UNIT

08 Fundamentals of Organisation
Structure

Names of Sub-Units

Concept of Organisation Structure and Types of Organisation Structure

Overview

The unit begins by explaining the concept of organisation structure and the information-sharing
perspective of structure. Further, it describes the types of organisation structure and concept of
horizontal structure characteristics. The unit explains the factors impacting organisation structure.

Learning Objectives

In this unit, you will learn to:

 Explains the meaning of organisation structure
 List down the information-sharing perspective of structure
 Define structural alignment
 Describe the types of organisation structure
 List down the symptoms of structural deficiency
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Learning Outcomes
At the end of this unit, you would:
 Assess the organisation structure
 List down the reporting relationships
 Evaluate the types of organisation structure
 Appraise the virtual networks
 Examine the factors impacting organisation structure

Pre-Unit Preparatory Material

 https://www.youtube.com/watch?v=LCAAivdxVTU
 https://www.youtube.com/watch?v=AQcjYAFEsfc

8.1 INTRODUCTION
An organisation is a system that is affected by various interrelated and interdependent components.
An organisation is composed of system, style, values, structure, human resource, etc., organisation
structure is the framework of an organisation, which includes various departments, such as human
resource, marketing and finance. The structure of an organisation can be centralised and decentralised
depending upon the organisation’s plans and policies. Every organisation is characterised by numerous
features that help you to get a better understanding of several organisational issues. The following
points exhibit some important characteristics of an organisation:
 Strong employee involvement: It ensures a deeper commitment and dedication of employees in their
assigned tasks. Such commitment creates a new enthusiasm amongst the employees to achieve the
individual, group and organisational goals.
 Forming alliances: It consists of maintaining associations with other organisations. Some examples
for forming alliances may include collaborations, networks and mergers and acquisitions.
 Developing team culture: It refers to the capability of an organisation to form a team for meeting
organisational objectives.
 Mindfulness towards the change in environments: Every organisations hould check the effects of
its activities on the environment. In other words, the organisation should consider that its activities
do not harm the environment.
 Resources: These include physical, capital and material goods accessible to an organisation.
 Influence: It refers to the degree of authority of an organisation in the world at large. It helps in
understanding whether a particular organisation can exert enough political or social influence to
get the desired outcomes or not.
 Security: It is the measure of how well a particular organisation guards its trade secrets and other
confidential business-related information.
 Tenacity: It refers to the ability of an organisation to pursue its objectives in every situation. A highly
tenacious organisation sets its agendas with single minded fervour and efficiency. An organisation
with low tenacity indicates unwillingness to pursue its objectives.

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8.2 CONCEPT OF ORGANISATION STRUCTURE

Organisational structure is an outline that determines the level at which the roles and responsibilities
are delegated to individuals to fulfil the goals of an organisation. In other words, it is a hierarchy in
which a group of people co-ordinate with each other to accomplish the common goal of the organisation.
Organisational structure is a framework within which an organisation arranges its lines of authority
and channel of communication and assigns rights and duties to individuals. The organisational
structure varies on the basis of organisational objectives and strategies selected to achieve them. For
example, in a centralised structure, the top-level management takes all the decisions and controls all
the departments and divisions of the organisation. On the other hand, in a decentralised structure, the
decision-making process is performed by departments. In addition, in the decentralised structure, all
departments have different degree of autonomy. Figure 1 shows the organisation structure:

President

Division Product X Division Product Y Devision Product Z

R&D Manufacturing Marketing Finance R&D Manufacturing Marketing Finance

R&D Manufacturing Marketing Finance

Figure 1: Organisation Structure

An organisation needs to consider the following aspects while determining its structure:
 The strengths and weaknesses of different organisational forms.
 The legal aspects of all available organisational structures.
 The growth patterns of the organisation.
 The relationship between the manager and its subordinates.
 The flow of information and the frequency of communication.
 The number of subordinates under a manager.
 The autonomy given to employees at various levels of the organisation.

