Brand Course for International Students
An organizational structure is the formal framework by which job tasks are divided, grouped, and coordinated.
Organizing, or the process of creating an organization’s structure, is important for managers because an appropriate structure allows employees to effectively and efficiently do their work while accomplishing organizational goals and objectives.
Organizational design is the process of developing or changing an organization’s structure.
The process of organizational design involves about six key elements: -work specialization, departmentalization, chain of command, span of control, centralization/decentralization, and formalization.
Work specialization is dividing work activities into separate job tasks. Most of today’s managers regard work specialization as an important organizing mechanism, but not as a source of ever-increasing productivity. Human diseconomies from division of labor—boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover— that eventually exceed the economic advantages created by work specialization.
6.Describe the ways that managers can departmentalize work activities.
When work tasks have been defined, they must be arranged in order to accomplish organizational goals. This process, known as departmentalization, is the basis by which jobs are grouped. Managers can departmentalize work activities by function, product, geographic area, process, or customer.
Functional departmentalization groups jobs by functions performed. Product departmentalization groups jobs by product line. Geographical departmentalization groups jobs on the basis of geographical region. Process departmentalization groups jobs on the basis of product or customer flow. Customer departmentalization groups jobs on the basis of specific and unique customers who have common needs.
7.Explain cross-functional teams.
Cross-functional teams are work teams composed of individuals from various functional specialties.
8.How is the chain-of-command concept used in organizing?
The chain of command is an unbroken line of authority that extends from the upper levels of the organization to the lowest levels and clarifies who reports to whom.
9.Differentiate authority, responsibility, and unity of command.
Answer
Authority is the rights inherent in a managerial position to tell people what to do and to expect them to do it. Responsibility is the obligation or expectation to perform any assigned duties. Unity of command is the management principle that each person should report to only one manager.
10.Why is span of control important to organizing decisions?
Span of control is the number of employees a manager can efficiently and effectively manage.
The span of control is important because it determines the number of levels and managers in an organization —an important consideration in how efficient an organization will be.
11.Tell the difference between centralization and decentralization.
Centralization is the degree to which decision making is concentrated at upper levels of the organization. Decentralization refers to the degree to which lower-level employees provide input or actually make decisions.
12.Explain how formalization is used in organizational design.
Formalization is the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. Formalization concerns organization’s use of standardization and strict rules to provide consistency and control. Today’s organizations rely less on strict rules and standardization to guide and regulate employee behavior.
13.Describe the differences between mechanistic and organic organizations.
The mechanistic organization is a rigid and tightly controlled structure, whereas the organic organization is highly adaptive and flexible.
Four contingency factors that influence organizational design are strategy, organization size, technology and environmental uncertainty.
15.Explain the relationship between strategy and structure.
An organization’s structure should facilitate the achievement of goals. That is, structure should follow strategy. If the strategy changes, the structure also should change.
16.Tell how organizational size affects organizational design.
Answer
Considerable historical evidence indicates that an organization’s size significantly affects its structure. As an organization grows larger, its structure tends to change from organic to mechanistic. Larger organizations tend to have more specialization, departmentalization, centralization, and formalization, although the size-structure relationship is not linear.
17.Discuss Woodward’s findings on the relationship of technology and structure.
Answer
Technology has been shown to affect an organization’s choice of structure. Every organization uses some form of technology to transform inputs into outputs. Joan Woodward’s study of structure and technology shows that organizations adapt to their technology. An organic structure is most effective with unit production and process production technology. A mechanistic structure is most effective with mass production technology.
18.Explain how environmental uncertainty affects organizational design.
Answer
Environmental uncertainty is the final contingency factor that has been shown to affect organizational structure. The more uncertain the environment, the more flexible and responsive the organization needs to be. Mechanistic organizational structures tend to be most effective in stable and simple environments. The flexibility of organic organizational structures is better suited for dynamic and complex environments
19.When would the simple structure be the preferred organizational design?
The simple structure is most widely used by small businesses in which the owner and the manager are one and the same. It is one with low departmentalization, wide spans of control, centralized authority, and little formalization.
Under a functional structure, management designs an organization based on grouping together similar or related occupational specialties. The divisional structure is one made up of separate units or divisions.
The strengths of the simple structure are its flexibility, speed, and low cost to maintain. Its major drawback is that it’s most effective in small organizations. The strength of the functional structure lies in the cost-saving advantages that accrue from specialization. The biggest weakness is that the organization can lose sight of its best overall interests in the pursuit of functional goals. Also, functional specialists tend to become insulated and have little understanding of what others in the organization are doing. The strength of the divisional structure is that it focuses on results. The major disadvantage is the duplication of activities and resources. Exhibit 10.7 outlines the strengths and weaknesses of each of these traditional organizational designs.
In a team-based structure, the entire organization is made up of work groups or teams that perform the organization’s work.
A matrix structure is a design that assigns specialists from different functional departments to work on one or more projects being led by a project manager. A project structure is one in which employees and the work they do are permanently assigned to projects. Unlike the matrix structure, it has no formal departments that employees return to at the completion of a project; instead, they take their specific skills and capabilities to other work projects.
A boundaryless organization is one whose design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.
A learning organization is one that has developed the capacity to continuously learn, adapt and change.
26.What types of change can managers make in organizations?
The manager’s options for change essentially fall into three categories: structure, technology, and people.