MANAGEMENT

ORGANIZING

Human Relations
Why be concerned with organizational structure? 
Organizing follows strategy. Strategy defines what to do; organizing defines how to do it.

ORGANIZING
‡ Tasks are subdivided into individual jobs. ‡ Division of labor concept. ‡ Employees perform only the tasks relevant to their specialized function. ‡ Jobs tend to be small, but they can be performed efficiently. ‡ the development of organizational resources to achieve strategic goals. ‡ Arranging into coherent unity or functional whole. ‡ Alfred D Chandler: ³structure is the design of organizations through which the enterprise is administered.´

resources are deployed. and departments coordinated.Organization Structure ‡ Organizing: the development of organizational resources to achieve strategic goals. ‡ Organization Chart: The visual representation of an organizations structure. . ‡ ‡ Organizational Structure: the framework in which the organization defines how tasks are divided.

INFORMAL ORGANIZATION: a network of interpersonal relationship that arise when people associated with each other.Formal and Informal Organization FORMAL ORGANIZATION: the intentional structure of roles in a formally organized enterprise. Relation don't appear in organizational chart .

‡ Each employee is responsible to report to only one supervisor. .Peters Harcourt. Inc. ‡ Q: Can one person work for multiple employees and have just one supervisor? ‡ A: Yes.‡ Work Specialization ‡ Work can be performed more efficiently if employees are allowed to specialize. ‡ the degree to which organizational tasks are subdivided into individual jobs (division of labor) ‡ Some organizations are moving away from this principal going towards a team approach or allowing workers to develop skills outside of their specialization. ‡ Chain of Command: an unbroken line of authority that links all individuals in the organization and specifies who reports to whom. Developed by Stephen M. Inc. items and derived items copyright © 2001 by Harcourt.

‡ Span of Management ‡ The number of employees who report to a supervisor. ‡ How many employees should report to each manager? ‡ Close supervision requires a small span of control ‡ Less supervision is associated with a larger span of control ‡ In general. items and location ‡ Subordinates are concentrated in a single derived items copyright © 2001 by Harcourt. ‡ Staff Authority: a from of authority granted to staff specialists in their area of expertise. Inc. Inc. also called span of control.‡ Line Authority: a form of authority in which individuals in management positions have the formal power to direct and control immediate subordinates. .Peters Harcourt. the trend toward downsizing has increased the span of control ‡ Work performed by subordinates is stable and routine ‡ Subordinates perform similar work tasks Developed by Stephen M.

Tall vs. ‡ Flat: broad span of control and few levels of hierarchy . Flat ‡ . ‡ Tall: narrow span of management. many levels hierarchy.

Inc.Peters Adapted from Exhibit 7. Inc.Narrow Organizational Structures Tall Organizational Structure Levels = 4 Span of Control = 3 Total Employees = 40 Developed by Stephen M. .4: Tall and Flat Organization Structures Harcourt. items and derived items copyright © 2001 by Harcourt.

Inc.4: Tall and Flat Organization Structures Harcourt. .Peters Adapted from Exhibit 7.Exhibit Tall and Flat Organizational Structures Flat Organizational Structure Tall Organizational Structure Levels = 3 Span of Control = 7 Total Employees = 57 Developed by Stephen M. items and derived items copyright © 2001 by Harcourt. Inc.

items and derived items copyright © 2001 by Harcourt. Developed by Stephen M. Keeps decisions close to the action. Inc. Keeps control at a higher level. .Centralization and Decentralization Centralization: the location of decision authority near top of the organizational levels.Peters Harcourt. Decentralization: the location of decision authority near lower organizational levels. rapid response. Inc.

Inc. . items and derived items copyright © 2001 by Harcourt. Inc.Peters Harcourt.Classical Organizing Theory Developed by Stephen M.

Departmentalization ‡ The basis on which individuals are grouped into departments and departments into the total organization .

Advantages of a Functional Structure Specialization of functional knowledge Less duplication of functional resources Facilitates coordination within functional areas Top manager direct and control Easier for workers to communication and share information Provides for career ladders to reward superior performance through promotion opportunities Disadvantages of a Functional Structure Weak coordination across functional groups Restricted view of overall organizational goals Limited general management training. expertise.Functional Structure ‡ An organizational structure that groups together people who hold similar positions. and resources use. or use the same kinds of skills. perform a similar set of tasks. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ .

Peters Adapted from Exhibit 7.6: Functional Structure Harcourt. Inc. . Inc. items and derived items copyright © 2001 by Harcourt.Functional Structure CEO Vice President Marketing Market research Advertising Promotion Vice President Sales East region South region West region Vice President Manufacturing Purchasing Operations Logistics Vice President Human Resources Recruiting Training Compensation Developed by Stephen M.

