Presented by: Suhail Gaziani 75 Darshana Shinde 112 Shweta Matta 88 Ritesh Gandhi 72

What is an Organizational Structure?
 Organizational Structure is the system of task, reporting,

and authority relationships within which the work of the organization is done.
 Structure defines the form and function of the

organization’s activities.
 Structure also defines how the parts of an organization fit

together.

Elements of Organizational Structure
Work specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization

Work Specialization
 It is the extent to which the organization’s work is

separated into different jobs to be done by different people.
Advantages Disadvantages Repetitive jobs Reduced job satisfaction Decreases productivity

Efficient use of labor
Reduced training costs Increases productivity

Departmentalization
 Departmentalization refers to the process of grouping

activities into departments.

 Usually, the more specialized the jobs within the organization,

the greater the departmentalization.

Basis of Departmentalization
 Function
 Type of product  Geography  Type of customer  Process

By Function
Plant Manager

Manger Manager Manger Manger Manage Engineering Manufacturing Accounts Personal Purchas

By Type of product
President VP (Lubricants & Waxes) Marketing Planning VP (chemicals)

VP (Fuels)

Supply & distribution
Manufacturing

By Geography

VP (Sales)

Sales Manager Sales Mana Sales Manager Sales Manager esternSouthern RegionEastern Reg Region Northern Region

By Type of customer

Loan Division Retail Loan Commercial Loan Agricultural Loan

By Process

Inspectio Plant Manager packin Cast Press Tube Finishing & Department Department Department Department Shippin Manager Manager Manager Manager Dept Manage

Chain of Command
 It is an unbroken line of authority that

extends from the top of the organization to the lowest level and clarifies who reports to whom.
 It answers questions for employees such as
 “To whom do I go if I have a problem?”  “To whom am I responsible?”.

Span of Control
 Span of control refers to the number of subordinates a

manager can efficiently and effectively direct.
 It is the number of people directly reporting to the next

level

Centralization and Decentralization
 Centralization - The degree to which decision making is

concentrated at a single point in the organization.
 Decentralization - The degree to which decision making is

spread throughout the organization.

Formalization
 It refers to the degree to which jobs within the

organization are standardized.
 It is the extent to which rules and procedures

are followed in an organization.

TYPES OF ORGANIZATIONAL STRUCTURE

SIMPLE

FUNCTIONAL

DIVISIONAL

MATRIX

SIMPLE STRUCTURE
 Low departmentalization  Wide spans of control

 Authority centralized in a single person
 Little formalization  Commonly used by small businesses

Owner
Executive 1 Executive 2 Executive 3

PROS
 FAST

CONS
MORE SUITABLE FOR SMALL ORGANIZATIONS. RELIANCE ON ONE PERSON IS RISKY

FLEXIBLE INEXPENSIVE CLEAR ACCOUNTABILITY

Functional Structure
 Groups employees together based upon the

functions of specific jobs within the organization.

CEO
Accounting and Finance

R&D

Production

Marketing

PROS
Simple to understand with clear lines of command Specified tasks and responsibilities. Staff can specialize in a particular business area

CONS
Interdepartmental conflict Coherence and good communication are particularly hard to achieve between virtually independent functions.

Divisional Structure
 Groups each organizational function into a

division  Divisions can be categorized on geographical basis, market basis, or on product/service basis  Each division has relatively limited autonomy  Parent corporation acts as an external overseer to coordinate and control the divisions

PROS
Encourage team spirit Managers can develop broad skills as they have control of all basic functions

CONS
Risk of duplicating activities which can increase cost and reduces efficiency

Matrix Structure
 Combines functional and divisional departmentalization  Dual lines of authority

PROS
Better cooperation across functions Improved decision making Increased flexibility better customer service

CONS
Two-boss system is susceptible to power struggles
Team meetings in the matrix are time consuming Requirements of adding team leaders can result in increased costs.

Better performance accountability
Improved strategic management

Emerging Organizational Structure
New organizing principles
1.Strong employee involvement 2. Authority based on capability 3. Teams 4.Mindfulness of environments, changes, patterns and themes

Network structure
 It includes linking of numerous separate organizations to

optimize their interaction in order to accomplish a common overall goal.
 Egs-construction companies

Team organization
 No supervisors in the company.

 The team is granted sufficient authority and access to

resources to produce their product
 Team members develop their own process for identifying

and rotating members in managerial roles

Fishnet organization
 Flexible organization design

 Form and reform varied pattern of connection

Learning organization
 Managers do not direct as much as they facilitate

workers.  For a learning organization ‘adaptive learning’ must be joined by ‘generative learning’.  The manager of this type of organization requires high value on communication and a great deal of patience.

Why Do Structures Differ?
Mechanistic Model A structure characterized by extensive departmentalization, high formalization, a limited information network, and centralization.

Organic Model A structure that is flat, uses cross-hierarchical and crossfunctional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.

Mechanistic Versus Organic Models

Why Do Structures Differ?
 Organization Size  Strategy  Technology  Environment

Innovation
Strategy

Strategy
Imitation Strategy CostMinimization

Strategy – Structure Relationship

Innovation
• Organic : Loose Structure

CostMinimization
• Mechanistic : Tight Control

Imitation
• Mechanistic and Organic : Mix of loose with tight properties

Technology
Routine

• Routine technologies are associated with tall, departmentalized structures and formalization in organizations.
Non routine

• Customized Activities

Three- Dimensional Model Of Environment

Bharti Airtel

Tata Motors

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