4.1 Foundation of Organizational Structure

Organizational structure

Defines how jobs are formally divided, grouped, and coordinated.

Work Specialization

Element of org structure that includes the degree to which tasks in the organization are subdivided into separate jobs.

Departmentalization

Element of org structure that includes the basis by which jobs are grouped together

e.g. by function, by product, by territory, by process and by customer

Chain of Command

Element of org structure that includes an unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom

Authority

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

Unity of Command

states that a person should have only one superior to whom he/she is directly responsible.

Span of Control

Element of org structure that includes the number of employees a manager can efficiently and effectively control

Centralization

Element of org structure that includes the degree to which decision making is concentrated at a single point in the organization.

Formalization

Element of org structure that includes which jobs within the organization are standardized.

Simple Structure

Organizational design that has a low degree of departmentalization, wide spans of control, authority is centralized in a single person and little formalization

Bureaucracy

Organizational design that is characterized by:

• highly routine operating tasks that are achieved through specialization

• very formalized rules and regulation

• tasks that are grouped into functional departments

• centralized authority

• narrow spans of control

• decision making that follows the chain of command.

Matrix Structure

Organizational design that has a dual change of command.

Employees have 2 bosses, their functional department managers and their product managers.

The Team Structure

Breaks down departmental barriers and decentralizes decision making to the level of the work team

Virtual Organization

Usually a small, core organization that outsources major business functions.

Highly centralized with little or no departmentalization.

Boundaryless Organization

Breaks down barriers to external constituencies (suppliers, customers, regulators, etc.) and barriers created by geography.

Mechnaistic Model

extreme model of org design that has:

• Extensive departmentalization

• High formalization

• Limited information network (mostly downward communication)

• Little participation by low-level members in decision making

Organic Model

extreme model of org design that has:
• Has a flat structure

• Uses cross-hierarchical and cross-functional teams

• Has low formalization

• Possesses a comprehensive information network

• Involves high participation in decision making

Innovation strategy

strategy dimension that includes the degree to which an organization introduce major new products or services; strives to achieve meaningful and unique innovations

e.g. Apple Computer

Cost-minimization strategy

strategy dimension that includes tightly controls costs, refrains from incurring unnecessary expenses, and cuts prices in selling a basic product

e.g. Wal-mart

Imitation strategy

strategy dimension that includes try to both minimize risk and maximize opportunity for profit, moving new products or entering new markets only after innovators have proven their viability.

e.g. manufacturers of mass-market fashion goods that imitate

designer styles

Organic

Innovation strategy is “ “; A loose structure; low specialization, low formalization, decentralized

Mechanistic

Cost minimization strategy is “ “: Tight control; extensive work specialization, high formalization, high centralization

Mechanistic and organic

Imitation strategy is “ “: Mix of loose with tight properties; tight controls over current activities and looser controls for new undertakings

Organization Size

large organizations tend to have more specialization, more departmentalization, more vertical levels, and more rules and regulations; size becomes less important as an organization expands

Technology

Describes the way an organization transfers inputs into outputs; What differentiates technologies is their degree of routineness

Routine tasks

Tasks tend to be associated with the presence of rules, manuals, job description and other formalized organization

Nonroutine activities

Tasks that are customized and require frequent revision and updating.

Environment

Includes outside institutions or forces that can affect its performance, such as suppliers, customers, competitors, government regulatory agencies, and public pressure groups

Capacity

Dimension of environment that refers to the degree to which it can support growth

Volatility

Dimension of environment that refers to the degree of instability in the environment

Complexity

Dimension of environment that refers to the degree of heterogeneity and concentration among environmental element