Planning Ahead — Chapter 10 Study Questions

 What is organizing as a management

function?
 What are the major types of organization
structures?
 What are the new developments in
organization structures?
 What organizing trends are changing the
workplace?

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 Study Question 1: What is organizing as a
management function?
 Organizing and organization structure
– Organizing
• The process of arranging people and other resources to
work together to accomplish a goal.
– Organization structure
• The system of tasks, workflows, reporting relationships,
and communication channels that link together diverse
individuals and groups.

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Figure 10.1 Organizing viewed in relationship
with the other management functions.

Management 8/e - Chapter 10 3

 Study Question 1: What is organizing as a
management function?
 Formal structures 
– The structure of the organization in its official state.
– An organization chart is a diagram describing reporting
relationships and the formal arrangement of work
positions within an organization.
– An organization chart identifies the following aspects of
formal structure:
• The division of work.
• Supervisory relationships.
• Communication channels.
• Major subunits.
• Levels of management.

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 Study Question 1: What is organizing as a
management function?

 Informal structures 
– A “shadow” organization made up of the unofficial, but
often critical, working relationships between organization
members.
– Potential advantages of informal structures:
• Helping people accomplish their work.
• Overcoming limits of formal structure.
• Gaining access to interpersonal networks.
• Informal learning.

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 Study Question 1: What is organizing as a
management function?

 Informal structures (cont.) 

– Potential disadvantages of informal structures:
• May work against best interests of entire organization.
• Susceptibility to rumor.
• May carry inaccurate information.
• May breed resistance to change.
• Diversion of work efforts from important objectives.
• Feeling of alienation by outsiders.

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 Study Question 2: What are the major types of
organization structures?
 Functional structures
– 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.

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 Figure 10.2 Functional structures in a
business, branch bank, and community hospital.

Management 8/e - Chapter 10 8

 Study Question 2: What are the major types of
organization structures?
 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.

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 Study Question 2: What are the major types of
organization structures?
 Potential disadvantages of functional
structures:
– Difficulties in pinpointing responsibilities.
– Functional chimneys problem.
– Sense of cooperation and common purpose break
down.
– Narrow view of performance objectives.
– Excessive upward referral of decisions.

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 Study Question 2: What are the major types of
organization structures?
 Divisional structures
– Group together people who work on the same
product or process, serve similar customers,
and/or are located in the same area or
geographical region.
– Common in complex organizations.
– Avoid problems associated with functional
structures.

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Figure 10.3 Divisional structures based on
product, geography, customer, and process.

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 Study Question 2: What are the major types of
organization structures?
 Potential advantages of divisional structures:
– More flexibility in responding to environmental
changes.
– Improved coordination.
– Clear points of responsibility.
– Expertise focused on specific customers, products,
and regions.
– Greater ease in restructuring.

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 Study Question 2: What are the major types of
organization structures?
 Potential disadvantages of divisional
structures:
– Duplication of resources and efforts across
divisions.
– Competition and poor coordination across
divisions.
– Emphasis on divisional goals at expense of
organizational goals.

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 Study Question 2: What are the major types of
organization structures?
 Types of divisional structures and how they group job
and activities:
– Product structures focus on a single product or service.
– Geographical structures focus on the same location or
geographical region.
– Customer structures focus on the same customers or
clients.
– Process structures focus on the same processes.

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 Study Question 2: What are the major types of
organization structures?
 Matrix structure
– Combines functional and divisional structures to gain
advantages and minimize disadvantages of each.
– Used in:
• Manufacturing
• Service industries
• Professional fields
• Non-profit sector
• Multi-national corporations

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Figure 10.4 Matrix structure in a small
multiproject business firm.

Management 8/e - Chapter 10 17

 Study Question 2: What are the major types of
organization structures?

 Potential advantages of matrix structures:

– Better cooperation across functions.
– Improved decision making.
– Increased flexibility in restructuring.
– Better customer service.
– Better performance accountability.
– Improved strategic management.

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 Study Question 2: What are the major types of
organization structures?
 Potential disadvantages of matrix structures:
– Two-boss system is susceptible to power struggles.
– Two-boss system can create task confusion and conflict in
work priorities.
– Team meetings are time consuming.
– Team may develop “groupitis.”
– Increased costs due to adding team leers to structure.

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 Study Question 3: What are the new
developments in organization structures?
 Guidelines for horizontal structures:
– Focus the organization around processes, not functions.
– Put people in charge of core processes.
– Decrease hierarchy and increase the use of teams.
– Empower people to make decisions critical to performance.
– Utilize information technology.
– Emphasize multiskilling and multiple competencies.
– Teach people how to work in partnership with others.
– Build a culture of openness, collaboration, and performance
commitment.

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 Study Question 3: What are the new
developments in organization structures?

 Team structures

– Extensively use permanent and temporary

teams to solve problems, complete special

projects, and accomplish day-to-day tasks.

– Often use cross-functional teams.

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Figure 10.5 How a team structure uses cross-
functional teams for improved lateral relations.

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 Study Question 3: What are the new
developments in organization structures?
 Potential advantages of team structures:
– Eliminates difficulties with communication and
decision making.
– Eliminates barriers between operating
departments.
– Improved morale.
– Greater sense of involvement and identification.
– Increased enthusiasm for work.
– Improved quality and speed of decision making.

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 Study Question 3: What are the new
developments in organization structures?

 Potential disadvantages of team structures:

– Conflicting loyalties among members.
– Excessive time spent in meetings.
– Effective use of time depends on quality of
interpersonal relations, group dynamics, and team
management.

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 Study Question 3: What are the new
developments in organization structures?