8.2.1 Information-sharing Perspective of Structure

Information sharing is defined as a linking concept between organisational and information sharing
structures. Task characteristics, technological interdependency, work teams, and networked structures
of organisations determine information-sharing requirements. Following are the elements of
organisation structure which influence information sharing:
 Departments: Departments are usually sorted on the basis of the kinds of tasks the workers in each
department perform, but this is not the only way to create a company’s departmental breakdown.

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Businesses are divided into groups based on product or brand lines, geographic locations or
even customer needs. Departmentalisation refers to how the organisational structure groups
the company’s functions, offices and teams. Those individual groups are typically referred to as
departments.
 Chain of command: Managers assign tasks, communicate expectations and deadlines to employees,
and provide motivation on a one-to-many basis. Most organisations, from businesses to non-profits
to the military, utilise a chain of command. This helps eliminate inefficiencies by having each
employee report to a single manager, instead of several bosses. The chain of command is reflected in
the organisational structure and affects job descriptions as well as office hierarchies. This chain of
authority or command streamlines corporate operations and communications for a more efficient
and productive business.
When employees encounter obstacles or problems, they report back to the appropriate manager.
When necessary, the manager is then responsible for taking the concern or issue up the chain of
command to the next level, and so forth.
 Span of control: Managers, who are placed higher up the chain of command, typically have a
tighter span of control, as they are directly responsible for middle-manager or team leaders. An
organisational structure’s span of control defines how many employees each manager is responsible
for within the company. There is no single type of span of control that is ideal for all companies or
even for all businesses in a specific industry. The optimal span will depend on a number of factors,
including the size of the workforce, how the company is broken up into departments and even the
company’s specific business goals and strategies.
 Centralisation and decentralisation: Organisational structures also rest somewhere on a spectrum
of centralisation. Generally, more conservative corporate entities adopt a centralised structure.
Centralising authority in a business means that middle management typically is left with little to
no input about the goals the company sets. This system is typical in larger corporate organisations
as well as at companies in more conservative industries. On the other hand, a company could
adopt a more decentralised approach. A decentralised system allows all levels of management the
opportunity to give input on big-vision, goals and objectives.
 Work specialisation: In any business, employees at all levels, typically, are given a description of their
duties and the expectations that come with their positions. In larger companies, job descriptions
are generally formally adopted in writing. This approach helps ensure that the company’s specific
workforce needs are met, without any unnecessary duplication of effort. Work specialisation ensures
that all employees have specific duties that they are expected to perform based on each employee’s
work experience, education and skills. This prevents expecting employees to perform tasks for which
they have no previous experience or training and from performing beneath their capacities.
 Formalisation: Finally, organisational structures implement some degree of formalisation. This
element outlines inter-organisational relationships. Formalisation is the element that determines
the company’s procedures, rules and guidelines as adopted by management. Formalisation also
determines company culture aspects, such as whether employees have to sign in and out upon
arriving and exiting the office, how many breaks workers can take and how long those breaks can
be, how and when employees can use company computers and how workers at all levels are expected
to dress for work.

Vertical Information Sharing

Vertical information sharing refers to communication in which the information or messages flows
between or among the subordinates and superiors (upward and downward) of the organisation.

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Figure 2 shows the vertical information structure:

Managing Director

General Manager
Downward Communication

Upward Communication
Assistant General Manager

Divisional/Departmental Head

Supervisor

Employees/Workers

Figure 2: Vertical Information Structure

Horizontal Information Sharing

Horizontal information sharing refers to information sharing among people at the parallel or same
level, position, rank or status people of the organisation. This type of information sharing is lateral
communication within the organisation, involves persons at the same level of the organisation.
Horizontal information sharing involves coordinating information and allows human resource with
the same or similar rank in an organisation to cooperate or collaborate. Figure 3 shows horizontal
information sharing:

Production Sales Purchase

Manager Manager Manager

Figure 3: Horizontal Information Sharing

8.2.2 Reporting Relationships

Reporting relationships are defined as an organisation structure in which every employee is placed
somewhere on an organisational chart. The employees report to the employee who is listed above them
on the organisational chart.

