Organizational Design.

Organizational Roles:
• Organizational Roles: The set of task related
behaviors required of a person by his or her
position in an organization.
• For example: In Restaurant, Waiter role is to
provide customers with quick service & Chef’s
role is to provide high-quality meals to
customers consistently and Speedily.
 Vertical & Horizontal Differentiation
• Meaning of Differentiation:
Differentiation is the process by which an
organization allocates people and resources to
organizational tasks and establishes the task
and authority relationships that allow the
organization to achieve its goals.
 VERTICAL DIFFERENTIATION
• It establishes the distribution of authority
between levels to give the organization more
control over its activities and increase its
ability to create value.
• The organization vertically differentiates
organizational roles in terms of the authority
that goes with each role.
 HORIZONTAL DIFFERENTIATION
• It establishes the division of labour, which
enables people in the organization to become
more specialize and productive and increases
the organizations ability to create value.
• The organizational chart horizontally
differentiates roles according to main task
responsibilities.
 The Contingency Approach To
Organizational Design
• A management approach in which the design
of an organization’s structure is tailored to the
sources of uncertainty facing an organization.
• The structure is designed to respond to
various contingencies i.e. things that might
happen & therefore must be planned for.
• One of the most important of these is the
nature of the environment.
The Fit between the Organization and its Environment
Poor Fit

Close Fit

Organization

Environment

Degree of fit
 Why and how vertical differentiation
occurs:?
Why: For deciding how much authority to centralize
at the top of the organizational hierarchy and how
much authority to decentralize to middle and lover
levels is to be given
•For organization decision making and
communication system works
How: designing number of levels of authority with in
an organization
•Providing span of control at each level
Designing organizational structure
• Functional structure: the process of
assignment of one person to a role is the start
of specialization and horizontal differentiation
continues
• The result is functional structure, a design that
groups people on the basis of their common
skills and expertise or because they use the
same same resources
• It’s a bed rock of horizontal differentiation to
achieve the principle goals of an organization
Functional Structure
 Divisional structures
• It is most commonly adopt to solve the
control problems that result from producing
many different kind of products at many
different location for many different types of
clients
• The goal behind the change to a divisional
structure is to create smaller more subunits
within in an organization and to solve
controlling problem in the organization
• Functioning :it functions according to specific
demands of products, market or customers
divisional Structure.
 Types of divisional structures
• Product structure: if the control problem is due
to the number and complexity of the products, the
organization will divide its activities by product and
use a product structure
• It is a divisional structures in which products(goods
or services)are grouped into separate divisions
according to similarities or difefrences
Product Structure
Product division structure: it is a structure in which
a centralized set of support functions service the
needs of a number of different product lines

• This structure is commonly used by food processor,

furniture makers, and the companies that make
personal care products
• increases the horizontal differentiation with in the
organization
• Multidivisional structures:
this structure is for the organization
which produces a wide range of complex
products, such as many car or truck
models
• Managing complex and diverse value
creation activities requires a
multidivisional structures
• When divisions are self contained each
division has its own set of support
funtions and controls its own value
creation activities
 Multi-divisional Structure

Production Manufacturing Goods Fast Food

• Product team structure: in a product team
structure, members of support functions such as
Marketing and R&D coordinates with different
divisions as their services are needed, but heir main
loyalty is to their function not to the division
• Geographic divisional structure: in which
divisions are organized according to the
requirements of the different location in
which an organization operates,Is available
Geographic Structure.
Matrix Structure