1. DEFINITION:
How job tasks are formally divided, grouped, and coordinated.
2. IMPORTANT FACTORS:
• Work specialization: To what degree are activities subdivided into different jobs?
• Departmentalization: On what basis will jobs be grouped together?
• Chain of command: To whom do people report?
• Span of control: How many individuals report to a manager?
• Centralization vs. Decentralization: Where does decision-making lie?
• Formalization: To what degree do rules and regulations direct employee behavior?
3. Types of Organizational Structure
Functional
Product
Matrix
Network
4. Functional Organization:
Departmentalization based on the activities or functions performed (e.g., sales, finance)
- Advantage : managers are experts in one particular function
- Limitations:
---may limit innovation and hinder cross-functional projects
---leads to silos
5. Product Organizations:
Departmentalization based on the products (or product lines) produced
- separate divisions established that contain all of the resources necessary to develop, manufacture, and sell a product
- organization is composed of separate divisions, each of which operates independently – “Cost centers”
- Advantage : managers from each division can devote their energies to one particular business
- Limitations:
--- loss of economies of scale because of duplication of resources
--- problems of coordination across product lines may arise
6. Matrix Organizations :
Departmentalization in which a product or project form is superimposed on a functional form
Dual authority - employees report to two bosses, one functional, the other product (project)
Advantages:
- Permits flexible use of an organization’s human resources
- Efficient means of responding to changed environment
- Enhances communication among managers
Limitations:
- frustration and stress due to role ambiguity and role conflict
7. Network organizations :
flexible organization that forms teams specific to each project or task
-Division of labor by knowledge within project
-All managers need to be network entrepreneurs
-Decentralized
-Low stability
-Informal structure important
Advantages:
- highly flexible design
- allows for constant adaptation
- minimal infrastructure or fixed costs
Limitations:
-Jobs and roles ambiguous
-Top executives are responsible but have little control
-Difficult to maintain in a large organization
-Political behavior rampant
8. Mechanistic Versus Organic Structures
9. Structures are related to strategy
10. Interorganizational Design
• Conglomerates – An organization (usually a very large,multinational one) adds an entirely unrelated business or product
- Diversification
- Countercyclical business trends across different industries
- Built-in markets and access to suppliers
• Strategic Alliance - 2 or more separate companies combine forces to develop and operate a specific business
- Each firm contributes its own specialty
- Provide benefits to each individual organization that could not be attained by operating separately
- Gain access to markets in foreign countries
- Share technology, i.e. licensing agreements