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There are four types of reporting relationships:

1. Functional reporting relationships
2. Direct and indirect reporting relationships
3. Dual reporting relationships

Functional reporting relationship establishes a connection between positions or organisational units at

different levels of the management on the basis of specialised nature of the function for which a mutual
responsibility is shared.
A direct reporting relationship is when an employee formally reports to any senior or management.
This generally means that an employee is directly responsible for assigning them work and managing
their performance. An indirect reporting is when the employees report to their subordinates.
A dual-reporting relationship is when an employee reports to two managers who are jointly responsible
for the employee’s performance.

8.2.3 Departmental Grouping Options

Departmentalisation is the process of grouping activities into departments. Division of labour is the main
idea behind departmental grouping options. Departmentalisation brings coordination. Department
is facilitated by grouping specialists together in departments. There are four departmental grouping
options which are mentioned below:
 Functional departmental grouping: It is done by grouping people on the basis of functions (work
being done) to pursue economies of scale by placing employees with shared skills and knowledge
into one department.
 Product departmental grouping: It is done by grouping people on the basis of the product line.
Department grouping is done according to a specific product or service, thus, placing all activities
related to the product or the service under one manager.
 Customer departmental grouping: It is done by grouping people on the basis of common customers
or types of customers. Jobs may be grouped according to the type of customer served by the
organisation.
 Geographic departmental grouping: It is done by grouping people based on territory. If customers
of the organisation are geographically dispersed, it can group jobs based on geography.
 Process departmental grouping: It is done by grouping people on the basis of product or service
or customer flow. For example, applicants might need to go through several departments, namely
validation, licensing and treasury, before receiving a driver’s license.
 Divisional departmental grouping: it is when an organisation makes independent lines of business
which functions as separate organisations, all contributing to the corporation profitability, the
design is called divisional departmental grouping.

8.2.4 Structural Alignment

Structural alignment refers to a form of sequence alignment which is based on the comparison of shape.
FRAPS tool can be used by an organisation to do the structural alignment. FRAPS means Framework for
Aligning Process and Structure.

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FRAPS tool is mainly useful when an organisation evaluates two sets of processes or two sets of roles
against each other. Figure 4 shows organisational alignment tools:

ORGANISATIONAL ALIGNMENT TOOL

COLLABORATION
STRUCTURE MODEL
How teams collaborate SKILLS &
The logical grouping of
on key activities and CAPABILITIES Needed
activities into functions,
make effective by your people to do
lines of reporting and
decisions their jobs efficiently
individual

YOUR
STRATEGY

INFORMATION & WAYS OF

RESOURCES Needed WORKING
by your people to do The value, behaviours
their jobs well MEASUREMENT & and culture that must
REWARD Structures be fostered
that are in place to
measure and reward
success

Figure 4: Organisational Alignment Tools

Source: https://hrcurator.com/

Let us understand with the help of an example:

Marketing and sales – should they be grouped together or should they remain separate (and report to
two different managers)?
Should we outsource manufacturing (and by implication, separate it from engineering, which is still
going to be internal)?
Should customer support and sales be integrated?
Although the tool itself is simple – it is just a 2×2 diagram – it summarises a large body of theory and
research on organization design. The principle behind the diagram is powerful yet frequently neglected.
The purpose is to ensure that the formal structure (in particular, the boundaries between units) matches
the resource and information flows.

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8.3 TYPES OF ORGANISATION STRUCTURE

Determining the organisational structure requires a proper attention and supervision. Therefore,
an organisation needs to be very careful while determining its structure because an inappropriate
organisational structure may hamper the completion of organisational goals and objectives. The
different types of organisational structures are as follows:
 Line structure
 Line and staff structure
 Functional structure
 Divisional structure
 Project structure
 Matrix structure
Let us understand these structures in detail:
 Line organisational structure: This is an organisational structure in which there is a single line
of command. In other words, in line organisational structure, the orders and approvals take place
from top to bottom in a line. This type of structure is informal in nature and is generally used in
small-scale organisations. The line organisational structure is also known as scalar, military or
vertical organisational structure. In addition, in the line organisational structure, the decision-
making process is easy and simple.
Figure 5 shows line organisational structure:

President

Vice-President
(Production)

Plant Manager

Foreman A Foreman B Foreman C

Workers Workers Workers

Figure 5: Line Organisational Structure

 Line and staff organisational structure: This is an organisational structure in which the flow of
information is from top to bottom in a line and staff members support line managers. For example,
the production manager (line employee) is directly responsible for the production of goods, while
the quality manager (staff member) checks and ensures the quality of goods that are produced.

