Lecture - 3

Organizational Structures
What Is Organizing?
Organizing
Arranging the
activities of the
enterprise in
such a way that
they
systematically
contribute to the
enterprises
goals.
2
Depicting the Organization

Organization Chart
A chart that shows
the structure of the
organization including
the title of each
managers position
and, by means of
connecting lines, who
is accountable to
whom and who has
authority for each
area.
3
Organization Chart
In f o r m a tio n S e r v ic e s G r o u p
K n o w le d g e A r c h i t e c t u r e M a n a g e r
K n o w le d g e A r c h i t e c t u r e L e a d
C u s to m e r L ia is o n
C a ta lo g e r
C a ta lo g e r
S e a r c h /S y s te m s L e a d
D e v e lo p e r
D e s ig n L e a d
A s s is ta n t D e s ig n e r
D e v e lo p e r
S y s t e m s A d m in
T a x o n o m y D e s ig n e r
Organization Design and

Structure
Organization design
A process in which managers develop or
change their organizations structure
Work specialization
A component of organization structure
that involves having each discrete step
of a job done by a different individual
rather than having one individual do the
whole job
5
Stages of Organizational
Development
Simple structure
An organization that is low in specialization
and formalization but high in centralization
Functional structure
An organization in which similar and
related occupational specialties are
grouped together
Divisional structure
An organization made up of self-contained
units
6
Stages of Organizational
Development (contd)
Matrix structure
An organization in which specialists from
functional departments are assigned to work on
one or more projects led by a project manager
Team-based structure
An organization that consists entirely of work
groups or teams
Boundaryless organization
An organization that is not defined or limited by
boundaries or categories imposed by traditional
structures
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Mechanistic and Organic

Organizations
Mechanistic organization
The bureaucracy; a structure that is high
in specialization, formalization, and
centralization
Organic organization
An adhocracy; a structure that is low in
specialization, formalization, and
centralization
Structure follows strategy

8
Structure Variables
Principles
Chain of command
Span of control
Authority
Power
Responsibility
Departmentalizatio
n
Functional
Divisional
Product
Customer
Geographic
Process
Organizational Structure:
Control
Chain of command
The management principle that no person should report
to more than one boss
Span of control
The number of subordinates a manager can direct
efficiently and effectively
Authority
The rights inherent in a managerial position to give
orders and expect them to be obeyed
Responsibility
An obligation to perform assigned activities
Power
An individuals capacity to influence decisions
10
Chain of Command
11
Tall And Flat Organizations, And

The Span Of Control
Span of Control
The number of subordinates reporting
directly to a supervisor.
Wide spans: larger number of direct reports.
Narrow spans: fewer number of direct reports.
Tall vs. Flat Organizations

Tall organizations: more management layers
and more hierarchical controls.
Flat organizations: fewer management layer
and decision making closer to the customer.
12
Spans of Control in Country-Based

Organization
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Types of Organizational
Authority
Line authority
The position authority (given and defined
by the organization) that entitles a
manager to direct the work of operative
employees
Staff authority
Positions that have some authority (e.g.,
organization policy enforcement) but that
are created to support, assist, and advise
the holders of line authority
14
Functional vs. Divisional

Organizations
Functional Organization Advantages
1. It is simple, obvious, and logical.

2. It fosters efficiency.
3. It can simplify executive hiring and
training.
4. It can facilitate the top managers control.
Functional Organization Disadvantages

1. It increases the workload on the
executive to whom the functional
department heads report.
2. It may reduce the firms sensitivity to and
service to the customer.
3. It produces fewer general managers.
15

Organizations
Divisional Organization
Advantages
1. The product or service gets the
single-minded attention of its own
general manager and unit, and its
customers may get better, more
responsive service.
2. Its easier to judge performance.
3. It develops general managers.
4. It reduces the burden for the
companys CEO.
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Organizations
Divisional Organization
Disadvantages
1. It creates duplication of effort.
2. It may diminish top
managements control.
3. It requires more managers with
general management abilities.
4. It can breed
compartmentalization.
17
Creating Matrix
Organizations
Matrix Organization
An organization structure in which
employees are permanently attached to
one department but also simultaneously
have ongoing assignments in which they
report to project, customer, product, or
geographic unit heads.
18
Matrix Organization
Departmentalization
19
Matrix Organizations
Advantages
Access to
expertise.
Stability of
permanent
department
assignments for
employees.
Allows for focus on
specific projects,
products, or
customers.
Disadvantages
Confusion of
command.
Power struggles
and conflicts.
Lost time in
coordinating.
Excess overhead
for managing
matrix functions.
20
The Four Organizational Boundaries

That Matter
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Challenges in Organization
Merging separate organizations with
different structures
Changing an existing organization to meet
external or internal changes in conditions
Conflicts between departments or groups
Interdependence between organizational
units
Centralization vs. decentralization
22

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Lecture - 3

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Organizational Structures

Depicting the Organization

Organization Design and

Mechanistic and Organic

Structure follows strategy

Tall And Flat Organizations, And

Tall vs. Flat Organizations

Spans of Control in Country-Based

Functional vs. Divisional

1. It is simple, obvious, and logical.

Functional Organization Disadvantages

Functional vs. Divisional

Functional vs. Divisional

The Four Organizational Boundaries

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