 Network structures
– A central core that is linked through networks of
relationships with outside contractors and
suppliers of essential services.
– Own only core components and use strategic
alliances or outsourcing to provide other
components.

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Figure 10.6 A network structure for a Web-based
retail business.

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 Study Question 3: What are the new
developments in organization structures?

 Potential advantages of network structures:

– Firms can operate with fewer full-time employees
and less complex internal systems.
– Reduced overhead costs and increased operating
efficiency.
– Permits operations across great distances.

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 Study Question 3: What are the new
developments in organization structures?
 Potential disadvantages of network structures:
– Control and coordination problems may arise from
network complexity.
– Potential loss of control over outsourced activities.
– Potential lack of loyalty among infrequently used
contractors.
– Excessively aggressive outsourcing can be
dangerous.

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 Study Question 3: What are the new
developments in organization structures?
 Deadly sins of outsourcing:
– Outsourcing activities that are part of the core.
– Outsourcing to untrustworthy vendors.
– Not having good contracts with the vendor.
– Overlooking impact on existing employees.
– Not maintaining oversight; losing control to vendors.
– Overlooking hidden costs of managing contracts.
– Failing to anticipate need to change vendors, cease
outsourcing.

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 Study Question 3: What are the new
developments in organization structures?
 Boundaryless organizations
– Eliminate internal boundaries among subsystems and
external boundaries with the external environment.
– A combination of team and network structures, with the
addition of “temporariness.”
– Key requirements:
• Absence of hierarchy.
• Empowerment of team members.
• Technology utilization.
• Acceptance of impermanence.

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Figure 10.7 The boundaryless organization
eliminates internal and external barriers.

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 Study Question 3: What are the new
developments in organization structures?

 Boundaryless organizations (cont.)

– Encourage creativity, quality, timeliness, flexibility, and
efficiency.
– Knowledge sharing is both a goal and essential
component.
– Virtual organization.
• A special form of boundaryless organization.
• Operates in a shifting network of external alliances that are
engaged as needed, using IT and the Internet.

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 Study Question 4: What organizing trends are
changing the workplace?

 Contemporary organizing trends include:

– Shorter chains of command.
– Less unity of command.
– Wider spans of control.
– More delegation and empowerment.
– Decentralization with centralization.
– Reduced use of staff.

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 Study Question 4: What organizing trends are
changing the workplace?
 Shorter chains of command
– The line of authority that vertically links all
persons with successively higher levels of
management.
– Organizing trend:
• Organizations are being “streamlined” by cutting
unnecessary levels of management.
• Flatter structures are viewed as a competitive
advantage.

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 Study Question 4: What organizing trends are
changing the workplace?
 Less unity of command
– Each person in an organization should report to
one and only one supervisor.
– Organizing trend:
• Organizations are using more cross-functional teams,
task forces, and horizontal structures.
• Organizations are becoming more customer conscious.
• Employees often find themselves working for more
than one boss.

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 Study Question 4: What organizing trends are
changing the workplace?
 Wider spans of control
– The number of persons directly reporting to a
manager.
– Organizing trend:
• Many organizations are shifting to wider spans of
control as levels of management are eliminated.
• Managers have responsibility for a larger number of
subordinates who operate with less direct supervision.

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Figure 10.8 Spans of control in “flat” versus “tall”
structures.

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 Study Question 4: What organizing trends are
changing the workplace?
 More delegation and empowerment
– Delegation is the process of entrusting work to
others by giving them the right to make decisions
and take action.
– The manager assigns responsibility, grants
authority to act, and creates accountability.
– Authority should be commensurate with
responsibility.

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 Study Question 4: What organizing trends are
changing the workplace?
 Guidelines for effective delegation:
– Carefully choose the person to whom you delegate.
– Define the responsibility; make the assignment clear.
– Agree on performance objectives and standards.
– Agree on a performance timetable.
– Give authority; allow the other person to act independently.
– Show trust in the other person.
– Provide performance support.
– Give performance feedback
– Recognize and reinforce progress.
– Help when things go wrong.
– Don’t forget your accountability for performance results.

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 Study Question 4: What organizing trends are
changing the workplace?
 More delegation and empowerment (cont.)
– A common management failure is unwillingness to
delegate.
– Delegation leads to empowerment.
– Organizing trend:
• Managers are delegating more and finding more ways
to empower people at all levels.

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 Study Question 4: What organizing trends are
changing the workplace?
 Decentralization with centralization
– Centralization is the concentration of authority for
making most decisions at the top levels of the
organization.
– Decentralization is the dispersion of authority to
make decisions throughout all levels of the
organization.

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 Study Question 4: What organizing trends are
changing the workplace?
 Decentralization with centralization (cont.)
– Centralization and decentralization not an
“either/or” choice.
– Organizing trend:
• Delegation, empowerment, and horizontal
structures contribute to more decentralization
in organizations.
• Advances in information technology allow for
the retention of centralized control.

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 Study Question 4: What organizing trends are
changing the workplace?
 Reduced use of staff
– Specialized staff
• People who perform a technical service or provide
special problem-solving expertise to other parts of the
organization.
– Personal staff
• People working in “assistant-to” positions that provide
special support to higher-level managers.

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 Study Question 4: What organizing trends are
changing the workplace?
 Reduced use of staff (cont.)
– Line and staff managers may disagree over staff authority.
• Advisory Authority.
• Functional authority.
– No one best solution for dividing line-staff responsibilities.
– Organizing trend:
• Organizations are reducing staff size.
• Organizations are seeking increased operating efficiency by
employing fewer staff personnel and smaller staff units.

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