Table of Contents

I.

I. THEORY REVIEW
In Foundation of Organization Structure, we have studied five types of organization design that are bureaucracy, matrix, simple, virtual, and boundary less. As follow ranging from the highly structured bureaucracy to the amorphous boundary less organization.

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Firstly, bureaucracy is a structure of highly operating routine tasks achieved through specialization, much formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.

Secondly, matrix is a structure that creates dual lines of authority and combines functional and product departmentalization.

Thirdly, virtual organization is a new design option that is a small, core organization that outsources its major business functions, is highly centralized with little or no departmentalization.

Lastly, boundary less organization is that seeks to eliminate the chain of command, have limitless spans of control, and replace departments with empowered teams.

Other two extreme models of organizational design are mechanistic and organic models. Mechanistic model is generally synonymous with the bureaucracy in that it has highly standardized processes for work, high formalization, and more managerial hierarchy. The other extreme, the organic model, looks a lot like the boundary less organization. Its flat, has fewer formal procedures for making decisions, has multiple decision makers, and favors flexible practices. There are some causes determining the differences in organizational structure such as organizations strategy, size, technology, and environment.

II. CASE SUMMARY

Steelmaker Nucor is a steel manufacturing company. Its CEO is Dan DiMicco. It has 3 levels of management separating the CEO from factory workers with Nucors structure, plant managers report directly to CEO Dan DiMicco. In 2006, DiMicco is finding it increasingly hard to maintain this simple structure so he added another layer of management, creating a new layer of five executive vice presidents. After adding, Nucor is remarkably lean and simple. US steel employs 1200 people at its corporate headquarters, compared to a scant 66 at Nucors.

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III.

QUESTION ANSWERING

1. Question 1: How does the Nucor case illustrate the limitation of the simple organizational structure?

The first limitation of the simple organizational structure is information overload for top manager because its low formalization(little or no rule, regulation, policy) and high centralization (authority is centralized on one single person). In this case, the plant managers report directly to CEO Dan DiMicco. It means that CEO must solve all problems in the company from plant level to top level leading to information overload and be difficult to understand deeply, make decision well and manage efficiently. The second limitation of the simple organizational structure is everything depends on one person that means risk. There is only ECO Dan DiMicco managing and making all decision for Steelmaker Nucor. You can image when Dan DiMicco is ill, it can destroy the organizations information and decision making center. And even Dan DiMicco is always strong, basing on one persons idea is quite risky. The third limitation of the simple organizational structure is not suitable to grow. As size increases, decision making typically becomes slower. As Nucor continues to grow, though, DiMicco is finding it increasingly hard to maintain this simple structure. It is very difficult for the owner manager to make all the choices. All things can lead to a standstill and even failure. The last weakness of the simple organizational structure in this case is rigid to change, lack of innovation because the organization depends on the view of one person CEO Dan DiMicco. There is a limitation of ideas, efforts so it is slower to develop.

2.Question 2: Do you think other organizations should attempt to replicate Nucors? Why or why not?
You know that the structure of Nucor is simple and lean; it has three levels of management separating the CEO from factory workers. And each organization belongs to differentindustry,and

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each of them has different strategy, different structure. Therefore, the structure of organization depends on strategy, organization size, technology, and environment. Because strategy and structure are closely linked with each other, structure should follow strategy. If management significantly changes the organizations strategy, the structure must change to accommodate. As usual, strategy focuses on three dimensions: Innovation strategy: that emphasizes the introduction of major new products and services. Example, In Viet Nam, Tosy with the machine plays table tennis, a diversified toy with superior features. Cost- minimize strategy, that tight cost control, avoidance of uncertainty innovation or marketing expenses, price cutting. Imitation strategy, seeks to move into new product or new marketing only after their viability has already been proven. For large companies, using a strategy of imitation is only used for short-term. Whereas, small companies are often used a permanent strategy. Small brands in general when entering the market reach of major brands or regions that are difficult to reach by big brands. This strategy is suitable for the target market lower. An organization size significantly affects its structure. As organization grow, become more mechanistic, more specialized, with more rules and regulations. Technology is the way an organization transfers inputs into outputs. For instance, at university, ever-popular lecture method programmed learning method, using machine or computer. Environment also effects on structure. The more scare, dynamic and complex the environment, the more organic a structure should be. The more abundant, stable and simple the environment, the more the mechanistic structure will be preferred.
3.Question 3: Why do you think other organizations have developed structures much more complex than Nucors?

