Organization

Organizational Structure
Organizational Structure
The vertical and horizontal configuration

of departments, authority, and jobs within
a company.
Organizational Process
The collection of activities that transform

inputs into outputs that customers value.
Chapter 9
Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 1
Departmentalization
Functional
Functional Product
Product
Customer
Customer Geographic
Geographic Matrix
Matrix
1
Chapter 9
Functional Departmentalization
1.1
Chapter 9
Functional Departmentalization
Advantages Disadvantages
 Work done by highly  Cross-department

skilled specialists coordination can be
 Lowers costs through difficult
reduced duplication  May lead to slower
 Communication and decision making
coordination problems  Produces managers
are lessened with narrow
experiences
1.1
Chapter 9
Product Departmentalization
United
United Technologies
Technologies
Carrier
Carrier Chubb
Chubb
Hamilton
Hamilton Otis
Otis
Sundstrand
Sundstrand
Pratt
Pratt&&Whitney
Whitney Sikorsky
Sikorsky
--Administrative services
--Communication & public relations
--Customer service & support UTC
UTCPower
Power
--E-Business
--Engineering
1.2 --etc…
Chapter 9 Adapted from Exhibit 9.4

Product Departmentalization
 Managers specialize,  Duplication of activities

but have broader  Difficult to coordinate
experiences across departments
 Easier to assess work-
unit performance
 Decision-making is
faster
1.2
Chapter 9
Customer Departmentalization
Sprint
Sprint
Corporation
Corporation
Business
Business Consumer
Consumer Local
LocalTelecom
Telecom Sprint
Sprint
Solutions
Solutions Solutions
Solutions Division
Division North
NorthSupply
Supply
U.S.
U.S. Local
Local Local
Local Supply
SupplyChain
Chain
Businesses
Businesses Service
Service Service
Service Integration
Integration
International Long-
Long- Long-
Long- Logistics
International Distance
Distance Distance Logistics
Businesses
Businesses Service Distance Network
Network
Service Service
Service
Wireless Wireline
Wireline&& Distribution
Solutions
Solutions Wireless Wireless
Wireless Distribution
Services
Services Services Centers
Centers
Services
1.3 (Partial Listing)

Customer Departmentalization
 Focuses on customer  Duplication of resources

needs  Difficult to coordinate
 Products and services across departments
tailored to customer  Efforts to please
needs customers may hurt the
company
1.3
Chapter 9
Geographic Departmentalization
Operation
Enterprises
ofOperation
Coca-ColaEnterprises
Territoriesof
Coca-Cola
Territories
1.4
Chapter 9 Exhibit 9.6
Geographic Departmentalization
 Responsive to the  Duplication of resources

demands of different  Difficult to coordinate
market areas across departments
 Unique resources
located close to the
customer
1.4
Chapter 9
Matrix Departmentalization
CitiGroup
CitiGroup International
International
North
North
Global Europe,
Europe,
Global America
America
Consumer Middle
MiddleEast,
East, Asia
AsiaPacific
Pacific
Consumer (excluding
(excluding Africa
Africa
Mexico)
Mexico)
Global
Global
Corporate
Corporate&& Country
Country
Investment
Investment Managers
Managersin in
Bank
Bank Spain,
Spain,UAE,
UAE,
Kenya, etc.
Kenya, etc.
Global
Global
Investment
Investment
Management
Management Country
Country
Managers
Managersin
in
China,
China,Australia,
Australia,
1.5 Smith etc.
etc.
SmithBarney
Barney
Matrix Departmentalization
 Efficiently manage large,  Requires high levels

complex tasks of coordination
 Pool of available  Conflict between bosses
resources  Requires high levels of
management skills
1.5
Chapter 9
Organizational Authority
Chain of Line versus

Command Staff Authority
Delegation
Delegation Degree
Degreeofof
of
of Authority
Authority Centralization
Centralization
2
Chapter 9
Chain of Command
 The vertical line of authority in an organization

 Clarifies who reports to whom
 Unity of command
 workers report to only one boss
 matrix organizations violate
this principle
2.1
Chapter 9
Line versus Staff Authority
 Line authority
 the right to command immediate subordinates
in the chain of command
 Staff authority
 the right to advise but not command others
2.2
Chapter 9
Delegation of Authority
The assignment of direct authority and

responsibility to a subordinate to complete
tasks for which the manager is normally
responsible.
2.3
Chapter 9
2.3
How to be a More
Effective Delegator
1. Trust your staff to be a good job

2. Avoid seeing perfection
3. Give effective job instructions
4. Know your true interests
5. Follow up on progress.
6. Praise the efforts of your staff.
7. Don’t wait to the last minute to delegate.
8. Ask questions, expect answers, assist employees.
9. Provide the resources you would provide if doing
the assignment yourself.
2.3
10. Delegate to the lowest possible level.
Degree of Centralization
 Centralization of authority
 primary authority is held by upper management
 Decentralization
 significant authority is found in lower levels of
the organization
 Standardization
 solving problems by applying rules, procedures,
and processes
2.4
Chapter 9

Organization

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Organization

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Organizational Structure

The vertical and horizontal configuration

The collection of activities that transform

 Work done by highly  Cross-department

Chapter 9 Adapted from Exhibit 9.4

 Managers specialize,  Duplication of activities

Chapter 9 Adapted from Exhibit 9.5

 Focuses on customer  Duplication of resources

 Responsive to the  Duplication of resources

 Efficiently manage large,  Requires high levels

Chain of Line versus

 The vertical line of authority in an organization

The assignment of direct authority and

1. Trust your staff to be a good job

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