Overview The dynamic organizational environment has lead to significant structural changes in order to remain in business and gain the competitive edge. In addition, new technological developments is influence much of the change, certainly in the offering of quick and reliable customer service. The topic of organizing is very relevant as a managerial function. This presentation is aimed at: Defining the concept of organizing. Describing the various types of organizational structure. Explaining the connection between structure and strategy
Definition Organization is a social entity that is deliberately structured to achieve a goal. An informal organization is considered as a network of personal and social relationships (alliances, cliques, friendships) that arise as people associate with other people in a work environment. The key in defining an organization is that it has a definite structure for a purpose.
Key terms used in organizational design and structure Work specialization – the degree to which organizational tasks are subdivided into individual jobs. Chain of command – an unbroken line of authority showing who reports to whom. Span of control or span of management – the number of employees reporting to a supervisor. Centralization – the location of decision authority at the top management level. Decentralization – location of decision authority near the lower organizational levels. Departmentalization – grouping individuals into departments and departments into the total organization. Organizational chart – visual representation of the organization’s structure.
Organizational structure There are five approaches to designing an organization: Functional Divisional Matrix Teams Networks Traditional approaches Contemporary approaches
Functional structure Grouping of positions into departments based on similar skills, expertise and resources.
Advantages Disadvantages Facilitates specialization Cohesive work groups Operate efficiently Focuses on department rather than organizational issues Problem in developing generalists needed for top management. Only top management is accountable for profitability, because profit centres usually do not exist. Functional structure
Divisional Structures Divisional structures are grouped on the basis of common products or services, geographic markets, or customers served. Product divisional structure is a structure in which the activities of the organization are grouped according to specific products or product lines. Geographic divisional structure is a structure in which the activities are grouped according to geographic markets served. Customer divisional structure is an organizational structure focused on customer groups. Each region division has the same functional departments
Advantages Disadvantages Focuses on specific product, geographic markets, or customers. Adapt the specific growth strategies Duplicate resources across divisions Difficult to coordinate among divisions. Divisional structures
Matrix An organizational structure that arranges work groups on two dimension simultaneously.
Advantages Disadvantages Focuses on simultaneous goals Develop managerial skills in several directions Complex and difficult to implement with two bosses. Difficult to plan and coordinate matrix
Teams structure The team approach gives managers a way to delegate authority and a means to be more flexible and responsive to the competitive environment. Cross-functional teams – employees from many functional departments are permanently assigned to solve ongoing problems. Permanent team structure – employees working together on a project
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Advantages Disadvantages Maximizes effectiveness of core unit. Can do more with fewer resources Fragmentation; difficult to control systems. Difficult to develop employee loyalty. Success depends on locating resources. Organizing