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Nature of Organizations

Differentiation of the Organizations Internal Environment

Differentiation in organizations involves division of labor and specialization according to Bateman and
Snell (2008). These necessarily result from the organizations compositionmany different work units
with different kinds of tasks, using different skills and work activities coordinating with one another for a
common end.

Division of labor involves assigning different tasks to different people in the organizations different work
units. Related to it is specialization, the process in which different individuals and units perform different

Integration of Work Units

Integration is another process in the organizations internal environment which involves the
collaboration and coordination of its different work units or work divisions.

Coordination refers to the procedures that connect the work activities of the different work
divisions/units of the firm in order to achieve its overall goal.


Vertical Organization Structure clears out issues related to authority rights, responsibilities, and
reporting relationships

Horizontal Organization chart refers to a selection of independent, usually single-function organizations

that work together to produce a product or service

Types of Organization Structures

An organization structure is a system made up of tasks to be accomplished, work movements from one
work level to other work levels in the system, reporting relationships, and communication passageways
that unite the work of different individual persons and groups. The types of organizational structures

a. vertical structure

According to Bateman and Snell (2008), a vertical structure clears out issues related to authority
rights, responsibilities, and reporting relationships. Authority rights refer to the legitimate rights of
individuals, appointed in positions

b. horizontal structure

A horizontal structure refers to the departmentalization of an organization into smaller work

units as tasks become increasingly varied and numerous.
Types of Department:
Line departments deal directly with the firms primary goods and
services; responsible for manufacturing, selling, and providing services
to clients.
Staff departments support the activities of the line departments by
doing research, attending to legal matters, performing public relations
duties, etc. Meanwhile, departmentalization may be done using three
Functional approach where the subdivisions are formed based on
specialized activities such as marketing, production, financial management,
and human resources management.
Divisional approach where departments are formed based on management
of their products, customers, or geographic areas covered.
Matrix approach is a hybrid form of departmentalization where
managers and staff personnel report to the superiors, the functional
manager, and the divisional manager.
c. network structure
a network structure is a collection of independent, usually
single function organizations/companies that work together in order
to produce a product or service.