You are on page 1of 19



Learning Objective 1
Understand the relationship between organizational structure and culture

Types of organization and associated structures Organizational culture Diagnosing behavioral problems Perception Significance and nature of individual differences Individual Behaviour at work

Types of organization & Associated structures

Organizational structure
Business organizations are characterized by division of labor

This allows employees to specialize in certain roles and

achieve organizational objective The resulting pattern of relationship between individuals and roles constitute what is know as organizational structure Organization structure provides a framework through which communication can happen in an organization The organization should choose a structure that best defines its needs

Good characteristics of Organization Structure

Achieve efficiency in the utilization of resources






performance Ensure accountability of individuals Guarantee co-ordination between the different parts of the enterprise Provide an efficient and effective means of organizational communication Create job satisfaction, including opportunities for progression Adapt to changing circumstances brought about by external and internal developments

Organization chart
Designates the formal pattern of role relationships, and the

interaction between the roles and individuals occupying

those roles Individual authority relationships may be classified as:

Line relationships
Staff relationships Functional relationships Lateral relationships

Line relationship

Occur when authority flows from superior to subordinate, vertically

Staff relationship

They are created when senior personnel appoint assistants who normally have no authority over staff but act as extensions to superiors

Functional Relationships

Are those between specialists (or advisors) and line managers and their subordinates. E.g.. when a specialist provides a common service throughout the organization but has no authority over the users of the service.

Lateral Relationships

Exists between individuals holding equivalent positions. E.g. HODs, section leaders, MDs etc.

Classification of organizations
By function

Associated particularly with departmental structures Individuals responsible for a particular service or product are grouped together Based on geographical criteria By particular skill or method of operation E.g. children, the disabled, the elderly etc.

By product

By location

By common process

By client group

Functional Organization
Managing Director

Production Manager

Marketing Manager

Human Recourse Manager

Finance Manger


Marketing Research


As its name indicates, in this type of structure activities are clustered

together by common purpose or function. E.g. all marketing activities are clubbed together as a common function, typically within a marketing division.

Advantages: Simple in nature Development of function Provide a recognized path for career progress


Likely to create sectional interests

Inter functional rivalry Suitable for single product firms

Organization by Product
Managing Director

Product A

Product B

Product C

Product D

Product E

Production Manager




In case of division of work and the grouping of activities is dictated by the product or service such that each group is responsible for a particular part of the output.

Advantages: Allows an organization to offer a diversified range of products Highly organized


The divisions may become too autonomous

Loss of control and coordination on the part of management

The Divisional Structure

Group HQ (main board)

Group Functions (E.g. Finance) Commercial division (board) Components Davison (board)

Car division (board)

Aircraft Division (board)

A divisional structure is formed when an organization is split up into a number of self-contained business units, each of which operates as a profit center. Such a division may occur on the basis of a product or a market or combination of the two, with

each unit tending to operate along functional or product lines

with certain key functions (e.g. finance, corporate planning etc.), provided centrally usually at company headquarters.

Allows each part to function semi independently in producing and marketing its products Allows the organization to produce products according to local needs. Disadvantages: Conflict of interest between the central and divisional units Tends to become too costly

Matrix Structure
Head of Business School

Head of Marketing

Head of Economics

Head of HRM

Head of corporate strategy

Head of Finance

Course Leader BA Business

Course Leader HND Business Course Leader BA Leisure

A Matrix is an arrangement for combining functional specialization

(e.g. through departments) with structure built around products, projects or programmes. The resulting grid has a two way flow of authority. The member is answerable to both the vertical and

horizontal functional heads.

Advantages: Flexibility Opportunities for staff development Enhanced sense of ownership of a project Customer orientation Coordination of information and expertise Disadvantages: Problem of coordination and control Conflicting loyalties Uncertain line of authority

Project Teams:
A project team is a temporary organization that is established to

fulfill a particular task. Once the task is completed the team is

disbanded. Advantages: High level of customer orientation High level of expertise Help an organization to deal with change

Disadvantages May involve duplication of resources Give rise to logistical and scheduling problems

Virtual Organization

Organizational Culture