Chapter 10

Designing Adaptive Organizations

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 Organizing
 All organizations wrestle with structural
design and reorganization

The deployment of organizational

resources to achieve strategic goals
 Division of labor
 Lines of authority
 Coordination

 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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 10.1 Sample Organization
Chart

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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 flows down the vertical
hierarchy
 Authority is accepted by subordinates

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 Authority, Responsibility,
and Delegation
 Responsibility is the duty to perform the
task or activity as assigned
 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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 Line and Staff Authority

Line departments perform primary

business tasks
 Sales
 Production

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 Line and Staff Authority

Staff departments support line

departments
 Marketing
 Labor relations
 Research
 Accounting
 Human Resources

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 Line and Staff Authority
 Line authority means that people in
management positions have formal
authority to direct and control immediate
subordinates
 Staff authority is narrower and includes
the right to advise, recommend, counsel
in the staff specialists’ area of expertise

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 Span of Management

 The number of employees reporting to

a supervisor
 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
Manager’s preference
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 Span of Management

 Tall structure have more levels

and narrow span
 Flat structure have a wide span
and fewer levels

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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
Crisis requires centralization
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 Departmentalization:
Functional and Divisional
Basis for grouping positions into
departments and departments into the
total organization
 Vertical functional approach
Grouping of positions into departments
based on skills, expertise, work activities,
and resource use.

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 10.3 Five Approaches to
Structural Design

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 10.3 Five Approaches to
Structural Design

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 10.3 Five Approaches to
Structural Design

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 10.3 Five Approaches to
Structural Design

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 10.3 Five Approaches to
Structural Design

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© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Departmentalization:
Functional and Divisional
 Divisional approach
Grouping based on organizational output
Product, program, business
Geographic or Customer-based
divisions group activities by geography or
customer

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 10.4 Functional vs.
Divisional Structure

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 10.5 Geographic-Based
Global Organization Structure

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 Departmentalization:
Matrix and Team Approach
 Matrix approach 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

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 10.6 Dual-Authority Structure
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
 Could be a loose interconnected group
i.e., outsourcing

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

 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  Project Manager –
to solve a specific short- person
term problem involving responsible for
several departments coordinating
activities of
Cross-functional Team – several
furthers horizontal departments for
coordination by including the completion of
members across the a specific project
organization
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 10.11 Project Manager
Relationships to
Departments

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 Relational Coordination
 Frequent, timely, problem-solving
communication carried out through
[employee] relationships of shared goals,
shared knowledge, and mutual respect.

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 Structure Follows Strategy


 Businessperformance
Business performanceisis
influencedby
influenced bystructure
structure


 Strategicgoals
Strategic goalsshould
shoulddrive
drive
structure
structure

 Structureshould
Structure shouldfacilitate
facilitate
strategicgoals
strategic 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
Large-batch and mass production
Continuous process production
 The technical complexity of each type
of firm differs
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