Organizational structures

What is a functional area?

A functional area is a cluster of work requiring similar skills, knowledge, and responsibilities.

What is a department?

A department is a formally recognized unit that groups related work within an organisation.

What are core operations?

Core operations are the departments directly involved in creating and delivering the organisation's product or service.

What are support functions?

Support functions are departments that provide the resources, systems, coordination, and safeguards that allow core work to take place.

What is research and development (R&D)?

Research and development is the functional area that creates and improves products, technologies, features, and production methods.

What is procurement?

Procurement is the functional area that finds, evaluates, negotiates with, and manages suppliers.

What are operations?

Operations is the functional area that transforms inputs into goods or services through production or service delivery.

What is marketing?

Marketing is the functional area that studies customers and competitors and manages positioning, pricing, branding, and communication.

What is sales?

Sales is the functional area that converts customer interest into purchases and manages customer relationships.

What is logistics?

Logistics is the functional area that moves products, information, and inventory through the supply chain.

What is finance as a functional area?

Finance is the functional area that funds the firm, manages budgets and cash, analyses performance, and controls investments.

What is human resources (HR)?

Human resources is the functional area that recruits, develops, evaluates, rewards, and retains employees.

What is information technology (IT)?

Information technology is the functional area that builds and protects digital systems, data flows, and technological infrastructure.

What are legal and compliance functions?

Legal and compliance functions manage contracts, regulatory obligations, litigation, and ethical and legal risks.

What is specialisation?

Specialisation means focusing people or organisational units on a narrower set of tasks.

What is coordination?

Coordination is the process of making specialised people or units work together toward one coherent organisational output.

What are coordination mechanisms?

Coordination mechanisms are the tools an organisation uses to make specialised units work together.

What are the main coordination mechanisms?

The main coordination mechanisms are authority, formalisation, collaboration, and shared understanding.

What is authority as a coordination mechanism?

Authority coordinates work through hierarchy and escalation rules.

What is formalisation as a coordination mechanism?

Formalisation coordinates work through routines, plans, targets, rules, procedures, and training.

What is collaboration as a coordination mechanism?

Collaboration coordinates work through teams and shared data.

What is shared understanding as a coordination mechanism?

Shared understanding coordinates work through common culture and norms.

What is organisational structure?

Organisational structure is the arrangement of relationships among positions within an organisation; it results from assigning tasks and activities and coordinating them.

What choices do managers make when designing an organisational structure?

Managers decide how to group work, allocate authority, coordinate activities, and evaluate performance.

What is departmentalisation?

Departmentalisation is the grouping of jobs into working units, usually called departments, units, groups, or divisions.

What is functional departmentalisation?

Functional departmentalisation groups jobs that perform similar activities or require similar expertise.

What is product departmentalisation?

Product departmentalisation groups jobs according to the organisation's products or product lines.

What is geographical departmentalisation?

Geographical departmentalisation groups jobs according to geographic location, such as a region, country, or continent.

What is customer departmentalisation?

Customer departmentalisation groups jobs around the needs of different types of customers.

What is delegation of authority?

Delegation of authority means assigning tasks to employees and empowering them with a degree of freedom to carry out those tasks.

What is responsibility in delegation?

Responsibility is an employee's obligation to carry out an assigned task satisfactorily.

What is accountability in delegation?

Accountability is an employee's obligation to answer to a superior for achieving the desired outcomes.

What is centralisation?

Centralisation is the concentration of decision-making authority at the upper levels of an organisation.

What is decentralisation?

Decentralisation is the delegation of decision-making authority to lower levels of an organisation.

What does the degree of centralisation indicate?

The degree of centralisation indicates how extensively authority is retained at the top or delegated throughout an organisation.

What is the span of management, or span of control?

The span of management is the number of subordinates who report directly to a particular manager.

What are organisational layers?

Organisational layers are the different levels of management within an organisation.

What is a wide span of control?

A wide span of control exists when a manager directly supervises a large number of employees.

What is a narrow span of control?

A narrow span of control exists when a manager directly supervises only a few employees.

What is formalisation?

Formalisation is the degree to which an organisation standardises work through rules, procedures, training, and other formal systems.

What is a line structure?

A line structure is a simple organisational form in which direct lines of authority extend from top management to employees at the lowest levels.

What is a line-and-staff structure?

A line-and-staff structure combines the traditional authority relationship between superiors and subordinates with specialised staff managers who advise and support line managers.

Who are staff managers?

Staff managers are specialised managers who advise and support line managers; they have authority within their own departments but not over line managers.

Who are line managers?

Line managers are managers in the direct chain of authority who are responsible for the organisation's core operating activities.

What is a multidivisional structure?

A multidivisional structure groups departments into larger divisions or business units based on outputs such as products, customers, or geographic regions.

What is a division in a multidivisional structure?

A division is a relatively self-contained business unit that operates like a mini-firm and is accountable for its own profits.

What is the role of corporate headquarters in a multidivisional structure?

Corporate headquarters sets the vision for the whole organisation and provides central services such as planning, finance, and budgeting.

What is a matrix structure?

A matrix structure overlays output-based departments on function-based departments, creating two or more intersecting lines of authority.

What does dual reporting mean in a matrix structure?

Dual reporting means that an employee works for and reports to more than one manager along different organisational dimensions.

What is a project-based structure?

A project-based structure groups people around a specific project, deliverable, or work stream rather than around permanent departments.

What is organisational culture?

Organisational culture is an organisation's shared values, beliefs, traditions, philosophies, rules, and role models for behaviour.

How does organisational culture coordinate behaviour?

Organisational culture uses shared values, norms, routines, stories, and role models to guide behaviour when formal rules and hierarchy are incomplete.

What is the difference between formal structure and organisational culture?

Formal structure coordinates through reporting lines, roles, procedures, and decision rights, while organisational culture coordinates through shared values, norms, routines, stories, and role models.

What characterises an innovation-oriented culture?

An innovation-oriented culture emphasises experimentation, opportunity seeking, risk-taking, few rules, and low cautiousness.

What characterises a stability-oriented culture?

A stability-oriented culture emphasises predictability, security, and rules.

What characterises a respect-for-people culture?

A respect-for-people culture emphasises fairness and tolerance.

What characterises an outcomes-oriented culture?

An outcomes-oriented culture emphasises action, high expectations, and results.

What characterises an attention-to-detail culture?

An attention-to-detail culture emphasises precision and analysis.

What characterises a teamwork-oriented culture?

A teamwork-oriented culture emphasises collaboration and concern for people.

What characterises an aggressiveness-oriented culture?

An aggressiveness-oriented culture emphasises competition and gives less importance to social responsibility.