Functional or Process Approach in Managing the Organization. Decision Dilemmas of Modern Multi-entity Organizations
Purpose: This elaboration aims at answering the question: Does a domestic subsidiary of a German company apply functional or process approach in management? The first part of the article characterizes the functional and process approach. The second part includes results of the studies on approaches applied in the managing of a subsidiary of a national German company of automotive industry. Design/methodology/approach: The article is based on the analysis of secondary sources (scientific literature and corporate documents of studied subsidiaries) as well as on the analysis of primary sources (the results of an interview with the director of the company). Findings: Deciding on a change of approach in the management of a multi-entity organization should be well considered and preceded by a comprehensive analysis of the solutions guaranteeing optimal execution of the tasks resulting in customer satisfaction. While the functional approach exhausts, in a sense, the possibility of its further modification to achieve tangible benefits for the organization, the process approach, despite many problems it can generate, its scale of complexity in implementation, gives greater benefits in terms of capacity to react to external imbalances. The traditional arrangement of functions based on the functional layout will continue to be of interest for the management of the parent unit and subsidiaries. Research limitations/implications: The elaboration of the approach to management does not fully address the issues and concerns that are presented here. However, they point to many areas that need to be taken into account in further theoretical and empirical studies. Practical implications: The traditional arrangement of functions based on the functional layout will continue to be of interest for the management of the parent unit and subsidiaries. The business practice provides many examples in this regard, including unsuccessful reorganizations in the "purely" process direction. One might even say that multi-entity organizations applying the parameters of the process organization in full are rather scarce. Social implications: Not applicable. Originality/value: It has been shown on the basis of the studies that despite the separation of processes and directing the staff towards the final product the traditional (functional) approach regarding management dominates in the company. (original abstract)
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