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Figure 6 shows line and staff organisational structure:

Figure 1
Line-and-Staff Organization

President Line Authority

Staff Authority

Legal Advisor

Vice-President Vice-President Vice-President

Sales Production Finance

Production Production Department Department

Supervisor Supervisor Head Head

Figure 6: Line and Staff Organisational Structure

 Functional organisational structure: This is an organisational structure in which the individuals
with similar functional areas or skills are grouped in separate units. These separate units are
directly controlled and co-ordinated by the top management of the organisation. For example,
in organisational structure, the human resource personnel are responsible for recruiting, hiring,
appraising and training and development. On the other hand, the accounting personnel handle
all the financial activities of the organisation. The functional organisational structure is suitable
for large-scale organisations having a limited number of products. Figure 7 shows functional
organisational structure:

President

Finance Marketing Manufacturing

R&D Manager
Manager Manager Manager

Design Accounting Sales Line Supervisors

Customer Production
Development Purchasing
Service Teams

Testing Distribution

Figure 7: Functional Organisational Structure

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 Divisional organisational structure: It is an organisational structure in which an organisation is

divided into different independent or autonomous units. In this structure, the division is made on
the basis of product, market and geographic region of the organisation. Figure 8 shows divisional
organisational structure:

CEO

Division Product Division Product Division Product

X Y Z

R&D R&D R&D

Marketing Marketing Marketing

Finance Finance Finance

Figure 8: Divisional Organisational Structure

 Project organisational structure: It is an organisational structure that texists till the completion
of a particular project. The project organisational structure comprises individuals from different
organisation and assigned tasks temporarily to complete a specified project of the organisation.
Figure 9 shows the project organisational structure:

Chief Executive

Functional Functional Functional Manager of Project

Manager Manager Manager Managers

Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Staff Staff Staff Project Manager

Project B Coordination Project A Coordination

(Grey boxes represent staff engaged in project activities)

Figure 9: Project Organisational Structure

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 Matrix organisational structure: This is also called hybrid organisation structure and is one of the
most complex organisational structures. In this type of organisational structure, employees from
different departments of the organisation temporarily work together to complete a special task or
project. Figure 10 shows matrix organisational structure:

PRESIDENT

R&D MANUFACTURING MARKETING HR FINANCE PROCUREMENT

MANAGER PRODUCT X

MANAGER PRODUCT Y

MANAGER PRODUCT Z

Figure 10: Matrix Organisational Structure

8.3.1 Conditions for the Matrix Structure

Matrix structures are suitable for heavily project-driven organisations, such as construction companies.
These structures have grown out of project structures in which employees from different functions
formed teams until completing a project and then reverted to their own functions.
Each project manager reports directly to the vice president and the general manager. Each project is, in
essence, a mini profit center, and therefore, general managers usually make business decisions.
The matrix-structured organisation also provides greater visibility, stronger governance and more
control in large, complex companies. It is also well suited for development of business areas and
coordination of complex processes with strong dependencies.
Matrix structures pose difficult challenges for professionals charged with ensuring equity and fairness
across the organisation. Managers working in matrix structures should be prepared to intervene via
communication and training if the structure compromises these objectives. Furthermore, leadership
should monitor relationships between managers who share direct reports. These relationships between
an employee’s managers are crucial to the success of a matrix structure.
 Horizontal organisational structure: A horizontal organisational structure is also known as
the flat organisational structure. This structure fits organisations with few levels between upper
management and staff-level employees. Many start-up businesses use a horizontal organisational
structure before they grow large enough to build out different departments, but some organisations
maintain this structure since it encourages less supervision and more involvement from all
employees.
Following are the pros and cons of this structure:
Positive points
 This structure gives employees more responsibility
 This structure fosters more open communication
 This structure improves coordination and speed of implementing new ideas

