Chapter 15: Foundations of Organizational Structure

Organizational structure

the way in which job tasks are formally divided, grouped, and coordinated.

Work specialization

the degree to which tasks in an organization are subdivided into separate jobs.

Departmentalization

the basis by which jobs in an organization are grouped together.

Chain of command

the unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom.

Authority

the rights inherent in a managerial position to give orders and to expect the orders to be obeyed.

Unity of command

the idea that a subordinate should have only one superior to who they are directly responsible.

Span of control

the number of subordinates that a manager can direct efficiently and effectively.

Centralization

the degree to which decision making is concentrated at a single point in an organization.

Formalization

the degree to which jobs within an organization are standardized.

Boundary spanning

individuals forming relationships outside their formally assigned groups.

Simple structure

an organization structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization.

Bureaucracy

an organizational structure with highly routine operating tasks achieve through specialization, very formalized rules and regulation, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.

Matrix structure

an organization structure that creates dual lines of authority and combines functional and product departmentalization.

Virtual structure

a small, core organization that outsources major business functions.

Team structure

an organizational structure that replaces departments with empowered teams, and that eliminates horizontal boundaries and external barriers between customers and suppliers.

Circular structure

an organizational structure in which executives are at the center, spreading their vision outward in rings grouped by function (managers, then specialists, then workers).

Downsizing

a systematic effort to make an organization leaner by closing locations, reducing staff, or selling off business units that do not add value.

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 cross-functional teams, has low formalization, possesses a comprehensive information network, and relies on participative decision making.

Innovation strategy

a strategy that emphasizes the introduction of major new products and services.

Cost-minimization strategy

a strategy that emphasizes tight cost controls, avoidance of unnecessary innovation or marketing expenses, and price cutting.

Imitation strategy

a strategy that seeks to move into new products or new markets only after their viability has already been proven.

Technology

the way in which an organization transfers inputs to outputs.

Environment

forces outside an organization that potentially affect the organization's structure.

Institutions

cultural factors, especially those factors that might not lead to adaptive consequences, that lead many organizations to have similar structures.