Chapter 6 Griffin
Chapter 6 Griffin
Chapter 6 Griffin
3
WHAT IS ORGANIZATIONAL STRUCTURE
Determinants of Organization
Chain of Command
THE BUILDING BLOCKS OF ORGANIZATIONAL
STRUCTURE
Specialization
Departmentalization
Customer Departmentalization
Product Departmentalization
Process Departmentalization
Geographic departmentalization
Functional Departmentalization
ESTABLISHING THE DECISION-MAKING HIERARCHY
Assigning Tasks: Responsibility and Authority
Performing Tasks: Delegation and Accountability
Fear of Delegating
Distributing Authority: Centralization and Decentralization
Tall and Flat organizations
Span of Control
Three forms of authority
Line Authority
Staff Authority
Committee and Team Authority
Matrix Organization
International Organization
7-6
Definitions
Determinants of Organization
Purpose, Mission & Strategy
Size, technology and changes in environment
Organizational Chart:
Diagram depicting a company’s structure and
showing employees where they fit into its
operations
Chain of Command:
Reporting relationships within a company
7
THE BUILDING BLOCKS OF
ORGANIZATIONAL STRUCTURE
Job Specialization
The process of identifying the specific jobs
that need to be done and designing the
people who will perform them
Departmentalization
The process to determine how jobs should
be grouped together in logical units to
make the workplace more efficient
BASIS OF
DEPARTMENTALIZATION
1. Customer: according to types of customers likely to buy a given
product. E.g. women and men departments; wholesale and
retail department.
2. Product: Departmentalization according to specific products
being created. Example: When a computer store has a
department for printers, for hardware, for software, etc. often
used in manufacturers.
3. Process: Departmentalization according to production processes
used to create a good or service. Sewing Department, Cutting
department etc in a garment factory
4. Geographic: Departmentalization according to areas served by
a business.
5. Functional: Departmentalization according to the function or
activities of similar groups. Example: When a company has a
different department for marketing, accounting, etc. 9
Customer Departmentalization
Industrial vs.
Consumer
Youth vs. Adult
Family vs.
Singles
Product Departmentalization
Consumer office
supplies vs.
business office
supplies
Photocopiers vs.
computers
Tax return
preparation vs.
company financial
statements
7-11
Process Departmentalization
Groups based
on the
manufacturing
process
assembly
painting
drying
inspection
7-12
Geographic
Departmentalization
Western vs.
Eastern region
Canadian vs.
American
North America
vs. Europe
7-13
Functional
Departmentalization
Based on activities
performed
accounting & finance
marketing
human resource
production
The Combination of Various
Organizational Structures
ESTABLISHING THE DECISION-
MAKING HIERARCHY
1. Assign tasks
2. Perform tasks
3. Distribute Authority
16
Assign Tasks
Responsibility:
Duty to perform an assigned task
Authority:
Power to make the decisions necessary
to complete a task
17
Perform Tasks
Delegation:
assignment of a task, responsibility, or
authority by a manager to a subordinate
Accountability:
Liability of subordinates for
accomplishing tasks assigned by
managers
18
Distributing Authority
Centralized organizations
Top managers hold most
decision-making authority
Decentralized organizations
Lower level managers hold
significant decision-making
authority
Distributing Authority
Span of Control: The number of subordinates that a manager is responsible for
supervising
Wide span- many subordinates- Flat Organization
Narrow span- very few subordinates- Tall Organization
20
Organizational Structure and Span of Control
Forms of Authority
Line Authority
Line Departments
Staff Authority
Staff Members
Matrix
Organization International
Organization
Basic Forms of
Organizational Structure
Functional organization: Structured around basic business functions
such as marketing, operations, and finance. Examples can be found
in most small to medium businesses.
Divisional organization: Corporate divisions operate as autonomous
businesses under the larger corporate umbrella. This structure relies
on product departmentalization. Examples include General Electric,
and The Walt Disney Company. The create product based divisions.
Each may be managed as a separate enterprise.
Matrix organization: Teams are formed, and team members report to
two or more managers. In some firms the matrix structure is
temporary, while in other firms it is permanent. Examples include:
Martha Stewart Living, Omnimedia, and many large consulting firms.
It was created by NASA. It relies on committee and team authority.
International organization: Approach developed in response to the
need to manufacture, purchase, and sell in global markets. Typically
an international structure evolves as international operations escalate.
A Matrix Organization
MARTHA STEWART
Cooking
Entertainment
Weddings
Crafts
Gardening
Home
Holidays
Children
An International Organization
CEO
Latin
Europe Asia
America
An International Organization
Many organizations initiate international
expansion with a small team of
specialists, evolve into a separate
division as shown in the slide, and
ultimately (if they experience success in
foreign markets) integrate international
operations into their standard business
units.
The Future of
Organizational Structure
Boundary-less Organizations
Team Organizations
Virtual Organizations
Learning Organizations
The Future of
Organizational Structure
Organizational structure continues to change as organizations seek new
ways to compete effectively within a rapidly changing business
environment. Emerging forms include (these characteristics):
1. Boundary-less: Organizations in which traditional boundaries and
structures are minimized or eliminated. Example: Wal-Mart has tied its
key suppliers into its information system for seamless\faultless
inventory management.
2. Team: Organizations that rely almost exclusively on project-type
teams. Examples: Xerox and Apple are moving in this direction.
3. Virtual: Organizations that have little or no formal structure, relying
heavily on temporary workers, leased facilities, and outsourced services.
Examples: Global Research Consortium operates this way, and
University of Phoenix is moving in this direction.
4. Learning: Organizations that strive to integrate continuous
improvement with continuous employee learning and development.
Example: Shell Oil Company.
5. Learning org. works to facilitate the lifelong learning and personal
development to all employees and continuous respond to change.
The Informal Organization
A Powerful Dynamic
Informal Groups
The grapevine\gossip
Intrapreneuring
The Informal Organization
A Powerful Dynamic
The informal organization is the network of everyday
social interactions among employees, which do not
follow formal lines of communication. The informal
organization can be as powerful—if not more so—than
the formal organization.
Informal groups: Groups of people who decide to
interact among themselves. Their impact on the
organization can be positive, negative, or neutral.
The grapevine\gossip: Informal communication
network that runs through the organization. You need
to have open channels of communication and
responding vigorously in order to eliminate its level.
The Informal Organization
A Powerful Dynamic
Intrapreneuring: Harnessing\tie together
the energy of the informal organization to
improve productivity by creating the
innovation and flexibility of a small-
business environment within the confines
of a large organization. Compaq,
Rubbermaid, 3M, and Xerox are examples
of companies that support intrapreneuring.