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Negative points
 This structure can create confusion since employees do not have a clear supervisor to report to
 This structure can produce employees with more generalised skills and knowledge
 This structure can be difficult to maintain once the company grows beyond start-up status
 Virtual networks and outsourcing: Many businesses have all their business services under one roof,
and juggling the multitudes of vendors, subcontractors, freelancers, offsite locations, and satellite
offices can get confusing. A virtual network organisational structure makes sense of the spread of
resources. This structure also describes an internal structure which concentrates more on open
communication and relationships rather than hierarchy.
Let us understand some pros of virtual networks:
 Visualises the complex web of onsite and offsite relationships in organisations
 Allows organisations to be more flexible and agile
 Give more power to all employees to collaborate, take initiative and make decisions
 Helps employees and stakeholders understand workflows and processes
Let us understand the cons of virtual networks:
 Can quickly become overly complex when dealing with lots of offsite processes
 Can make it more difficult for employees to know who has the final say

8.3.2 Factors Impacting Organisation Structure

Organisation’s strategy, technology, human resource, task, etc., are some factors that impact
organisations structure. While designing an organisation structure following factors must be kept in
mind:
1. Organisation’s strategy: Strategy is the course of action to direct organisational activities keeping
in mind the actions of competitors. Organisations strategy makes plans to coordinate human and
physical resources to work towards a common objective. Strategy is prerequisite to organisation
structure and also follows it.
2. Technology: The technology for manufacturing goods and services also affects the organisation
stricture. In case of mass production technology, mechanistic organisation structure is more
appropriate, while in case of continuous production or small-scale production technology, the
appropriate form is organic structure. This is because mass production technologies involve
standardisation and specialisation of work activities and continuous or unit production technologies
require low levels of standardisation and specialisation.
3. People: Organisation structure defines work, groups it into departments and appoint people to
run those departments. People at different jobs must possess the skill, knowledge and efficiency to
accomplish the related tasks.
4. Tasks: Activities performed by people who transform organisational plans into reality are known as
tasks. Various task characteristics are:
 Skill variety (creativity, variety of skills and talents required to do a task)
 Task identity(Whether to produce a product in whole or in parts)
 Task significance(importance of task)

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 Autonomy (the extent to which a person enjoys the freedom of performing various job activities)
 Feedback (information people receive about the successful completion of their task)
5. Decisions: Questions like who makes decisions-top managers or lower-level managers, how
information flows in the organisation so that decision-making is facilitated, affect the organisation
structure.
6. Informal organisation: Social and cultural values, religious beliefs and personal likes and dislikes of
members which form informal groups cannot be overlooked by management.
7. Size: when an organisation increase in size, the need for job specialisation, standardisation and
decentralisation also increases and organisations are structured accordingly.
8. Environment: Organisation structure cannot ignore the effects of environment. Organisations
must adapt to the environment, respond to incremental opportunities and satisfy various external
parties such as customers, suppliers, layout unions, etc.
9. Managerial perceptions: Organisations where top managers perceive their subordinated as active,
dynamic and talented entrepreneurs, prefer the organic form of structure, If they hold a negative
opinion about their subordinates, they prefer mechanistic organisation structure.

8.3.3 Applications of structural design and Symptoms of Structural Deficiency

A small organisation would be benefitted from a flat organisational structure. Flat structure allows open
communication and collaboration. The large organisation requires a vertical organisational structure.
Matrix structures are good for heavily project-driven organisations. Flat structure removes barriers
to achieving rapid change and constant innovation—two necessary factors for small business success.
A larger organisation relies on systematic work, rigid rules and procedures which may benefit from
a functional or divisional organisational structure that includes multiple layers of management. This
type of organisational structure provides greater accountability and oversight to cut down on risk.
Symptoms of structural deficiency are:
 Mismatched hierarchies
 Unclear roles and responsibilities
 Poor communication
 Conflicts
 Outdated processes and systems

Conclusion 8.4 CONCLUSION

 An organisation is composed of system, style, values, structure, human resource, etc.

