CHAPTER 11

ORGANIZATION STRUCTURE

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 Learning Outcomes
11.1 Discuss the basic elements of organizing.
11.2 Describe the bureaucratic perspective on organizational design.
11.3 Discuss the basic forms of organizational design in the
organization.

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 Introduction
• Competition, convergences and changes in technology are forcing the
organization to look into its organizational structure to be more
flexible in design.
• Organizational structure describes how the total work of the
organization is divided into subunits and how these subunits are
coordinated for the organization’s goals to be achieved.
• These new forms of organizing are highly adaptive and innovative but
require more advances in managerial capabilities to operate
successfully.

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 Basic Elements of Organizing
• Job specialization
• Departmentalization
• Reporting relationship
• Assigning authority
• Coordination

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 Job Specialization
Advantages
• Improvement in productivity.
• Straightforward, faster and efficient due to repetition of the tasks.
• Independent and requires less supervision .

Disadvantages
• Boredom from doing the same job.
• Development and career advancement are limited.

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 Departmentalization
• Functional
• Divisional
i. Product
ii. Customer
iii. Geography (Location)
• Matrix

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 Functional Departmentalization
Exhibit 11.1: Functional Departmentalization

FACTORY
MANAGER

MANAGER OF
MANAGER OF MANAGER OF MANAGER OF MANAGER OF MANAGER OF
HUMAN
PRODUCTION FINANCE SALES ENGINEERING LOGISTIC
RESOURCE

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 Functional Departmentalization
Adapted from: Bateman, T.S. and Snell, S.A. (2014), Management: Leading & Collaborating in a Competitive World . 11th ed. McGraw Hill

Advantages Disadvantages
1. Economies of scale can be realized 1. Focus more on their own goals
2. Effective monitoring of the environment 2. Narrows a worker’s scope of
3. Performance standards better responsibility and reduces
maintained motivation
4. Greater opportunity for specialized
training and skill development
5. Technical specialists are relatively free
of administrative work
6. Decision making and lines of
communication are simple and clearly
understood

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Product Departmentalization

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Customer Departmentalization

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Geographic Departmentalization

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 P r od u ct / C u st om e r / G eo g r a ph i c D ep a r t m en t a l i z a t i o n
Adapted from: Bateman, T.S. and Snell, S.A. (2014), Management: Leading & Collaborating in a Competitive World. 11th ed. McGraw Hill

Advantages Disadvantages
1. Information needs are 1. Duplication of resources
managed more easily 2. Poor exchange of information
2. People have a full-time and coordination across
commitment to a particular different products/services/
product line geographical.
3. Task responsibilities are clear
4. People receive broader
training

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 The Matrix Departmentalization
Adapted from: Bateman, T.S. and Snell, S.A. (2014), Management: Leading & Collaborating in a Competitive World . 11th ed. McGraw Hill

Matrix Design
 An organization composed of dual reporting relationships in which
some managers report to two superiors—a functional manager and a
divisional manager

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 Matrix Organizational Structure
Adapted from: Bateman, T.S. and Snell, S.A. (2014), Management: Leading & Collaborating in a Competitive World . 11th ed. McGraw Hill

Figure 8.5

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 Advantages of a Matrix Design
Adapted from: Bateman, T.S. and Snell, S.A. (2014), Management: Leading & Collaborating in a Competitive World . 11th ed. McGraw Hill

Table 8.2

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 Disadvantages of a Matrix Design
Adapted from: Bateman, T.S. and Snell, S.A. (2014), Management: Leading & Collaborating in a Competitive World . 11th ed. McGraw Hill

Table 8.2

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 Assigning authority
• Delegation
• The assignment of direct authority and responsibility to a subordinate to complete jobs.
• Involves responsibility, authority and accountability

• Centralization and Decentralization

• Degree of decision-making authority that is allocated to the lower levels in an organisation.
Advantages of decentralisation:
1. Allows lower level employees to make decisions
2. Develop employee skills and capabilities
3. Efficient in making business decisions
Disadvantages of decentralisation:
4. Coordination to some extent
5. Different ideas and opinions
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 Reporting relationship
• Chain of Command
• Vertical line of authority that clarifies who reports to whom throughout the organisation.
• Span of Control or Management
• Number of subordinates whom managers can control effectively.
• Factors:
i. Location of business branches
ii. Competencies of workers
iii. Competencies of managers
iv. Value-added of the manager
v. Similarity of jobs
vi. Level of other jobs
vii. Availability of technology
• Tall versus Flat Organization

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Tall Organization

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Flat Organization

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 Tall or Flat Structures?
Advantages Disadvantages
• Tall: more organized and allow • Tall: slow down decision making
more managerial control • Flat: Heavy workload
• Flat: Flexible, employee more
autonomy

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 Coordination
• Structural techniques
• Managing chain of command or hierarchy
• Liaison Roles
• Task Force
• Integrating Departments
• Electronic coordination

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