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Mgt 230

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Organizational Structure Paper
Kristin Arzaga
August 28, 2013

Organizational Structure Paper

Daimler Truck is widely regarded as the world’s highest quality truck producer. The customer base of the Daimler truck company includes nearly every country in the world. The parent company, Daimler AG distributes a total of more than 100 individual vehicle designs, including cars, vans, trucks, and buses in about 200 countries throughout the world. The models represented by Daimler incorporate Mercedes Benz, Mitsubishi Fuso, Western Star, Orion bus, Thomas Built Bus, Detroit Diesel as well as Freightliner. Daimler Trucks North America (DTNA) is an associate of the Daimler group and works as a different organization from Daimler AG. This is to detach the automotive category from the truck category and let each company focus on their specialized product lines. This is a classic example of a divisional style organization and this paper will use The Daimler Group to describe organizational structure, functions, and design ("Daimler", 2013).
The history of DTNA with Daimler goes as far back as 1981, when Freightliner Corporation was purchased by Daimler-Benz of Stuttgart, Germany. By using the expertise and fiscal power of Daimler-Benz Freightliner rose to leadership of the United States heavy-duty sector. Daimler Trucks North America is closely aligned with Daimler's international commercial vehicle strategy. Daimler Trucks North America models support the crucial NAFTA truck industry and are sold in more than 35 nations across the world. DTNA is accountable for a substantial part of Daimler's heavy and medium-duty vehicle unit sales. Along with Mercedes-Benz trucks, Setra Buses as well as Orion Buses Daimler Trucks North America models build the basis of Daimler's international commercial automobile leadership ("Daimler Trucks of North America", n.d.).

The Daimler Company includes DTNA operations under a mix of organizational structures, including both vertical and horizontal aspects. The Daimler group is led by a board of directors as well as Chief Executive Officer. Located in Stuttgart, Germany they control the international operations. The vertical hierarchy controls the Daimler organization from the CEO to a V. P. responsible for truck operations. The Vice president after that controls the DTNA company right down to the North America CEO. From this administration stage the DTNA company transitions to a horizontal system. The horizontal system functions like a divisional company. The varied goods, clients, and geographical areas served by DTNA have resulted in the decision to work under a divisional structure system. The goods manufactured by DTNA are significantly different from each other and need specialized knowledge to achieve success in each divisions operation. The product lines vary from engine production (Detroit Diesel), to Motor Homes (Freightliner Custom Chassis), to top quality trucks (Freightliner/Western Star). Daimler Trucks North America incorporates 14,000 workers, five business unit head offices, 14 production areas, and eight parts distribution head offices. Each organizational system is unique in different phases or divisions. The objective is a seamless coordination between administrators and workers at every level to attain the company objectives. These organizational systems remain in place to guarantee the correct decisions are made that directly relates to the particular requirements of each department. A divisional company that keeps growing and focuses on the customer is able to remain relevant in the buyers eyes (Bateman & Snell, 2011).

The divisional structure used by Daimler Trucks North America may be compared with other horizontal systems that may not be suited to this kind of operation. Independent of whether DTNA decides to concentrate on goods, clients, or geographic places the divisional organization will let a number of operations to be carried out and not always need other departments input into the decision-making processes. Indeed a company’s structure is developed so that challenging tasks are capable of being separated and essential work finished in an effective way without needing upper managements advice. Divisional organizations help upper management to know the output and earnings each business section produces and fulfill the customer’s requirements. The goal while structuring an organization like a divisional company is to supply goods the clients’ desire and outstanding service to those clients (Bateman & Snell, 2011).
An illustration of the benefits of a divisional organization system may be found by evaluating two departments in the DTNA family. One department (Freightliner Custom Chassis aka FCCC) manufactures items for the Motor Home and School Bus sector), another department (Detroit Diesel) manufactures top quality engines. Every company has got its own client base as well as strategic business plan. It would be impractical and unproductive to blend both departments into one operation and maintain the achievement and client dedication enjoyed now. The main objective is toward profit earnings and the expansion of the company. By having product “experts” at every department the managers can concentrate on understanding market tendencies, customer needs, and be better qualified with the development of strategic and tactical scheduling ("Daimler Trucks of North America", n.d.).

Companies may start with one kind of organizational structure only to discover that there is a need to change that structure as the company starts to expand. . A thriving organization will have to continually assess the kind of organizational structure and be adaptable to make modifications to keep or enhance revenue (Bateman & Snell, 2011).
The functional organization type is effective at reducing costs and increasing efficiencies. A functional company has divisions that focus only on engineering, purchasing, operations, human resources, and so on. This is in comparison to a divisional company that will have people who are experts for each of these operations at every division. Electrolux is a global leader in the professional and consumer appliance market with more than 50 million products sold annually to customers in 150 markets. The operations are divided into six business sectors, some are geographically defined and some are global. The functional areas are the seven group staff units that support every business sector. The seven staff units are finance, legal affairs, human resources and organizational development, marketing and branding, technology and product development, design and communications. To make use of the economies of scale principle the major appliances sector was changed from a geographically based divisional structure to a global organization in 2009. The Electrolux group uses a decentralized corporate structure that uses business sector boards for management of their operational activities ("Electrolux", 2013).

The matrix structure used by Lockheed Martin is a mixed structure of both a functional as well as divisional structure. Lockheed Martin is a global security and aerospace company with $47.2 billion in net sales for 2012. They operate in five business sectors: Aeronautics, Information Systems and Global Solutions (IS&GS), Missiles and Fire Control (MFC), Mission Systems and Training (MST), and Space Systems. In a recent project engineer application job description, the company description quote is “The company implements a matrix organisational structure that in collaboration with other lines of business, industry partners, subcontractors and vendors as appropriate is able to capture and deliver programmes of work consistent with the Company's business objectives and goals.” The matrix organization includes two different administrators consisting of a divisional and functional administrator. This kind of set-up has both disadvantages and advantages. The advantages include important resources are used more effectively because they are shared across many products and projects. Lockheed Martin’s defense contracts account for 61% of their business, the project nature, and strict government oversight of this sector suits the dual responsibilities structure of a matrix organization. There are also drawbacks, including misunderstandings that may come up because workers report to more than one administrator. For Lockheed Martin the complexities involving the continuously changing external influences like changing political parties in power, or the internal acquisition of new companies means that the functional or divisional structures are insufficient by themselves. Therefore, the merging of the two structures in a matrix organization was decided upon ("Lockheed Martin", 2013).
Each of the different kinds of company structures has their strong and weak points. The complexity of the global market for any major business means that the structure must be able to change and adapt in response to customer demands and other internal and external influences. The United States is currently in an economic downturn that directly influenced the organizational restructuring of some of Lockheed Martin’s business segments. Both Electrolux and Daimler have had to focus on increasing efficiencies to maintain market share, or in some cases diversify into other areas that show strong sales potential. This clearly indicates that organizational structure is critical to a company’s flexibility and efficiency.

Bateman, T.S., & Snell, S.A. (2011). Management: leading & collaborating in a competitive world (9th ed.). Retrieved from The University of Phoenix eBook Collection database..
Daimler . (2013). Retrieved from
Daimler Trucks of North America. ((n.d.)). Retrieved from http://www.daimler- Lockheed Martin. (2013). Retrieved from Electrolux. (2013). Retrieved from…...

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