Faculty of Business Administration

and International Trade

Principles of management
MGT101
Handout

Business students
 Chapter 11- Organizing
➢ Organizing: management function that involves arranging and structuring work to
accomplish the organization’s goals
➢ Organizational structure: the formal arrangement of jobs within an organization
➢ Organizational chart: the visual representation of an organization’s structure
➢ Organizational design: creating or changing an organization’s structure
Purposes of Organizing
1. Divide the work to be done into specific jobs and departments.
2. Assigns tasks and responsibilities associated with individual jobs.
3. Coordinates diverse organizational tasks.
4. Clusters jobs into units.
5. Establish relationships among individuals, groups, and departments. Establishes formal lines
of authority.
6. Allocates and deploys organizational resources.
➢ Work specialization: dividing work activities into separate job tasks
➢ Departmentalization: the basis by which jobs are grouped together
✓ Functional: Grouping jobs by functions performed
✓ Product: Grouping jobs by product line
✓ Geographical: Grouping jobs on the basis of territory (zone) or geography
✓ Process: Grouping jobs on the basis of product or customer flow
✓ Customer: Grouping jobs by type of customer and needs

➢ Today’s View on Departmentalization

Two trends are:
✓ Cross-functional teams: a work team composed of individuals from various functional
specialties. This has become more popular as tasks become more complex.
✓ Customer departmentalization: emphasizes monitoring and responding to customers’ needs

➢ Chain of command: the line of authority extending from upper organizational levels to the lowest
levels, which clarifies who reports to whom to understand the chain of command, you have to
understand three other important concepts: Authority, Responsibility, and Unity of command.
✓ Authority: the rights inherent in a managerial position to tell people what to do and to expect
them to do it
▪ Line authority: authority that entitles a manager to direct the work of an employee
▪ Staff authority: positions with some authority that have been created to support, assist, and
advise those holding line authority

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 ✓ Responsibility: the obligation or expectation to perform any assigned duties
✓ Unity of command: the management principle that each person should report to only one
manager

➢ Span of control: the number of employees a manager can efficiently and effectively manage
➢ Centralization: the degree to which decision making is concentrated at the upper levels of the
organization
➢ Decentralization: the degree to which lower-level employees provide input or actually make decisions.

ore entralization ore De entralization

Environment is stable. Environment is complex, uncertain.

Lower-level managers are not as capable or Lower-level managers are capable and
experienced at making decisions as upper- experienced at making decisions.
level managers.

Lower-level managers do not want a say in Lower-level managers want a voice in

decisions. decisions.

Decisions are relatively minor. Decisions are significant.

Organization is facing a crisis or the risk Corporate culture is open to allowing

of company failure. managers a say in what happens.

Company is large. Company is geographically dispersed.

Effective implementation of company Effective implementation of company

strategies depends on managers retaining strategies depends on managers having
say over what happens. involvement and flexibility to make
decisions.

➢ Employee empowerment: giving employees more authority (power) to make decisions

➢ Formalization: how standardized an organization’s jobs are and the extent to which employee
behavior is guided by rules and procedure
➢ Mechanistic organization: an organizational design that’s rigid and tightly controlled
➢ Organic organization: an organizational design that’s highly adaptive and flexible

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 ➢ An organization’s structure should facilitate goal achievement. Because goals are an important part of
the organization’s strategies, it’s only logical that strategy and structure are closely linked.
➢ There’s considerable evidence that an organization’s size affects its structure, but once an
organization grows past a certain size, size has less influence on structure.
➢ Unit production: the production of items in units or small batches
➢ Mass production: the production of items in large batches

➢ Process production: the production of items in continuous processes

Unit ass Produ tion Pro ess Produ tion

Produ tion
Structural Low vertical Moderate vertical High vertical
characteristics differentiation differentiation differentiation
blank Low High horizontal differentiation Low horizontal
horizontal differentiation
differentiation
blank Low High formalization Low formalization
formalization
Most effective
structure: Organic Mechanistic Organic

✓ Instable and simple environments, mechanistic designs can be more effective.

✓ The greater the uncertainty, the more an organization needs the flexibility of an organic design.
➢ Simple structure: an organizational design with little departmentalization, wide spans of control,
centralized authority, and little formalization

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➢ Functional structure: an organizational design that groups together similar or related occupational
specialties
➢ Divisional structure: an organizational structure made up of separate, semiautonomous units or
divisions
➢ Team structure: an organizational structure in which the entire organization is made up of work
teams
➢ Matrix structure: an organizational structure that assigns specialists from different functional
departments to work on one or more projects

➢ Project structure: an organizational structure in which employees continuously work on projects

➢ Virtual organization: an organization that consists of a small core of full-time employees and outside
specialists temporarily hired as needed to work on projects Sometimes called “Network” or “Modular”
organization
➢ Telecommuting: a work arrangement in which employees work at home and are linked to the
workplace by computer

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➢ Compressed workweek: a workweek where employees work longer hours per day but fewer days per
week
➢ Flextime (or flexible work hours): a scheduling system in which employees are required to work a
specific number of hours a week but are free to vary those hours within certain limits
➢ Job sharing: the practice of having two or more people split a full-time job
➢ Contingent workers: temporary, freelance, or contract workers whose employment is contingent on
demand for their services

Reference: Management Fifteenth Edition, Global Edition Stephen P. Robbins & Mary A. Coulter