LESSON 4: Organizing

Differentiation in Organizations

Differentiation in Organizations

Involves division of labor and specialization

Division of Labor

Assigning different tasks to different people in the organization

Integration

Collaboration and coordination of different work units/division

Coordination

Procedures that connect the work activities of the different units/divisions of the firm

Structural Mechanisms

Mechanisms that may be devised to increase collaboration and coordination

Organization Structure

System made up of tasks to be accomplished, work moements from one work level to other work levels, reporting relationships, and communication passageways

Vertical, Horizontal, Network

Types of organization structures

Vertical Structure

Structure that clears out issues related to authority rights, responsibilities,a nd reporting relationships

Authority Rights

Legitimate rights of individuals appointed in positions to give orders to their subordinates

Horizontal Structure

Departmentalization of an organization into smaller work units

Horizontal Organization Chart

Selection of independent, usually single-function organizations that work together to produce a product/service

Line Departments

Departments that deal directly with the firm's primary goods and services; responsible for manufacturing, selling, and providing services to clients

Staff Departments

Departments that support the activities of the line departments by doing research, attending to legal matters, performing public relations duties, etc.

Functional Approach

Approach formed based on specialized activities

Divisional Approach

Approach formed based on management of their products, customers, or geographic areas covered

Matrix Approach

Hybrid form of departmentalization; managers and staff report to the functional and divisional manager

Network Structure

Collection of independent, usually single function organizations that work together to produce a product/service

Organizational Design

Way of a management achieves the right combination of differentiation and integration of the organization's operations, in response to the level of uncertainty in its external environment

Traditional, Modern

Organizational design theories

Traditional Theories

Usual, old fashioned ways

Simple, Functional, Divisional

Traditional theories

Simple Organizational Design

Few departments, wide spans of control, big number of subordinates directly reporting to a manager, centralized authority figure, used by companies that start out as entrepreneurial ventures

Functional Organizational Design

Groups together similar/related specialties, utilized and put into practice in an entire organization

Divisional Organizational Design

Separate business divisions/units, parent corporation acts as overseer to coordinate and control different divisions and provide financial and legal support services

Moderm Theories

Contemporary/new design theories

Team, Matrix Project, Boundary-less

Modern theories

Team Design

Organization is made up of work groups/teams

Matrix Project Design

Specialists from different departments work on projects that are supervised by a project manager

Boundary-less Design

Not defined/limited by vertical, horizontal and external boundaries; no hierarchal levels, departmentalization

Virtual Organization Designs

Small groups of full-time employees and outside specialists are temporarily hired to work