CHAPTER 10: ORGANIZATIONAL STRUCTURE

Lesson Objectives
At the end of this lesson, the students should be able to:
1 Identify Mintzberg’s nine design parameters; and
2.
. Explain the organizational relationship.

MINTZBERG’S NINE DESIGN PARAMETERS

 Design assumes discretion, an ability to alter the system. In the case of the
organization structure, design means turning those knobs that influence the
division of labor and the coordinating mechanisms thereby affecting how the
organization functions. Consider the following questions, which are the basic
issues of structural design:

a. How many tasks should a given position in the organization contain, and how
specialized should each task be?
b. To what extent should the work content of each position be standardized?
c. What skills and knowledge should be required for each position?
d. On what basis should positions be grouped into units and units into larger units?
e. How large should each unit be; how many people should report to a given
manager?
f. To what extent should the output of each position or unit be standardized?
g. What mechanisms should be established to facilitate mutual adjustment among
positions and units?
h. How much decision power should be delegated to the managers of line units down
the chain of authority?
 i. How much decision making power should pass from the line managers to the
staff specialists and operators?
ORGANIZATIONAL RELATIONSHIPS

Work Design
 Work can be combined in various forms. Decisions on the methods of groupings
will consider:
 The need for coordination
 The identification of clearly defined divisions of work
 Economy
 The process of managing activities
 Avoiding conflict, and
 The design of work organization which takes account of the nature of staff
employed, their interests and job satisfaction
Formal
 Line – vertical flow of authority
 Functional – between specialists in advisory positions and line management teams
 Staff – personal assistants to senior members
Span of control – number of direct reports. Influencing factors:
 Nature of organization, complexity of work, range of responsibilities
 Ability and personal qualities e.g. capacity of manager
 Time available to spend with subordinates
 Ability and training of subordinates
  Effectiveness of coordination, communication, control systems
 Physical location of subordinates

FACTORS AFFECTING ORGANIZATIONAL STRUCTURE

SELECTION IN MULTINATIONAL CORPORATIONS

 The organization structure of the business

environment is an approach that helps and guides in organizing
the employees of the organization into a structure and
organized pattern for the better coordination and
communication. The structure in a multinational company
defines the architecture of the business competence, functional
relationship and management function.

REGULATION

 Regulation is the administrative process of writing and

passing laws that, to a certain extent, restrain some
fundamental rights of business. It can have distinguished from
principal legislation by elected legislative body. Regulation can take many forms:
legal restriction promulgated by a government authority, self-regulation by an
industry in which the type of business belongs such as through a trade association,
social regulation, and market regulation. One can consider regulation as action of
imposing sanctions or penalties to the extent permitted by the law.
AREAS OF GOVERNMENT REGULATION OF BUSINESS
RELEVANT TO THE EXISTENCE OF BUSINESS
THE STATE WILL TAKE CHARGE OF ECONOMY ACTIVITY
  A centrally planned economy is one where all major
economic decisions are under the control of the
government. This type of economy is typically
associated with socialist and communist ideals, and
was first attempted in the Soviet Union in the early
20th century. In contrast to a free market or capitalist
economy, a centrally planned economy does not all
the supply and demand of the market to define prices, wages, or the production of
goods.
 The theory behind a centrally planned economy begins with the idea that the
market is not a measure of what is best for the country. Subject to whim, trend,
and a myriad of opinions, the free market can slow or even impede the goals of a
central government.
 Most modern economies include a mix of centrally planned and free market
behavior. While the government may control certain areas of the economy, much
of the market runs at the impulse of the people. In such an economy, a person has
the right to and charge a sales tax based on the centrally planned aspects.

ADVANTAGE OF PLANNED ECONOMY

A. DRIVEN FOR COLLECTIVE BENEFITS GOVERNMENT

 Decided economies can be proposed to serve

communal rather than individual needs. A planned
economy eradicates the individual profit motives as the
driving force of production and rests it in the hands of
government planners to determine the appropriate
production of different sets of goods.

