ORGANIZATIONAL

STRUCTURE
 ORGANI
ORGANIZATION

•An organization
ation is a group of
people who together work to
achieve a common goal.
 ORGANIZATIONAL STRUCTURE

Organizational structure defines how tasks are

 ORGANI
ORGANIZATION

President

Vice President Vice President Vice President

Marketing Sales Production

ger Manager Manager Manager Manager Mana

A Simple Organization
Organi structure
 STRUCTURE?

• Organizational chart displays the structure of th

organization and shows the relationships betwee
organizational members and the ranks of all th
positions in the organization
ation.

• Organizational chart clarifies for each member what the

are supposed to do and who they report to.
 STRUCTURE
• It enables members to know what their responsibilities.

• It frees the manager and the individual workers

concentrate on their respective roles and responsibilities

• It coordinates all organization activities so there is mini

duplication of effort or conflict.
conflict

• It establishes relationship between individuals, groups

departments.
 KEY ELEMENTS FOR DESIGNING TH
ORGANIZATIONAL STRUCTURE
• Work Specialization
• Departmentalization
• Chain of Command
• Span of Control
• Centralization and Decentralization
• Formalization
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE

• To what degree are activities subdivided into

separate jobs?
• Work Specialization (or) Division of Labour
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE

• On what basis will jobs be grouped

together?
• Departmentalization
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE

• To whom do individuals and groups

report?
• Chain of Command
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE

• How many individuals can a manager

efficiently and effectively direct?
• Span of Control
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE

• Where does decision making authority lie?

• Centralization and Decentralization
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE

• To what degree will there be rules and

regulations to direct employees and mangers?
• Formalization
 ORGANIZATIONAL STRUCTURE

Question Answer

To what degree are

Work Specialization (or)
activities subdivided into
Division of Labour
separate jobs?

On what basis will jobs be

Departmentalization
grouped together?

To whom do individuals
Chain of Command
and groups report?
 ORGANIZATIONAL STRUCTURE

Question Answer

How many individuals can

a manager efficiently and Span of Control
effectively direct?

Where does decision Centralization and

making authority lie? Decentralization

To what degree will there

be rules and regulations
Formalization
to direct employees and
 ORGANIZATIONAL STRUCTURE
Work Specialization or Division of Labor:
• The degree to which tasks in an organization are subdivi
into separate jobs.

• It refers to the subdivision of work into separate j

assigned to different people.
people Subdivided leads to
specialization.
 KEY ELEMENTS FOR DESIGNING THE
ORGANIZATIONAL STRUCTURE
rk
cialization
mples:
ry Ford became rich and
ous by building
omobiles on an assembly
, demonstrating that work
be performed more
ently by using a work
ialization strategy.
 ORGANIZATIONAL STRUCTURE
Work Specialization:
• Benefits: Greater Efficiency and Lower Costs.

• Limitations: Over specialization can result in fatigue, p

quality, human feels boredom.
boredom
Departmentalization:
• Departmentalization specifies how employees
their activities are grouped together.

• It involves dividing an organization into differ

departments, which perform tasks according to
departments specializations in the organization.
 STRUCTURE

Forms of Departmentalization:
Departmentalization
1. Functional Departmentalization

2. Product Departmentalization

3. Geography Departmentalization

4. Process Departmentalization

5. Customer Departmentalization
Forms of Departmentalization:
Departmentalization
Functional Departmentalization
• Grouping activities based on functions performed.

Functional
Departmentalization

Production Marketing
Finance Departme
Department Department
Forms of Departmentalization:
Departmentalization
Functional Departmentalization: Example

Hospitals

Intensive
Research Surgery
Care Units
Forms of Departmentalization:
Departmentalization
Functional Departmentalization: Example

Travel
Agency

Ticket Visa Insurance Currency Package

Sales Services Advisors Exchange Tours
Forms of Departmentalization:
Departmentalization
Product Departmentalization:
• Departmentalize jobs according to the type of
products.

Reliance

Jewels Jio Phones Footwear Petroleum

Forms of Departmentalization:
Departmentalization
Geography Departmentalization:
• When a firm is departmentalized on the basis of geography.

Product
Sales

Western Southern Mid Western

Zone Zone Zone
Forms of Departmentalization:
Departmentalization
Process Departmentalization:
• It works for processing customers as well as products. (For Ex, Passport Offices
and Manufacturing Companies)

Receiving
license in RTO

Validation by Processing by
Payment
motor vehicles the licensing
Collection
division department
Forms of Departmentalization:
Departmentalization
Customer Departmentalization:
• Grouping activities on the basis of common customers.

Microsoft

Individual Large Software

Person Corporations Developers
Chain of Command:
• It is a formal line of authority and communication
within the organization.

• It demonstrates who formally reports to whom

within the organization.

• The vertical lines in the chart represent chain of

command.
STRUCTURE
Chain of Command:
• Authority: the rights inherent in a managerial
position to give orders and to expect them to be
obeyed.

• Unity of Command: the concept of unity of

command is that each person on the organization
chart has one manager.
Span of Control:
• The number of subordinates a manager can
efficiently and effectively direct.
direct

• A wide span of control indicates that many people

are reporting to a manager.
manager

• A narrow span of control indicates that only a few

people are reporting to a manager.
Span of Control:
Example below shows a Narrow span of
control of 4 for the marketing manager

Marketing
Manager

Marketing Market Tele sales Customer

Assistant Researcher Supervisor Care Assistan
Span of Control:
Example below shows a wide span of control
of 7 for the marketing manager

Marketing
Manager

Market Tele sales Cus

st. 1 Asst. 2 Asst. 3 Asst. 4
Researcher Supervisor Care A
Span of Control:
• A wide span of control is possible when employees
perform routine jobs, because there is less
frequent need for direction or advice from
supervisors.
• A narrow span of control is necessary when
employees perform complex tasks, because these
employees tends to require more supervisory
decisions and coaching.
Centralization and Decentralization:
Decentralization
• Centralization means the degree to which
decision making is concentrated at a single point in
an organization.

