Chapter 10

Designing Adaptive Organizations

Organizing
The deployment of organizational
resources to achieve strategic goals
Division of labor
Lines of authority
Coordination

All organizations wrestle with structural

design and reorganization
Organizing is important because it
follows from strategy
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Organizing the Vertical Structure

Organizing Structure Defines:

The set of formal tasks assigned to
individuals and departments
Formal reporting relationships
The design of the systems to ensure
effective coordination

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Organizing Concepts
Work Specialization is the degree to
which organizational tasks are
subdivided into individual jobs; also
called division of labor
Chain of Command is an unbroken
line of authority that links all
individuals in the organization and
specifies who reports to whom

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Authority, Responsibility,
and Delegation
Authority is vested in organizational
positions, not people
Authority is accepted by subordinates
Authority flows down the vertical hierarchy
Accountability is the mechanism through
which authority and responsibility are
aligned
Delegation is the process managers use
to transfer authority and responsibility
down the chain
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10.1 Sample Organization Chart

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Line and Staff Authority

Line departments
perform primary business
tasks
Sales
Production

Staff departments
support line departments

Marketing
Human Resources
Accounting
Research

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Span of Management
The number of
employees reporting
to a supervisor
Tall Organizations
have more levels and
narrow span
Flat Organizations
have a wide span and
fewer levels
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Less Supervision/Larger
Spans of Control

Work is stable and routine

Subordinates perform similar work
Subordinates are in one location
Highly trained/require little direction
Rules and procedures are defined
Few planning or nonsupervisory
activities
Managers preference
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10.2 Reorganization and

Span of Management

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Centralization and Decentralization

Centralization decision authority is
located near the top of the organization
Decentralization decision authority is
pushed downward to all levels
Factors that influence centralization versus
decentralization:
Change and uncertainty are usually associated
with decentralization
Strategic fit (e.g. customer relationsdecentralize & purchasing-centralize ; global
corp & local touch)
Crisis requires centralization
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11

Departmentalization:
Functional and Divisional

Vertical Functional Approach

Grouping of positions into departments
based on skills, expertise, work
activities, and resource use

Divisional Approach
Grouping based on organizational
output
Product, Program, Business (self-contained
unit)
Geographic oror
Customer-Based
Divisions
Geographic
Customer-Based

Divisions group activities by geography or

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10.4 Functional Versus

Divisional Structures

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10.5 Geographic-Based Global Organization

Structure

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Departmentalization:
Matrix and Team Approach

Matrix combines functional and

divisional approaches
Improve coordination and information
Dual lines of authority

Team approach is a very

widespread trend
Allows managers to delegate authority
Flexible, responsive
FBI & SWAT& SMART
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10.6 Dual-Authority in a
Matrix Organization

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10.7 Global Matrix Structure

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Virtual Network Approach

Extends idea of horizontal coordination
and collaboration
Partnerships
Alliances

Could be a loose interconnected group

i.e. outsourcing (Pfizer outsourcing from
India)

Virtual network structure means that

the firm subcontracts most of its major
functions to separate companies
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10.8 Network Approach to Departmentalization

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10.9 Structural Advantages and Disadvantages

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Organizing for Horizontal Coordination

Companies need more flexibility than

vertical structure can offer
Meet fast-shifting environment
Break down barriers between departments
Need integration and coordination

Lack of coordination and cooperation

can cause information problems
Growing global challenge
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10.10 Evolution of Organization Structures

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Reengineering

or business process
reengineering, is the radical
redesign of business
processes to achieve
dramatic improvements in
cost, quality, service, and
speed
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Task Forces, Teams, and

Project Management

Task Force a temporary

team or committee formed
to solve a specific shortterm problem involving
several departments
Cross-functional Team
furthers horizontal
coordination by including
members across the
organization
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Project
Manager

person
responsible for
coordinating
activities of
several
departments
for the
completion of
a specific
project

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10.11 Project Manager

Relationships to Departments

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Structure Follows Strategy

Businessperformance
performance
Business
is
influenced
by
is influenced by
structure
structure
Strategicgoals
goalsshould
should
Strategic
drivestructure
structure
drive
Structureshould
should
Structure
facilitatestrategic
strategic
facilitate
goals
goals
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10.12 Factors Affecting Organization Structure

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10.13 Relationship of Structural Approach to Strategy

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Structure Fits the Technology

Knowledge, tools, techniques, and activities
should match production activities
Manufacturing firms can be categorized
according to:
Small-batch and unit production (e.g. tailored
clothing, satellites & submarine).
Large-batch and mass production (e.g. automobile,
hand phones, personal computers)
Continuous process production (e.g. chemical plants,
petroleum refineries & nuclear plants).

The technical complexity of each type of firm

differs
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10.14 Manufacturing Technology and Organization

Structure

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