 Organisation structure is the framework of an organisation, which includes various departments,
such as human resources, marketing and finance.
 The organisational structure varies on the basis of organisational objectives and strategies selected
to achieve them.
 Information sharing is defined as a linking concept between organisational and information sharing
structures.

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 Task characteristics, technological interdependency, work teams, and networked structures of

organisations determine information-sharing requirements.
 Vertical information sharing refers to communication in which the information or messages flows
between or among the subordinates and superiors (upward and downward) of the organisational.
 Horizontal information sharing refers to information sharing among people at the parallel or same
level, position, rank or status people of the organisation.
 Reporting relationships are defined as an organisation structure in which every employee is placed
somewhere on an organisational chart. The employees report to the employee who is listed above
them on the organisational chart.
 There are four types of reporting relationships:
1. Functional reporting relationships
2. Direct and indirect reporting relationships
3. Dual reporting relationships
 Departmentalisation is the process of grouping activities into departments. Division of labour is the
main idea behind departmental grouping options.
 Structural alignment refers to a form of sequence alignment which is based on the comparison of
shape.
 The different types of organisational structures are as follows:
 Line structure
 Line and staff structure
 Functional structure
 Divisional structure
 Project structure
 Matrix structure
 A horizontal organisational structure is also known as the flat organisational structure. This
structure fits organisations with few levels between upper management and staff-level employees.
 A virtual network organisational structure makes sense of the spread of resources.
 Organisation’s strategy, technology, human resource, task, etc., are some factors that impact
organisations structure.

8.5 GLOSSARY

 Authority: The legitimate control over organisational processes and subordinates within the span
of an individual’s management
 Co-ordination: Linking all activities in such a manner that a network is established in the way that
tasks are carried to perform a particular job
 Departmentation: The process of dividing organisations in various departments.
 Monitoring: Act of observing and keeping a track of activities taking place at a particular place and
time.

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8.6 CASE STUDY: TAKING OVER OF MOTOROLA BY GOOGLE

Case Objective
This case aims to describe the strategy implemented by Google for taking over Motorola.
Google Inc’s biggest deal ever, acquiring Motorola Mobility Holdings Inc for $12.5 billion, was an
attempt to buy insurance against increasingly aggressive legal attacks from rivals such as Apple Inc.
The acquisition of one of the mobile telecommunications industry’s most storied names is Google co-
founder Larry Page’s boldest move since taking over as CEO in April, launching the Internet giant into a
lower-margin manufacturing business and pitting it against many of the 38 other handset companies
that now use its Android software.
The split of Motorola Motorola Inc was split this year into two: Motorola Mobility, which got the faster
growing cellphone and TV set-top box businesses; and Motorola Solutions, which sells gear like walkie-
talkies to corporate and government clients. Google is paying a massive 63 per cent premium to gain
access to one of the mobile phone industry’s largest patent libraries. The company had been under
pressure to build a patent portfolio after losing out to Apple, Microsoft Corp and others in a recent
auction of bankrupt Nortel’s assets. Unlike the Nortel deal and others, the fact that Google avoided
having to compete in an auction for Motorola by engaging in exclusive negotiations for the company
underscores the pressure it was under to bolster its patent portfolio. Paying such a rich premium even
though it was the only buyer dovetails with analysts’ view that the increasingly litigious posture its
competitors have taken over intellectual property left the Internet search giant with no choice but to
pay up.
“No matter how you think about this, you have to look at it through the spectrum of the Android
ecosystem under incredible attack from an IP (Intellectual Property) perspective. And this is Google
going out and trying to fix that, said W.P. Stewart, Advisor’s Chief Investment Officer Jim Tierney. “The
biggest implication here is that Google wants Android to be one of the dominant phone operating
systems for years to come.” Wall Street quickly anointed Microsoft a winner in this deal, with Windows
benefiting should the move spur current Android partners to explore other options. The deal also stoked
speculation that struggling Nokia and Research in Motion would become takeover targets themselves,
sending Nokia’s shares up 17.35 per cent and RIM’s up 10.3 per cent. Google made its first foray into
hardware by co-developing the Nexus One phone with HTC in 2010 — an effort that met mixed results.
Monday’s deal, however, could mark the start of a shift to an Apple-style model, integrating mobile
hardware with underlying software. “Google decided to cross the Rubicon on the device side,” said
Fred Huet, head of telecoms and media consultancy Greenwich Consulting. “There has been growing
frustration (at Google) about the lack and speed of the Internet-centric devices. “With Nexus, they tried
to show the industry what they thought was the right evolution for handsets and it did not have an
impact. With the patents, they make sure that Android stays strong.” The acquisition is likely to draw
even closer regulatory scrutiny than usual, with the search leader already the subject of anti-trust
inquiries. Experts will want to review how it affects mobile industry competition. But the deal — which
took Wall Street by surprise — appears to mark a shift in strategy from Google’s traditional Internet
search and advertising empire and forays into video and social networking. “The danger is that other
handset makers feel disenfranchised,” said Nomura Securities global technology specialist Richard
Windsor. “Motorola is the weaker player. This could actually collapse the entire community.” Page, who
also launched the ambitious Google+ social network since taking over as CEO, reassured investors on
Monday this would not happen, saying Motorola will be run as a separate company licensing Android