The first reason might be that steelmaker Nucor have smaller size of organization than others, so Nucor can apply a simple structure but others cannot. As developing and expanding operation, the

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organization become more complex in their structure to obtain economies of scale, minimum duplication of personnel and equipment, centralize decision-making. The second reason other organizations have developed structures much more complex than Nucors is differences in each organization strategy. Nucor have both innovation and costminimization strategy. Therefore, when the Nucor size is not too large, they can use a simple design that encourage innovation as well as cost leadership. However, others have just only costminimization, for example, they can apply mechanistic model.

4.Question 4: Generally, organizational structures tend to reflect the views of the CEO. As more and more new blood comes into Nucor, do you think the structure will begin to look like that of other organizations?
Answer: As more and more new blood comes into Nucor that mean board of directions in Nucor have changed and new CEO comes into Nucor. In our point of view, the structure will begin to look like that of other organizations. Because of some reasons: The lifetime is changing day by day so that changing is a necessary for everything. It make lifetime become better. New CEO comes into Nucor that mean new human being have different personality, behavioral and attitude as well lead to different decision making among CEOs so that changing is so good for Nucor in order to adapt with our environment and becoming more successfully than other organizations. In additional, simple structure which Nucor follow, have some disadvantages when they apply such as: no specialization, low degree of departmentalization, limited chain of command, higher centralization and lower decentralization. Take an example, in simple structure, board of directions of Nucor always directly deal the problem without supporting from supervisors or employees. In this case, board of managers in Nucor tends to face with working overload and make stress in their job cause decrease productivity for organization. So that CEO of Nucor tends to follow the complex structure than simple structure is good alternative to apply.

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IV.

Q&A

1. What are advantages of the simple organizational structure? When should we use this kind of structure? (Kim Ngn) Answer: Besides the limitation of the simple organizational structure, there are also some of advantages. The simple organizational structure has a low degree of departmentalization, wide spans of control, authority, centralized in a single person, and little formalization. It is a flat organization; it usually has only two or three vertical levels, a loose body of employees, and one individual in whom the decision-making authority is centralized. So the strength of the simple structure lies in its simplicity is fast, flexible, and inexpensive to operate, and accountability is clear. However, the simple organizational structure only is suitable for small company such as a small retail store, an electronics firm run by a hard-driving entrepreneur. 2. Can you give me an example about innovation strategy? Do you think innovation strategy was applied in this case? If not what was strategy used in steelmaker Nucor? (Le Tam). Answer: Because innovator need the flexibility of the organic structure whereas cost minimize seek to the efficiency and stability of the mechanistic structure. Therefore, in this case Nucor have both innovation and cost-minimization strategy. Example, BKAV pro with persistent research effort, they try to build a software system security world class. They always create good service for customer. Making customers satisfied and creating their brand in the market. 3. You have already identified many limitations of Nucors structure. Do you think Nucor should change its structure? How can it overcome the limitations if there is no change?(Pham ThiTrang) Answer: Following the question 4 above Nucor should change its structure. In this case, there is no change in Nucors structure in order to overcome the limitations in simple structure, Nucor should be:

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Nucor should make some special training program such as on the job or off the job for employees in order to encourage work specialization which contributes to higher employee productivity, higher Nucors performance. In order to get job satisfaction, Nucor should be encouraged their employee participate in decision making in decentralization which help managers avoid working overload and under pressure, make the good relationship between employees and board of directions. Moreover, Nucor should decrease the wide spans of control by manager should design job description and job analysis for their employees more clearly and create a closely network among managers in order to support together. 4. As organizations grow, they become more mechanistic, more complex. How do complex organizations can deal with a dynamic environment? (Giang) In here, a complex organization is bureaucracy and matrix structure, or characterized as mechanistic model. These structures usually have high specialization, rigid departmentalization, and clear chain of command, narrow spans of control, centralization, and high formalization. Specifically, decision is made from top down => the time for waiting is long=> it is problem in a dynamic environment. To deal with this problem, the firm can cut down some procedures is to make decision making faster, can give low level of management empowerment to make their own decisions.

REFERENCE
http://en.wikipedia.org/wiki/Organizational_structure http://www.oppapers.com/essays/Organisational-Structure/374991

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