10: Geographical/Regional Structure Harcourt. items and derived items copyright © 2001 by Harcourt. Inc.Peters Adapted from Exhibit 7.Geographical/Regional Structure Chief Executive Officer Vice President North America Vice President Europe Vice President Southeast Asia Vice President Latin America Vice President Africa Developed by Stephen M. . Inc.

‡ Strengths: ‡ Facilitates local responsiveness ‡ Develops in depth knowledge of specific regions/countries ‡ Creates accountability by region ‡ Facilitates cross-functional coordination within regions ‡ Weaknesses: ‡ Often creates cross-regional coordination difficulties ‡ Can inhibit ability to capture global scale economies ‡ Duplicates resources and functions across regions .Territory or geography ‡ Grouping of activities by area or territory is common in enterprises operating over wide geographic area.

CUSTOMER GROUP ‡ grouping of activities that reflect a primary interest in customers Strengths ‡ In-depth understanding of specific customers ‡ Responsiveness to changes in customer preferences and needs ‡ Responsiveness to moves by competitors to better serve customers Weaknesses ‡ Duplication of functional resources in each customer unit ‡ Coordination between customer units and corporate objectives ‡ Failure to leverage technology or other strengths in one unit across other units .

Inc. items and derived items copyright © 2001 by Harcourt.Peters Adapted from Exhibit 7. .Customer Structure CEO Vice President Retail Small Mid-size Vice President Industrial Domestic International Vice President Military Army Navy Developed by Stephen M.9: Customer Structure Harcourt. Inc.

Strengths ‡ More focus on products and customers ‡ Easier to evaluate performance of the product ‡ Product responsiveness to market changes ‡ Less burden on the top executive in making operating decisions Weaknesses ‡ Duplication and lack of economies of scale ‡ Problems for customers purchasing across multiple product groups ‡ Conflicts between product group and corporate objectives ‡ Conflict between product groups .PRODUCT Grouping of activities according to product lines.

7: Product Structure Harcourt. . items and derived items copyright © 2001 by Harcourt. Inc. Inc.Peters Adapted from Exhibit 7.Product Structure CEO Vice President Product A Marketing Operations Sales Vice President Product B Marketing Operations Sales Vice President Product C Marketing Operations Sales Vice President Product D Marketing Operations Sales Developed by Stephen M.

Functional hierarchy of authority runs vertically. Divisional hierarchy runs laterally.      . Dual lines of authority. Violates the unity of command concept. An organization structure that utilizes functional and divisional chain of command simultaneously in the same part of the organization Functional and divisional chains of command simultaneously.MATRIX ‡ ‡ An organizational structure that simultaneously groups people by function and by product team.

. items and derived items copyright © 2001 by Harcourt. Inc.Peters Harcourt.Matrix Organization Developed by Stephen M. Inc.

Peters Adapted from Exhibit 7. Inc.Matrix Structure Chief Executive Officer Health NA AP EMEA LA Beauty Cleaning Food Developed by Stephen M.11: Matrix Structure Harcourt. . items and derived items copyright © 2001 by Harcourt. Inc.

maximizes communication and cooperation between team members.Matrix Approach ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Advantages of Matrix Structures More efficient use of resources Development of general and specialist management skills. Enables company to develop new products rapidly. . and promotes creativity and innovation Structure is flexible Disadvantages of Matrix Structures Increases role conflict and role ambiguity Can cause high levels of work stress Individual contributions to team efforts may be hard to identify Opportunities for promotion are limited More discussions and meetings.

 An organization structure that disaggregates major functions into separate companies that are brokered by a small headquarters organization . information technology.  Neither organizational chart nor centrallized building.Network ORGANIZATION  A rather losses concept of a group of independent firms or people that are connected through usually.

items and derived items copyright © 2001 by Harcourt. . Inc.The Virtual Organization Independent R & D Consulting Firm Advertising Agency Executive Group Factories in South Korea Commissioned Sales Representatives Developed by Stephen M. Inc.Peters Harcourt.

Inc. items and derived items copyright © 2001 by Harcourt.Peters Harcourt. Inc.Virtual Network Approach Advantages ‡ Can draw on expertise worldwide ‡ Work force flexibility ‡ Reduced administrative overhead Developed by Stephen M. .

Inc.Network Approach Disadvantages ‡ Lack of control. items and derived items copyright © 2001 by Harcourt.Peters Harcourt. weak boundaries ‡ Greater demands on managers ‡ Employee loyalty weakened Developed by Stephen M. . Inc.

BOUNDERYLESS ‡ An flexible and unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliers. ‡ Removes internal (horizontal) boundaries: ± Eliminates the chain of command ± Has limitless spans of control ± Uses empowered teams rather than departments .

Inc.The Boundaryless Organization Limited Chain of Command Developed by Stephen M.Peters Widened Spans of Control Empowered Employee Teams Harcourt. items and derived items copyright © 2001 by Harcourt. Inc. .

. Inc. Inc. items and derived items copyright © 2001 by Harcourt.Developed by Stephen M.Peters Harcourt.

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