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software in the same way as rivals like HTC Corp and LG Electronics. Phone makers including Samsung
officially said they welcomed a deal that will aid their own legal battles, but some analysts questioned
the sincerity of those claims, noting that rival companies would now be unlikely to promote Android
heavily since it would benefit a direct competitor. Andy Lees, president of the Windows Phone Division at
Microsoft, said in a statement that, “Investing in a broad and truly open mobile ecosystem is important
for the industry and consumers alike, and Windows Phone is now the only platform that does so with
equal opportunity for all partners.” Some analysts also doubt that Google will continue manufacturing
handsets in the long term.” We don’t think they necessarily want to be in the handset business. They
want those patents first and foremost,” said Brian Pitz, an analyst at UBS. “This is really a game of
protection.”

Google’s Strategy
Analysts say that Google’s rivals are likely to continue to enforce their patent rights on mobile devices
through legal means. Microsoft, for instance, recently settled a lawsuit with HTC over the Taiwanese
company’s Android devices. Oracle is also seeking billions of dollars from Google for infringing on Java
patents. Analysts expect Apple to continue its increasingly effective patent war against its rivals as
well, which could hurt Google by potentially raising licensing costs that need to be paid to Apple. While
Apple’s iPhone leads in market prestige and is considered more innovative, Android has managed to
quietly surpass it in market share. Android held a 43.4 per cent share of the smartphone market at the
end of the second quarter, ahead of Nokia’s 22 per cent, according to Gartner data. Apple ranked third
with 18 per cent, the data showed.

The Takeover Deal

As part of the deal, Google also gets Motorola’s set-top box businesses, giving its nascent TV operation
a much-needed boost by providing it with a more direct route into the home. Bernstein analyst Craig
Moffett noted that Google, a frequent disrupter of the pay-television market via its ownership of
YouTube and launching of over-the-top TV products that allow consumers to get streaming video in the
home, will now be one of its largest suppliers.” It will be fascinating to see whether this tempers their
enthusiasm for disruptive business models as they have to face the practical realities of satisfying their
cable customers,” said Moffett. “I think the cable industry would be delighted to see Google inside the
tent,” Google said it expects the deal to close by the end of 2011 or early in 2012, and that it was confident
it would gain the regulatory approvals required in the United States and Europe and the blessing of
Motorola Mobility’s shareholders.
It’s always “go big or go home” when it comes to Google – this is especially true of their most recent
announcement that they are going to acquire Motorola Mobility for $12.5 billion in cash. This is Google’s
biggest acquisition till date and the impact this kind of deal will have on the future of mobility should
not be underestimated.
The takeover is likely to boost Google’s increasing dominance in the budding smartphone and tablet
computer market.

