Lecture 4 Revision

1. The nature of decision making – What is decision making?

2. Types of decision making.
3. Decision making conditions.
4. Decision Making models.
5. Process of decision making.
6. Factor of risk propensity and decision making.
7. Ethical decision making process.
8. Challenges faced by managers in making decisions.

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 Lecture 5:
Organising (how work is done?)
(Organisation Structure & Design)

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Learning Outcomes
• To explain the concept of organising
• To examine fundamentals of organising.
• To describe departmentalisation & bureaucratic model of organisation design.
• To elaborate on situations which influence organisational design.
• To examine recent developments in organisation design.

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Lecture Structure
1. What is meant by the term organising?
2. Fundamentals of organising.
3. Departmentalisation (types of organisational structure).
4. Bureaucratic Model of Organisation Design.
5. Situational Influences on Organisation Design.
6. Recent Developments in Organisation Design.

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1. What is meant by the term Organising?
• Organising refers to deployment of resources in achieving
organisations strategic goal.
• In order to do so organisation structure is needed.
• Organising  how work is assigned to the workers, what type of
work they will do and in which dept the work is being carried out

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Sample Organisation Structure:
Source: Daft (2018)

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2. Fundamentals of Organising
1. Division of labour.
2. Chain of command.
3. Authority
4. Delegation.
5. Line department /Line authority.
6. Staff department/Staff authority.
7. Span of Management.
8. Centralisation vs. Decentralisation.

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2. Fundamentals of Organising (continued)
1. Division of labour = work specialisation. Isolation (silos)
2. Chain of command = unbroken line of authority  that links all
employees in an organisation. Show who report to whom
3. Authority = managers legitimate right to make decisions, issue orders and
allocate resources. Power flows from the highest level to the lowest level
4. Delegation = managers transfer authority & responsibility down the
hierarchy.
5. Line authority = authority that enables managers to direct & control
immediate subordinates as reflected in chain of command. Line dept =
serve organisation’s primary goal and mission eg production and sales
dept
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2. Fundamentals of Organising (continued)
6. Staff authority =positions with some authority that have been created to
support and advise those holding line authority. Staff dept support line dept =
eg HR, Marketing dept, Finance dept

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2. Fundamentals of Organising (continued)
7. Span of Management = the number of employees a manager can
efficiently manage. It determines the number of levels and managers
in an organization. Number of employees reporting to a manager
• Supervision:
a. (many workers reporting to a manager) Less levels = less
supervision  FLAT STRUCTURE = workers have > autonomy
b. (less workers reporting to a manager = micro-managing ) More
levels = more supervision  TALL STRUCTURE = workers have <
autonomy

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 Tall Structure Flat Structure

Flat Structure – Wide Span of

Tall Structure – Narrow Span of
Management
Management •Has few levels.
•Has many levels.
•One manager  responsible for lots of
• > supervision
• Eg: large companies such as those employees
•Employees have greater responsibility.
involved in manufacturing • < supervision

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2. Fundamentals of Organising (continued)
8. Centralisation vs. Decentralisation. DECISION MAKING
• Centralization: the degree to which decision making is located at the top of
organisation, decision made by one person; center = CRISIS
• Decentralization: the degree to which lower-level employees make decisions.
decision made by MORE THAN A person (Many) = UNCERTAINTIES

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 3. Departmentalisation
(Types of Organisational Structure)

• Departmentalisation refers to basis by which jobs are grouped

together and carried out in organisation.
1. Functional Form (U Form) = Unitary Form.
2. Divisional Form (M Form) = Multi-divisional Form.
3. Matrix Form (combine U & M Form).
4. Conglomerate Form (H Form) = Holding Form.
5. Bureaucratic model.

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3.1 Functional Form (Unitary Form)
• Grouping of work activities by common function.
• Job positions are grouped into departments according to similar skills,
expertise and work activities.
• Evaluation
• + efficient use of resources. Similar specialities common skills,
knowledge & orientations.
• + in-depth specialisation.
• - poor communication across functional departments.
• - decision centred at the top. Delay in decision making results in slow
response in change.
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3.2 Divisional (Multi-divisional Form)
• Departments are grouped on the basis of organisational output.
• Organisational output are: product, customer and geography.
Evaluation
• + focus on customer needs.
• + good coordination across functional departments.
• + fast response to change.
• - duplication of resources.
• - poor coordination across divisions.

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Source: Daft (2018)

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Product Divisional Structure
Source: Borges, et.al (2015)

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Customer Divisional Structure
Source: Borges, et.al (2015)

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Geographic Divisional Structure
Source: Borges, et.al (2015)

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3.3 Matrix Form
• Combines the functional & divisional organisation structures.
• Assigns workers from different functional departments to work on projects.
• Employees report to two bosses simultaneously.
Evaluation
+ expertise from all divisions, interdisciplinary.
+ efficient use of resources. WORKERS ARE BEING MAXIMISED
+ flexible to change.
- confusion from dual chain of command. STRESS
- conflict on dual-side of matrix.
- many meetings & more discussion than action. TIME IS OF ESSENCE
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Source: Daft (2018)

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3.4 Conglomerate Form (Holding Form)
• Conglomerate (Holding Form) design consists of a combination of two
more corporations engaged in unrelated businesses that fall under
one corporate group. A GROUP INDEPENDENT COMPANIES
• Evaluation
• + risk & profits are spread.
• + low central overhead.
• + allocate resources in more efficient manner.

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3.4 Conglomerate (Holding Form) continued
- extra layers of management increase cost to the organisation.
- lack of coordination and direction for the whole group.
- no centralized skills.