• Decentralization means the degree to which

decision making is spread throughout the
organization.
Centralization and Decentralization:

Nestle food company,, has decentralized marketing

decisions to remain responsive to local markets, but it has
centralized production activities to improve cost
 STRUCTURE
Formalization:
• Formalization means the degree to wh
organizations standardize behavior through ru
procedures, and formal training.
training
• McDonald’s restaurants and most other efficient fast-f
chains typically have a high degree of formalization beca
they rely on standardization of work processes a
coordinating mechanism. Employees have precisely def
roles, how many pickles should be applied and how
each item should be cooked.
cooked
 ORGANIZATIONAL DESIGNS

• Organization design is a process in which manage

develop or change their organization’s structure.

• It is the process of coordinating the key elemen

of organizations in the most appropriate manner.
 ORGANIZATIONAL DESIGNS

• Even the most precisely designed organizations w

face the need to change at one time, adjusting t
the realities of technological change
accidents, company enter new business, whe
they merge with other companies.
companies

• Organization designs must be flexible as well.

 ORGANIZATIONAL DESIGNS

1. The Simple Structure

2. The Bureaucracy
3. The Matrix Structure
4. The Team Structure
5. The Virtual Organization
6. The Boundaryless Organization
The Simple Structure:
• An organization structure characterized by a

• Low Degree of Departmentalization

• Wide Spans of Control

• Authority Centralized in a Single Person

• Little Formalization
The Simple Structure:

Owner

Sales Sales Sales Sales

Cashier
Person Person Person Person
The Bureaucracy:
• Standardized work process.
For Example:
• Banks, where you keep money,
• The department store where you buy clothes.
clothes
e Bureaucracy: The Bureaucracy is characterized by highl
ine operating tasks achieved through
• Specialization

• Very formalized rules and regulations

• Tasks grouped into functional departments

• Centralized authority

• Narrow span of control

• Decision making that follows the chain o

The Matrix Structure:
• An organization structure that creates dual lines
authority and combines functional and produc
departmentalization.

• It is used in advertising agencies, aerospace firms, research an

development laboratories, construction companies, hospita
government agencies, universities, management consulting firm
and entertainment companies.
The Matrix Structure:

x Structure (College of Business Administration)

The Team Structure:

• A structure in which entire organization is mad

up of work teams is known as Team Structure.

• Organizations in which autonomous work teams ar

organized in parallel fashion such that each perform
many different steps in the work process.
The Team Structure:

• Brings together people with different skills i

order to meet a particular objective.

• Teams have the authority to make fin

decisions.
m Structure Example: Project Team Development

Executive Team:
Technical, System Administrator, Training

ocess Team A: Receiving Process Team B: Inspection

aterial, Picking Material,
The Virtual Organization:
• It requires forming alliances with multiple externa
partners

• The essence of the virtual organization is that it

typically a small, core organization that outsource
major business functions::

• Also referred to as modular or network organization

• It is highly centralized, with little or n

departmentalization.
The Virtual Organization: Example

Design
Company

Finance Logistics
Company Company
Core
Company

Sales &
Manufacturing
Marketing
Company
Company
• Textbook is published by McGraw-H
McGraw
Education
• Putting the textbook and suppleme
material together is done by a virtu
team.
• The authors live in Texas, Michigan, and
New York

• The editors work in Illinois

• The text compositors are in India

• Deadlines are coordinated by the MH

The Boundaryless Organization:
• It may be defined as an organization structure that can a
all the barriers.

• The boundaryless organization seeks to

• Eliminate the chain of command,

• Have limitless spans of control, and

• Replaces departments with empowered teams.

The Boundaryless Organization:
The key features of boundary less organization includ
• knowledge-sharing,

• absence of hierarchy and

• bureaucracy.
 ORGANIZATIONAL DESIGNS:
TYPES OF BOUNDARYLESSNESS

• Vertical Boundaries
• Horizontal Boundaries
• External Boundaries
• Geographic Boundaries
 ORGANIZATIONAL DESIGNS:
TYPES OF BOUNDARYLESSNESS

• VERTICAL BOUNDARIES

• It divide management from employees & divide

layers of management from each other.

• Do the different layers communicate effectively

 ORGANIZATIONAL DESIGNS:
TYPES OF BOUNDARYLESSNESS

• HORIZONTAL BOUNDARIES

• It divide divisions & departments within a corporati

from each other.

• Do different functional areas cooperate with

compete against each other ?
 ORGANIZATIONAL DESIGNS:
TYPES OF BOUNDARYLESSNESS

EXTERNAL BOUNDARIES

• It divide a company from others in its value chain.

• How well does a company collaborate with its

customers & suppliers ?
 ORGANIZATIONAL DESIGNS:
TYPES OF BOUNDARYLESSNESS

GEOGRAPHIC BOUNDARIES

• These boundaries are a special form of horizontal

boundary.

• How well does a company cross the national & cultur

boundaries that divide its international operations fro
each other & itself from foreign markets ?