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Organizational Structure Paper
University of Phoenix
Management Theory and Practice

Organizational Structure Paper It has been that businesses operate under different organizational structures depending on the needs of the organization, its products, customer needs and services. This paper will help the reader understand the organizing structures and how it relates to a particular organization. It will show that some organizations can use multiple structures simultaneously to allow for the success of the organization and to accomplish the overall goals set forth by the organization’s vision. For the purpose of this paper we will discuss the organizational and geographical structure of Farmers Insurance Group and how it compares to Ford Motor Company and Westhorp & Associates, Inc. Farmers Insurance Group operates under a functional organizational structure. This means that each department is staffed with individuals that have similar responsibilities. This approach allows each department to work more efficiently with maximum productivity. However, this also allows the possibility for little or no communication between the departments. Under the Farmers Insurance Group organizational function all auto claims adjuster are under one department, all commercial adjusters are under another department, all marketing representatives are under their own department. There are no overlapping responsibilities at the lower level management. The overlapping occurs further up in the organization. Furthermore, Farmers Insurance Group then divides geographically as well. Due to the ever changing needs of the market in different parts of the US, this becomes necessary. For instance, they do not write homeowner policies in Florida because of the high risk nature due to the hurricanes. But they do write homeowners policies in Texas. Farmers Insurance Group provides products which include auto, motorcycle, life, recreational, and business insurance. Where they write certain policies differs from region to region. By separating the organizational functions by geographical location, the company can better serve each region. Ford Motor Company uses a divisional organizational structure. This allows the company to separate the divisions by target customers. For example, the SUV division would allow all of the resources and functions to focus on young growing families, while the Truck division will focus all of its resources and functions to target blue collar workers that will need to transport heavy materials and equipment and on customers wanting to haul heavy loads. Westhrop & Associates, Inc operates under a matrix organizational structure. The company will have a group of engineers reporting to a specific manager on a regular basis but may assign each engineer to a project and have that engineer report to the project manager for the purpose of the specific project. In 2007 Farmers Insurance Group acquired Bristol West Holdings and in 2008, the integration of Bristol West to Farmers Insurance Group began. . In 2009, Farmers Insurance Group then acquired 21st Century Insurance. Up until the acquisition each company operated as their own entity. After the Acquisition there were many functions to consider due to the redundancy of personnel, technology, and the rise of business operating expenses. One of the first steps was to have human resources create a certification process that would allow personnel to be evaluated based on technical knowledge, critical decision-making abilities, and acceptable behaviors. Farmers Insurance Group also encountered issues with technology during the integration. Each of the companies, Bristol West, 21st Century and Farmers had their own computer equipment and operating systems. During the Bristol West integration the employees were using two different computer systems to process claims. This led to reduced productivity, customer service issues, and staffing requirements. After many meetings to discuss the elimination of the acquired computer systems, focus then went to reevaluating staffing, as it was greatly affected by the technology used by the employees up until then. Recently, Farmers Insurance Group reassessed Bristol West Holding’s performance and acquisition. Farmers Insurance Group decided to split Bristol West Holdings off to perform as its own entity. This occurred because Bristol West Holding is a non-standard auto insurance carrier. Under the Farmers Insurance Group brand they were being molded in the standard model. This caused huge financial losses to the organization as a whole. By splitting the entity, it allows Bristol West to operate under its own model and process claims more aggressively to fit the needs of the non-standard market. This changed the organizational structure because of the drastic change in size of the newly split company. Bristol West Holdings unlike Farmers Insurance Group utilizes site managers rather than regional directors. The site managers are based out of an individual office. Each office may process claims for one or more states therefore, the need for regional directors was eliminated. Organizational design is determined by which structure best suits each organization’s needs. Farmers Insurance Group seems to tactically use several organizational structures simultaneously. Because it is such a large organization, the needs to use geographical structuring is essential in order to smoothly run the company. Farmers Insurance Group takes it further because of the different types of products and services it offers it must then take into account the needs of each market and must divide by specialty within each region. For instance, homeowner claims are processed by a different department from personal auto claims within each region. It is necessary because the laws vary from state to state. To require a single individual to know the laws that apply to all 50 states would be to place a huge burden on that individual. While the states overlap occasionally because of commuters, it is handled on a case by case basis. Another example would be the marketing department. This is even more segmented because of the special attention that goes into each area based on public needs. It is through constant monitoring and evaluation that the organization can determine the necessary changes needed to continue to be profitable and continue to grow in the vision set forth by the organization. By remaining vigilant, the organization has continued to grow and make the adjustments to provide a better product, a better service, and still remain true to the organizations needs while still meeting the needs of the public with the various products and services it offers. It is where management functions help determine when a course of action is needed and what the course of action should be to keep the organization on track to achieving the organizations vision and goals, however changing they may be.
Bateman, T. S., & Snell, S. A. (2009). Management: Leading & Collaborating in a Competitive World, Eighth Edition. Retrieved September 1, 2013 from
Free Management Library . (n.d.).
Farmers’. (n.d.).
Ingram, D. (2013). The Advantages of Geographical Organizational Structure. Retrieved September 1, 2013, from
Insurance Journal (2007). Zurich’s Farmers Group to Buy U.S. Auto Insurer Bristol West. Retrieved September 2, 2013, from

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