Top Administrative Support Technical Support Middle Management Technical Core

Organization and Organization Theory
Organization:
The different person working under the one roof for the attainment of specific
goals is called Organization.
Importance of Organization:
Bring together resources to achieve desired goals and outcomes
Produce goods and services efficiently
Facilitate innovation
Use modern manufacturing and computer-based technology
Adapt to and influence a changing environment
Create value for owners, customers and employees
Accommodate ongoing challenges of diversity, ethics, and the motivation and

coordination of employees.
Five Basic Parts of An Organization:
Top Management
Middle Management
Technical Core
Technical support
Administrative Support
Top
Technical
Support
Middle
Management
Technical Core
Administrative
Support
Open systems and its subsystem:

Environment
1-4
Transformatio
n
Raw Materials
Input
People
Process
Output Products
and
Information
Services
resources
Subsystems
Financial
Boundary
resources
Spanning
Production,
Boundary
Maintenance,
Spanning
Adaptation,
Organization Structure:
Management
The following are the three key components in the definition of Organizational structure;
Organization structure designates formal reporting relationships, including the number of
levels in the hierarchy and the span of control of managers and supervisors.
Organization structure identifies the grouping together of individuals into departments

and of departments into the total organization.
Organization structure includes the design of systems to ensure effective communication,
coordination, and integration of effort across departments.
Simple Organizational Chart:

C EO
V ic e P r e s id e n t
F in a n c e
C h ie f
A c c o u n ta n t
B udget
A n a ly s t
V ic e P r e s id e n t
M a n u f a c tu r in g
P la n t
S u p e rin t e n d e n t
M a in t e n a n c e
S u p e rin t e n d e n t
D ir e c t o r
H u m an R e so u r
T r a in in g
S p e c ia lis t
Vertical vs. Horizontal Structure:

Vertical Structure
Specialized Task.
Vertical Organization
Designed for
Efficiency
Horizontal Structure
Shared Task, empowerment.
B
Ad
Strict Hierarchy, Many rules.

Vertical communication &
reporting system.
Relaxed Hierarchy, few rules.

Horizontal face to face
communication.
Vertical Information linkages:

Vertical linkages are used to coordinate activities between the top and bottom of an
organization and are designed primarily for control of the organization.
Organization Design Alternatives:

Required Work Activities
Reporting Relationships
Departmental Groupings
1. Required Work Activities:

Departments are created to perform tasks considered strategically important to the
company. e.g. Dept. of HR
As organizations grow larger and more complex, more and more functions need to
be performed.
Organizations typically define new departments or divisions as a way to
accomplish tasks deemed valuable by the organization.
2. Reporting Relationships:
Reporting relationships, often called the chain of command, are represented by
vertical lines on an organization chart.
The definition of departments and the drawing of reporting relationships define how
employees are to be grouped into departments.
3. Departmental Grouping:
Options for department grouping, including functional grouping, divisional
grouping, multifocused grouping (Matrix or Hybrid), horizontal grouping, and
modular grouping.
Departmental grouping affects employees because they share a common

supervisor and common resources, are jointly responsible for performance, and
tend to identify and collaborate with one another.
Strengths and weaknesses of Functional/centralized/tall/vertical

organizational Structure:
Strengths
Weaknesses
Allows economy of scale within

functional Departments.
Enables in-depth knowledge and skill
development.
Enables organization to achieve
functional goals.
Slow response time to environmental

changes
Leads to poor horizontal coordination
among the departments
Results in less innovation.
Strengths and weaknesses of divisional/flat/horizontal/decentralized

organizational structure:
Strengths
weaknesses
Suited to fast change in unstable

environment.
Best in large organizations with several
products.
Decentralize decision making.
Eliminate economy of scale within

functional departments.
Eliminates in-depth technical
specialization.
Leads to poor coordination across the
product lines.
Functional structure example:
Info-Tech
President
R&D
Manufacturing Accounting
Marketing
Divisional structure example:

CEO
Apple
Products
Apple
Americas
Apple
Europe
Apple
Pacific
Canada
France
Australia
Latin
America/
Caribbean
Sales
Service and
Marketing
to Regions
Japan
Asia
Strengths and weaknesses of Matrix organizational Structure:

Strengths
Achieves coordination necessary to
meet dual demands from customers
Suited to complex decisions and
frequent changes in unstable
environment.
Best in medium sized organizations
with multiple products.
Matrix structured organizational chart:
Weaknesses
Causes participants to experience dual
authority, which can be frustrating and
confusing.
It is time consuming, involves more
meeting and conflicts resolving
sessions.
Requires great effort to maintain power
balance.

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Organization and Organization Theory

Bring together resources to achieve desired goals and outcomes

Produce goods and services efficiently

Use modern manufacturing and computer-based technology

Adapt to and influence a changing environment

Create value for owners, customers and employees

Accommodate ongoing challenges of diversity, ethics, and the motivation and

Five Basic Parts of An Organization:

Open systems and its subsystem:

Organization structure identifies the grouping together of individuals into departments

Simple Organizational Chart:

Vertical vs. Horizontal Structure:

Strict Hierarchy, Many rules.

Relaxed Hierarchy, few rules.

Vertical Information linkages:

Organization Design Alternatives:

1. Required Work Activities:

Departmental grouping affects employees because they share a common

Strengths and weaknesses of Functional/centralized/tall/vertical

Allows economy of scale within

Slow response time to environmental

Strengths and weaknesses of divisional/flat/horizontal/decentralized

Suited to fast change in unstable

Eliminate economy of scale within

Functional structure example:

Divisional structure example:

Strengths and weaknesses of Matrix organizational Structure:

Matrix structured organizational chart:

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