Conclusion
According to Google’s CEO, Larry Page, “Motorola Mobility’s total commitment to Android has created a
natural fit for our two companies. Together, we will create amazing user experiences that supercharge

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the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to
welcoming Motorolans to our family of Googlers.” Andy Rubin, Senior Vice President of Mobile at Google,
said, “We expect that this combination will enable us to break new ground for the Android ecosystem.
However, our vision for Android is unchanged and Google remains firmly committed to Android as
an open platform and a vibrant open source community. We will continue to work with all our valued
Android partners to develop and distribute innovative Android-powered devices.” Google pretty much
plans to supercharge the Android ecosystem. What this gives Google is the power to streamline- from
hardware to software, to connections they need with developers. Building phones from the ground is
nothing but a warm-up.

Questions
1. Discuss the Google Inc’s deal of acquiring Motorola Mobility Holdings Inc.
(Hint: Google Inc’s biggest deal ever, acquiring Motorola Mobility Holdings Inc. for $12.5 billion, was
an attempt to buy insurance against increasingly aggressive legal attacks from rivals such as Apple
Inc.)
2. Comment on the strategies of Google and its rivals.
(Hint: Analysts say that Google’s rivals are likely to continue to enforce their patent rights on mobile
devices through legal means. Microsoft, for instance, recently settled a lawsuit with HTC over the
Taiwanese company’s Android devices)
3. Explain corporate restructuring.
(Hint: Reorganising the operations and activities of an organisation, using either internal techniques
or external techniques)

8.7 SELF-ASSESSMENT QUESTIONS

A. Essay Type Questions

1. Define organisation structure.
2. Explain the concept of reporting relationships.
3. What are the types of organisation structure?
4. Explain the factors impacting organisation structure.

8.8 ANSWERS AND HINTS FOR SELF-ASSESSMENT QUESTIONS

A. Hints for Essay Type Questions

1. Organisational structure is an outline that determines the level at which the roles and responsibilities
are delegated to individuals to fulfil the goals of an organisation. In other words, it is a hierarchy
in which a group of people coordinate with each other to accomplish the common goal of the
organisation. Refer to Section Concept of Organisation Structure
2. Reporting relationships are defined as an organisation structure in which every employee is placed
somewhere on an organisational chart. The employees report to the employee who is listed above
them on the organisational chart. Refer to Section Concept of Organisation Structure

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Organisational Behaviour and Human Resources Management

3. The different types of organisational structures are as follows:

 Line structure
 Line and staff structure
 Functional structure
 Divisional structure
 Project structure
 Matrix structure
Refer to Section Types of Organisation Structure
4. Organisation’s strategy, technology, human resource, task, etc., are some factors that impact
organisations structure. While designing an organisation structure following factors must be kept
in mind:
1. Organisation’s strategy: Strategy is the course of action to direct organisational activities
keeping in mind the actions of competitors. Organisations strategy makes plans to coordinate
human and physical resources to work towards a common objective. Strategy is prerequisite to
organisation structure and also follows it.
2. Technology: The technology for manufacturing goods and services also affects the organisation
stricture. In the case of mass production technology, the mechanistic organisation structure
is more appropriate, while in the case of continuous production or small-scale production
technology, the appropriate form is organic structure.
3. People: Organisation structure defines work, groups it into departments and appoint people to
run those departments. People at different jobs must possess the skill, knowledge and efficiency
to accomplish the related tasks.
4. Tasks: Activities performed by people who transform organisational plans into reality are
known as tasks.
Refer to Section Types of Organisation Structure

@ 8.9 POST-UNIT READING MATERIAL

 https://www.youtube.com/watch?v=fJ4hOaLQF-Q
 https://www.youtube.com/watch?v=ORuNA6Lghpo

8.10 TOPICS FOR DISCUSSION FORUMS

 Discuss the concept of Merger and Joint venture.

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