GOVERNMENT
  Can exploit land, labor, and capital to provide the economic purposes of the state.
Consumer demand can be contained in favor of bigger capital venture for
economic advancement in a preferred blueprint.
B. ECONOMIES AND SCALE
 A government run economy would Endeavour to replace a number
of firms with a single firm for the whole economy. This makes the
business the sole beneficiary on the advantage of single market,
arbitrary pricing and unilateral product offering.
C. INHERENTLY PROTECTED GOVERNMENT
 Planned economy is not subject to major downside of market economies and
market mixed economies.
 Another facet is that centrally mapped economy can offer public goods which
would not have been available

D. STABILITY

 When government is in charge, long term venture can be made without fear of a
market downward spiral which can easily lead to abandonment of a project. This
is especially important where returns are risky.

Disadvantages of Planned Economic Activity

a. Inefficient Use of Resources

 Critics of planned economies are pushing the idea that planners cannot detect
consumer preferences, shortage, and surpluses within the ideal level of accuracy
and therefore cannot efficiently coordinate production.
b. Restraint of Democracy in Trade
 Given that the central planning overcame its built-in inhibitions of incentives and
innovation, it would be nevertheless be unable to maximize economic democracy
and self-management, which some believes are concepts that are far more
rationally consistent, reliable and just than ordinary ideas of economic freedom.
Imposition of legal and Administrative Barriers

Based on research the following are the identified and recurring legal and administrative
barriers to entrepreneurship common to ASEAN countries.
a. Disproportionate Licensing and Regulatory Requirements.
• The regulatory and licensing barriers are perennial in today’s system whereby one
must obtain approval from the authorities to embark on even the smallest task.
b. Excessive, Complex and Arbitrary Taxation.
• The taxation system can sometimes be complex, subject to abuse by the
government officials and appears to change frequently.
c. Inadequate Banking System and Poor Banking Practices
• Can also impose impossible demands on entrepreneurs. Issues involving
timeframes and terms of credit for repayments are sometimes prohibitive, collateral are
difficult to provide and finding a guarantor to help secure a loan is very difficult.
d. Lack of Government’s Commitment to Reduce Administrative Barriers.

• A good mass within the business community and even those outside of business
recognizes that the government are doing little to reduce administrative barriers
impending investment and trade.
REGULATIONS RELEVANT TO THE CONDUCT OF BUSINESS
 The government has set many business regulations in place to protect employees’
rights, protect the environment and hold corporations accountable for the amount
of power they have in this business-driven society.
Advertising

 Laws pertaining to marketing and advertising set in

motion by the regulatory authority exist to protect consumers
and keep companies honest about their products.
Employment and Labor
 Among the ever-changing regulations in business are employment laws. These
laws pertain to minimum wages,
benefits, safety and health
compliance, working conditions, equal
employment opportunity and privacy
regulations cover the largest area of
subjects of all business regulation.
Environmental

 The carbon footprint of business of the environment is regulated by the Department

of Environment and Natural Resources (DENR). The DENR enforces
environmental laws passed by the government.
Privacy

 Sensitive information is usually from employees and customers during hiring and
business transactions and privacy laws prevent businesses from disclosing this
information freely. Information collected can include social security number,
address, name, health conditions, credit card and bank
numbers and personal history.
Safety and Health
 The safety and health laws ensure that employers provide
safe and sanitary work environments through frequent
inspections and a grading scale. A company must meet
specific standards in order to stay in business.
POLITICAL ENVIRONMENT OF BUSINESS
 The political environment in which the firm operates will have a significant impact
on a company’s international operating activities. The greater the level of
involvement of the company in a foreign market, the greater the need to monitor
the political climate of the countries where the business is conducted since this
 political climate among others the marketability of the company’s product. The
inflow of investments and more importantly valuation of share price.
CORPORATE SOCIAL RESPONSIBILITY AND ORGANIZATIONS
 Corporate social responsibility (CSR) can be defined as the “economic legal,
ethical, and discretionary expectations that society has of organizations at a given
point in time. Corporate social responsibility is related but no identical with
business ethics. While CSR encompasses the economic legal, ethical and
discretionary responsibilities of organizations, business ethics usually focuses on
the moral judgments and behavior of individuals and groups within the
organizations.

For further discussion please refer to the link provided: Mintzberg

https://www.youtube.com/watch?v=FGS1_jcBFiY
For further discussion please refer to the link provided: Regulation
https://www.youtube.com/watch?v=sDqGzMdhL1M
For further discussion, please refer to the link provided: Political Environment of business
https://www.youtube.com/watch?v=PO2vuihannA

Reference: Strategic Management Made Simple By: Felina C. Young