MGCR 222, 17 - Organizational Structure

What is organizational structure

The external environment consists of

External Environment (def)

Events and conditions surrounding an organization that influences its activities

Open system concept

Components of the external environment

The general economy

Customers

Suppliers

Competitors (who is or could support your business)

Social/Political Factors

Technology

Labour supply

Environmental uncertainty

When the external environment is vague, difficult to diagnose, and unpredictable.

How to use organizational structure as a strategic response

By making a change in the organizational structure

How to organize your structure based on:

Uncertainty environments

Fast-changing environments

Impact of rigid roles

What is critical

Rapid adaptation

Quick information flow

Limit responsiveness

Flexibility and speed

Organizational Structure describes

How members are accepted

How leadership is chosen

How decisions are made

Two basic dimensions of division of labor

Vertical and Horizontal

Why must labor be devided and what must it be once divided

Because individuals have physical and intellectual limitations

It must be coordinated to achieve organizational effectiveness

Vertical Division of Labor

Focuses on authority and decision-making

Defines the chain of command

Key themes: autonomy, control, communication

Horizontal division of labor

Breaks down work into specific roles

Groups similar jobs into departments

Specializes people based on skills or functions

Connects to job design and the org’s purpose

How to summarize the structure of organizations

Span of control

Flat vs tall

Formalization

Centralization

Complexity

Departmentation

How jobs are grouped

2 types: functional and divisional

Functional Departmentation

Very efficient when there’s one product, serving one market, dealing with one type of customer.

Jobs are grouped based on similar skills or responsibilities

Divisional Departmentation

When you have more than one product, market, or type of customer

Departments are grouped based on geography, product type, market, etc. (major dimensions of the business)