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Source: Needle

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4. Bureaucratic Model of Organisational Design
Source: Robbins & Coulter (2018)

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Advantages of Bureaucratic Model of
Organisation – Source: Borges, et.al (2015)
Evaluation
+ Greater control over organizational strategy decisions. MANAGERS
can command and control style of managing
+ Strategic decision making is fast because there are fewer people
involved in the process of approving. Centralised decision making,
few people deciding  fast
+ Job specialization in an organization with a bureaucratic structure,
leads to economies of scale. Work specialisation (expertise)

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Disadvantages of Bureaucratic Model of
Organisation – Source: Borges, et.al (2015)
- Discourages creativity and innovation in the organization. Voice of
workers is not heard
- Slow decision-making about procedural changes because moving
through the chain of command for approval. Red-tape, restrictions,
take-time before changes can be implemented
- Repetitive jobs which could increase the likelihood of employees
resigning as they receive less job satisfaction.

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5. Situational Influences on Organisation Design

• There are various situational factors that can affect the optimal design for an
organization. The following are the 4 factors:
i) Technology.
ii) Environment.
iii) Organization Size.
iv) Life Cycle.

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i. Technology & Organisation Structure
Technology Type Elements of Organisational Structure

Small Batch and Unit Production  Decentralised decision making.

• Technologies produce one item at  Greatest level of autonomy on workers.
one time; labour intensive  Organic structure: flexible & quick to adapt
[knowledge & skills]
Simple technology
Large Batch and Mass Production  Centralised decision making.
• Produce large number of same  Labour process that restricts the exercise of
item the worker autonomy.
• Moderately sophisticated =  Mechanistic structure: rigid and tightly
heavy machineries controlled

Continuous Process Production  Decentralised decision making.

• Conversion process which is  Greatest level of autonomy on workers.
automated  Organic structure: flexible & quick to adapt
• Sophisticated technology =
automations

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ii. Environment and Organisation Structure

STABLE [Low Uncertainty] TURBULENT [High Uncertainty]

 Low level competition.  High level competition.
 Few changes in the Environmental  Rapid product innovation.
product design. Uncertainty
 Dependable demand for Unpredictable access to
the final product & supplies and market.
supplies of required
materials to create them.

Mechanistic Structure Organic Structure

 Centralised decision  Decentralised decision
making. making.
 Clear communication.  Few rules and regulations.
 Limited autonomy.  Wide span of control.
 Narrow span of control.

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iii. Size & Organisation Structure
• Number of employees in the organisation will determine whether the
structure is mechanistic (large organisation); organic (small
organisation).
• The larger the organisation, more likely its employees are to work in
specialized functions, following standardized procedures and
formalized documentation. Mechanistic structure
• If, the organisation is small, it is likely that its structure would
encompass low formalisation and minimal centralised decision
making. Organic structure

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iv. Organisational Life Cycle Growth

Phase
Phase11[Birth]
[Birth]
Strategy:
Strategy: LowLowrevenue
revenuebase;
base;simple
simpleproduct
product&&market
marketscope.
scope.
Structure:
Structure: NoNoformal
formalstructure
structure (simple
(simplestructure).
structure).
Phase
Phase22[Youth]
[Youth]
Strategy:
Strategy: Increase
Increaseininrevenues
revenues
Structure:
Structure: Organic
Organic
Phase
Phase33[Midlife]
[Midlife]
Strategy:
Strategy: Expand
Expandproducts
productsand
andmarket.
market.
Structure:
Structure: Mechanistic
Mechanistic
Phase
Phase44[Maturity]
[Maturity]
Strategy:
Strategy: Solidify
Solidify
Structure:
Structure: Mechanistic
Mechanistic
6. Recent Developments in Organisation Design

1. Team Structure.
2. Virtual Structure.
3. Learning organisation.

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6.1 Team Structure
• Entire organisation is made up of work teams. (ability to work in groups; groups cohesive 
close-knit)
• Coordinate work to achieve organisation’s goals.
• Types of Teams:
a. Cross-functional teams: consist of employees from various functional departments who are
responsible to meet as a team and resolve mutual problems. Temporary; trouble shooters
b. Permanent teams: groups of employees who are organized in a way like a formal department
• Evaluation
• + reduced barriers among departments. Cross-functional team, work together, share ideas to
resolve issues
• + quicker decisions (many minds are working together) & shorter response time.
• + enthusiasm for employees > employee engagement
• - time and resources spent in meetings. lots of meetings will take place; less work will be done
• - dual loyalties (esp for cross functional teams, problem of work commitment) and conflict (many
people)
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Cross-functional Teams
Source: Daft (2018)

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6.2 Virtual Structure ICT; info communication technology
• Firm is involved in subcontracting key work activities  business partners
• Coordinate the work activities from main office - HQ.
Evaluation
+ expertise from worldwide.  value additions
+ flexible and responsive. Sensitive to developments geographically, < fixed
investments
+ reduced overhead cost. Operational cost can be reduced
- lack of control. Eg case of Foxconn
- more work demand on managers. Managers experience stress
- Weaker employee loyalty. Workers in partner companies do not have
commitment to the hub

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Source: Daft (2018)

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 6.3 Learning Organisation
Source: Borges, et.al (2015)
• A learning organization is defined as an organization that has
developed the capacity to continuously learn, adapt, and change.
Emphasise on knowledge development eg Boeing; APPLE, Microsoft
• Features of learning organisation is:
a. Has a strong organizational culture. Shared values & sharing of
knowledge among employees eg: PANASONIC
b. Has a strong leadership style. work oriented & employee oriented
c. Learning organizations that are flexible, innovative and
knowledgeable (industry leaders) why? competitive advantage

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