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Chapter Eight

Organizational Culture, Structure, and Design Building Blocks of the Organization

McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, All Rights Reserved.

What Is an Organizational Culture?

Organizational culture
system of shared beliefs and values that develops within an organization and guides the behavior of its members Also called corporate culture


Four Functions of Organizational Culture

Figure 8.1

Ways Cultures Become Embedded in Organizations

1. 2. 3. 4. 5. 6. Formal statements Slogans & sayings Stories, legends, & myths Leader reaction to crises Role modeling, training, & coaching Physical design


Ways Cultures Become Embedded in Organizations (cont.)

7. Rewards, titles, promotions, & bonuses 8. Organizational goals & performance criteria 9. Measurable & controllable activities 10.Organizational structure 11.Organizational systems & procedures


What is an Organization?
a system of consciously coordinated activities or forces of two or more people For-profit, nonprofit, mutual-benefit


The Organization Chart

Organization Chart
box-and-lines illustration showing the formal lines of authority and the organizations official positions or work specializations


Organization Chart

Example for a hospital

Figure 8.2

Line and Staff

Line have solid lines, staff have dotted lines

Figure 8.3


Basic Types of Organizational Structures

Simple structure
authority is centralized in a single person with few rules and low work specialization

Functional structure
people with similar occupational specialties are put together in formal groups

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Basic Types of Organizational Structures

Divisional structure
people with diverse occupational specialties are put together in formal groups by similar products, customers or geographic regions

Matrix structure
an organization combines functional and divisional chains of command in a grid so that there are two command structures-vertical and horizontal

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Basic Types of Organizational Structures

Team-based structure
workgroups are used to improve horizontal relations and solve problems throughout the organization

Network structure
the organization has a central core that is linked to outside independent firms by computer connections

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Team-based Structure

Figure 8.8
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Mechanistic vs. Organic Organizations

Table 8.1
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Stages in the Life of an Organization

Stage 1: Birth stage the organization is created Stage 2: Youth stage growth and expansion Stage 3: Midlife stage period of growth evolving into stability Stage 4: Maturity stage -organization becomes very bureaucratic, large, and mechanistic

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1. (p. 240) The "social glue" that binds shareholders with the organization's Board of Directors is called organizational culture.
TRUE OR FALSE FALSE Organizational culture is the "social glue" that binds members of the organization together.
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2. (p. 241) Pfizer Pharmaceuticals, with its culture that manages failure and disappointment, and of helping drug researchers live for the small victories in discovering new drugs for various diseases, is an example of an adhocracy.

TRUE An adhocracy culture has an external focus and values flexibility. This type of culture attempts to create innovative products (new drugs) by being adaptable, creative, and quick to respond to changes in the marketplace. Employees are encouraged to take risks and experiment with new ways of getting things done (drug research).
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3. (p. 241) Visible culture consists of values, beliefs, and assumptions. TRUE OR FALSE

FALSE At the most visible level, organizational culture is expressed in observable artifactsphysical manifestations such as manner of dress, awards, myths and stories about the company, rituals and ceremonies, and decorations, as well as visible behavior exhibited by managers and employees.
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4. (p. 243) The pink Cadillac that Mary Kay presents to the best salespeople of its cosmetic line is an example of a symbol.

TRUE FALSE TRUE A symbol is an object, act, quality, or event that conveys meaning to others. The pink Cadillac conveys excellence in personal selling in the Mary Kay organization.
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5. (p. 247) Roberto opened a new restaurant in Miami called Cuban Isle. He wanted to be sure a culture of service and excellence was embedded in his new organization so he posted the values of the organization in the kitchen and in the dining room. Roberto is teaching his organization the culture by this action. TRUE OR FALSE TRUE There are eleven ways that those who found a business and the managers who follow them use to teach the values, beliefs, expectations, behaviors, and business philosophy that constitute the organization's culture. One is making a formal statement of the organization's values as Roberto did.
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