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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 organizations 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
HUMAN
RESOURCE

MANAGER OF
PRODUCTION

MANAGER OF
FINANCE

MANAGER OF
SALES

MANAGER OF
ENGINEERING

MANAGER OF
LOGISTIC

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Functional Departmentalization

A d a p t e d f r o m : B a t e m a n , T. S . a n d S n e l l , S . A . ( 2 0 1 4 ) , M a n a g e m e n t : L e a d i n g & C o l l a b o r a t i n g i n a C o m p e t i t i v e W o r l d . 11 t h e d . M c G r a w H i l l

Advantages
1. Economies of scale can be realized
2. Effective monitoring of the environment
3. Performance standards better maintained
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

Disadvantages

1. Focus more on their own


goals
2. Narrows a workers scope of
responsibility and reduces
motivation

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Product Departmentalization

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Customer Departmentalization

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Geographic Departmentalization

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Product/Customer/Geographic Departmentalization

A d a p t e d f r o m : B a t e m a n , T. S . a n d S n e l l , S . A . ( 2 0 1 4 ) , M a n a g e m e n t : L e a d i n g & C o l l a b o r a t i n g i n a C o m p e t i t i v e W o r l d . 11 t h e d . M c G r a w H i l l

Advantages

Disadvantages

1. Information needs are


managed more easily

2. People have a full-time


commitment to a particular
product line

1.
2.

Duplication of resources
Poor exchange of information and coordination across
different products/services/ geographical.

3. Task responsibilities are clear


4. People receive broader
training
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The Matrix Departmentalization

A d a p t e d f r o m : B a t e m a n , T. S . a n d S n e l l , S . A . ( 2 0 1 4 ) , M a n a g e m e n t : L e a d i n g & C o l l a b o r a t i n g i n a C o m p e t i t i v e W o r l d . 11 t h e d . M c G r a w H i l l

Matrix Design

An organization composed of dual reporting relationships in which


some managers report to two superiorsa functional manager and a
divisional manager

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Matrix Organizational Structure

A d a p t e d f r o m : B a t e m a n , T. S . a n d S n e l l , S . A . ( 2 0 1 4 ) , M a n a g e m e n t : L e a d i n g & C o l l a b o r a t i n g i n a C o m p e t i t i v e W o r l d . 11 t h e d . M c G r a w H i l l

Figure 8.5

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Advantages of a Matrix Design

A d a p t e d f r o m : B a t e m a n , T. S . a n d S n e l l , S . A . ( 2 0 1 4 ) , M a n a g e m e n t : L e a d i n g & C o l l a b o r a t i n g i n a C o m p e t i t i v e W o r l d . 11 t h e d . M c G r a w H i l l

Table 8.2

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Disadvantages of a Matrix Design

A d a p t e d f r o m : B a t e m a n , T. S . a n d S n e l l , S . A . ( 2 0 1 4 ) , M a n a g e m e n t : L e a d i n g & C o l l a b o r a t i n g i n a C o m p e t i t i v e W o r l d . 11 t h e d . M c G r a w H i l l

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.
ii.
iii.
iv.
v.
vi.
vii.

Location of business branches


Competencies of workers
Competencies of managers
Value-added of the manager
Similarity of jobs
Level of other jobs
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

Tall: more organized and


allow more managerial
control
Flat: Flexible, employee
more autonomy

Disadvantages

Tall: slow down decision making

Flat: Heavy workload

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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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