the functional model. However, as the organization gets bigger and extends...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about ECT122 W1 ILab 3
  • 3 Idiots Essay
  • Marketing : Week 3 Assignment Essay
  • Summary of 3 Idiots Essay
  • Playstation 3 5 Forces Essay
  • Helium 3 Essay
  • Xbox 360 Kinect vs Playstation 3 Move Essay
  • 3 idiots movie review Essay

Become a StudyMode Member

Sign Up - It's Free