Organization Structure

Organization Design & Structure
PROCESS OF ORGANISING
Identification of Activities
Division of Work
Grouping of Activities
Departmentation
Assigning Activities
Hierarchy
Delegation of Authority
Decentralization
Factors Affecting Organizational Design

Environment
Strategy
Determine design or organizational structure
Technology
Human Resources (Size)
Determinants of Structure
The environment: The quicker the environment changes, the more problems face managers.
Structure must be more flexible when environmental change is rapid.
Strategy: Different strategies require the use of different structures.
A differentiation strategy needs a flexible structure, low cost may need a more formal structure. Increased vertical integration or diversification also requires a more flexible structure.
Determinants of Structure
Technology: The combination of skills, knowledge, tools,
equipment, computers and machines used in the organization. More complex technology makes it harder for managers to regulate the organization.
Human Resources: the final factor affecting organizational

structure. Higher skilled workers who need to work in teams usually need a more flexible structure. Higher skilled workers often have professional norms (CPAs, physicians). Managers must take into account all four factors (environment, strategy, technology and human resources) when designing the structure of the organization.
Organization Structure
Defines
the primary reporting relationships that exist within an organization.

The chain of command and hierarchy of responsibility, authority, and accountability are established through organizational structure.
Common

Forms of Organizational Structure
Functional structure Divisional structure Matrix structure Network structure
Line Organization
In a Line Organization all managers have direct authority over their respective subordinates, through Scalar chain of command.
Scalar chain of command
Managing Director
A direct relationship between superior and subordinate works as: As a chain of command As a channel of communication As a carrier of responsibility
Production Manager
Production Superintendent
Foreman
i. Simplicity ii. Clear-cut division of authority and responsibility. iii. Strong discipline iv. Unified control v. Prompt decisions vi. Flexibility
i. Heavy burden of work ii. Concentration of authority iii. Lack of specialization iv. Lack of communication v. Scope for favoritism
Line and Staff Organization

The line and staff organization refers to an organization in which two types of authority relationships co-exists. They are Direct or Line authority and Advisory Authority.
Staff managers advice ,support and serve line managers.

Following are the characteristics of the line and staff organization:
Managers are of two types-Line Managers and Staff managers. The line managers perform the functions of decision-making, issuing orders and controlling while the Staff managers perform the functions of advising, assisting and providing expert and specialized services. There is a unity of command. There is a scalar chain.
Line & Staff Organization Structure Chief Executive

Asst. to Chief Executive
Mktg. Manager
Personnel Manager
R&D Manager
Mfg. Manager
Qty. Ctrl. Manager
Plant Manager
Plant Manager Industrial. Product manager Consumer Product manager Marketing Research manager
Industrial Relations Manager Training manager Employ service manager
1. Specialization
2. Encouragement to research and development programmes

3. Balanced decisions
4. Less burden on line managers
1. Confusion 2. Ineffectiveness of the staff 3. Conflict between the line and staff.
Functional Organisation
Members of the organization are grouped according to the particular function that they perform within the organization.
Appropriate when an organizations greatest source of complexity comes from the diverse tasks that must be performed rather than from its products, geographic markets, or consumer groups.
People with similar skills and performing similar tasks are grouped together into formal work units. Members work in their functional areas of expertise. Are not limited to businesses. Work well for small organizations producing few products or services.
Potential Advantages of functional structures:

Economies of scale. Task assignments consistent with expertise and training. High-quality technical problem solving, In-depth training and skill development. Clear career paths within functions.
Potential Disadvantages of functional structures:

Difficulties in pinpointing responsibilities. Sense of cooperation and common purpose break down. Narrow view of performance objectives. Excessive upward referral of decisions.
Difference
Sr. No. 1. 2. 3. Feature Simplicity Suitability Specialization Line Organization High For small enterprises Low Line and Staff Organization Not So High For medium and large enterprises Moderate Functional Organization Low For large enterprises High
4.
5. 6.
Work load of managers

Unity of Command Economy
High
Strictly observed High
Moderate
Observed to great extent Moderate
Uneven
Not observed in general Low
Divisional Structures
A division is a collection of functions working together to produce a product.
Product structure: divisions created according to the type of product or service. Geographic structure: divisions based on the area of a country or world served.
Market structure: divisions based on the types of customers served.
Product Structure
CEO Corporation
Corporate Managers
Washing Machine Division
Lighting Division
Television Division
Geographic Structure
CEO Corporation
Corporate Managers
Northern Region
Western Region
Southern Region
Eastern Region
Market Structure
CEO Corporation
Corporate Managers
Large Business Customers
Small Business Customers
Educational Institutions
Individual Customers
Matrix Organisation
A
structure in which the tasks of the organization are grouped along two organizational dimensions simultaneously. include:
Examples
Product/function
Product/geographic region

Organization Structure

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What are the different types of organizational structures discussed in the document?

What are the different types of organizational structures discussed in the document?

What are some of the advantages and disadvantages of functional organizational structures?

What are some of the advantages and disadvantages of functional organizational structures?

Organization Design & Structure

Factors Affecting Organizational Design

Determine design or organizational structure

Human Resources (Size)

Structure must be more flexible when environmental change is rapid.

Strategy: Different strategies require the use of different structures.

Human Resources: the final factor affecting organizational

the primary reporting relationships that exist within an organization.

Forms of Organizational Structure

Functional structure Divisional structure Matrix structure Network structure

Scalar chain of command

Line and Staff Organization

Staff managers advice ,support and serve line managers.

Line & Staff Organization Structure Chief Executive

Qty. Ctrl. Manager

Industrial Relations Manager Training manager Employ service manager

2. Encouragement to research and development programmes

4. Less burden on line managers

Potential Advantages of functional structures:

Potential Disadvantages of functional structures:

Work load of managers

A division is a collection of functions working together to produce a product.

Market structure: divisions based on the types of customers served.

Washing Machine Division

Large Business Customers

Small Business Customers

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