Topic 1: Organisational Structure

PART 2: ORGANIZATIONAL STRUCTURE DEPARTMENTS & THEIR WORKS
Chapter 2.1: Organisational Structure
Topic 1: Organisational Structure
What is organisational structure

 The specification of the jobs to be done within an organization and the ways in
which those jobs relate to one another. (Ebert, Griffin, Business Essential)
 The typically hierarchical arrangement of lines of authority, communications,
rights and duties of an organization.
 Organizational structure determines how the roles, power and responsibilities
are assigned, controlled, and coordinated, and how information flows between
the different levels of management
Organization chart
 Organization chart
-a diagram that represents the positions and relationships within an organization
-each box in the chart represents a job
 Chain of command
-the solid lines define the chain of command
-The line of authority that move from the top of a hierarchy to the lowest levels
Determinants of Organization Structure

 The organization’s mission and strategy
 Size of the company
 Aspect of the organization’s environment
The Building Blocks of Organization Structure

 The first step in developing the structure of any business, involves three
activities :
 Specialization- Determining who will do what
 Departmentalization- Determining how people performing certain tasks can
best be grouped together
 Establishment of a Decision Making Hierarchy- Deciding who will be
empowered to make which decisions and who will have authority over others
Job Specialization
 The process of identifying the specific jobs that need to be done and designating
the people who will perform them
 A natural part of organizational growth
 Major job of business such as
 Making cars (Ford)
 Providing telecommunications service (Maxis)
 The job of United Airlines is to transport passengers and their luggage from one
airport to another
 To perform the major job, managers actually break it down into several smaller
jobs.
 Some specialist will:-
 Schedule the flights
 Book passengers
 Fly the planes
 Deal with passenger luggage and cargo
Advantages of Job Specialization

 Save a time (learned more easily)
 Accuracy (can be performed more efficiently)
 Easier to replace people who leave an organization
Disadvantages of Job Specialization

 Employees may become bored and careless
 Derive less satisfaction from their jobs
 Create monopoly
 Limits the freedom of the choice
Topic 2: Department and their work
Departmentalization
 Process of grouping jobs into logical unit
 Allow to treat each department as a profit center, a separate company unit
responsible for its own costs & profits
 The manager group jobs logically, according to some common thread or purpose
 May occur along functional, product, process, customer or geographic lines (or
any combination of these)
Types of Departmentalization
 Functional Departmentalization-dividing an organization according to group’s
functions or activities
 Product Departmentalization-dividing an organization according to specific
products or services being created
 Process Departmentalization-dividing an organization according to production
processes used to create a good or service
 Customer Departmentalization-dividing an organization to offer products and
meet needs for identifiable customer groups
 Geographic Departmentalization-dividing an organization according to the
areas of the country or the world served by a business
Establishing the Decision Making Hierarchy

 Done by formalizing reporting relationships
 Among individual managers and the people who report to them (DELEGATION)
 Distributing Authority : Centralization vs Decentralization
Centralized Organization
 Organization in which most decision-making authority is held by upper-level
management
 Tend to have relatively fewer layers of management (Flat Organization
Structure)
Decentralized Organization
 Organization in which a great deal of decision-making authority is delegated to
levels of management at points below of top
 Typically require multiple layers of management (Tall Organization Structure)

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PART 2: ORGANIZATIONAL STRUCTURE DEPARTMENTS & THEIR WORKS

Chapter 2.1: Organisational Structure

Topic 1: Organisational Structure

What is organisational structure

Determinants of Organization Structure

The Building Blocks of Organization Structure

Advantages of Job Specialization

Disadvantages of Job Specialization

Topic 2: Department and their work

Establishing the Decision Making Hierarchy

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