Daft11ePPT - Ch10-For Students

© 2014 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1. Organizing the Vertical Structure
2. Departmentalization
3. Organizing for Horizontal
Coordination
4. Factors Shaping Structure
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Organizing is the deployment of organizational
resources to achieve strategic goals
 Division of labor
 Lines of authority
 Coordination
 Organizing is important because it follows from

strategy
 Strategy defines what to do, and organizing

defines how to do it
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The organizing process leads to the
creation of organization structure,
which defines:
 how tasks are divided,
 resources are deployed, and
 departments are coordinated.
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Organizing structure defines:
 The set of formal tasks assigned to
individuals and departments
 Formal reporting relationships
 The design of the systems to ensure

effective coordination
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 Work Specialization is the degree to
which organizational tasks are
subdivided into individual jobs; also
called division of labor.
 Too much specialization leads to
employees being isolated and doing
only a single boring job.
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Chain of Command is an unbroken line of
authority that links all individuals in the
organization and specifies who reports to
whom => Two principles:
 Unity of command means that each
employee is held accountable to only
one supervisor.
 The scalar principle refers to a clearly
defined line of authority in the
organization that includes all employees.
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 The chain of command illustrates
the authority structure of the
organization.
 Authority is the formal and
legitimate right of a manager to
make decisions, issue orders, and
allocate resources to achieve
organizational outcomes.
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Authority is distinguished by three
characteristics:
 Authority is vested in organizational
positions, not people
 Authority flows down the vertical
hierarchy
 Authority is accepted by subordinates
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 Responsibility is the duty to perform the task
or activity as assigned
 Accountability is the mechanism through
which authority and responsibility are
aligned/balanced
 Delegation is the process managers use to
transfer authority and responsibility down
the chain
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Line departments perform primary
business tasks
 Sales
 Production
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Staff departments support line
departments
 Marketing
 Labor relations
 Research
 Accounting
 Human Resources
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 Line authority means that people in
management positions have formal
authority to direct and control
immediate subordinates
 Staff authority is narrower and includes
the right to advise, recommend,
counsel in the staff specialists’ area of
expertise
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 The number of employees reporting to a
supervisor
 Less supervision/larger spans of control
Work is stable and routine
Subordinates perform similar work
Subordinates are in one location
Highly trained/require little direction
Rules and procedures are defined
Few planning or nonsupervisory activities
Manager’s preference
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 Tall structure have more
levels and narrow span
 Flat structure have a wide
span and fewer levels
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 Centralization – decision authority is located
near the top of the organization
 Decentralization – decision authority is
pushed downward to all levels
 Factors that influence centralization versus
decentralization:
Change and uncertainty are usually
associated with decentralization
Strategic fit
Crisis requires centralization
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Basis for grouping positions into
departments and departments into the
total organization
 Vertical functional approach
Grouping of positions into
departments based on skills,
expertise, work activities, and
resource use
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 Divisional approach
Grouping based on
organizational output
Product, program, business
Geographic or Customer-based
divisions group activities by
geography or customer
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 Matrix approach combines
functional and divisional
approaches
Improve coordination and
information
Dual lines of authority
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 The team approach is probably the most
widespread trend in departmentalization.
 The vertical chain of command is a
powerful means of control, but passing all
decisions up the hierarchy takes too long
and keeps responsibility at the top.
 Managers can delegate authority, push
responsibility to lower levels, and be more
flexible and responsive in the competitive
global environment.
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 Cross-functional teams consist of
employees from various functional
departments, responsible to meet as a
team and resolve mutual problems.
 Team members report to their functional
departments, but also to the team.
 These teams provide needed horizontal
coordination to complement existing
functional or divisional structures.
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 Permanent teams are groups of employees
brought together in a way similar to a
formal department. Emphasis is on
horizontal communication and information
sharing because representatives from all
functions coordinate to complete a
specific task.
 Authority is pushed down to lower levels,
and front-line employees are given the
freedom to make decisions and take action
on their own.
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 With a team-based structure, the
entire organization is made up of
horizontal teams that coordinate their
work with customers to accomplish
the organization’s goals
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 Extends idea of horizontal coordination and
collaboration
 Could be a loose interconnected group
i.e., outsourcing
Virtual network structure means that the firm

subcontracts most of its major functions to
separate companies
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 Companies need more flexibility than
vertical structure can offer
Meet fast-shifting environment
Break down barriers between departments
Need integration and coordination
 Lack of coordination and cooperation can

cause information problems
Growing global challenge
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 Radical redesign of business
processes to achieve dramatic
improvements in cost, quality,
service, and speed
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Task Force – a temporary
team or committee formed  Project Manager –
to solve a specific short-term person responsible
problem involving several for coordinating
departments activities of several
departments for
Cross-functional Team – the completion of
furthers horizontal a specific project
coordination by including
members across the
organization
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 Frequent, timely, problem-solving
communication carried out through
[employee] relationships of shared
goals, shared knowledge, and mutual
respect.
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 Business performance is
influenced by structure
 Strategic goals should drive

structure
 Structure should facilitate

strategic goals
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 Knowledge, tools, techniques, and activities
should match production activities
 Manufacturing firms can be categorized
according to:
Small-batch and unit production
Large-batch and mass production
Continuous process production
 The technical complexity of each type of
firm differs
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© 2014 Cengage Learning. All Rights Reserved.

 Organizing is important because it follows from

 Strategy defines what to do, and organizing

 The design of the systems to ensure

Virtual network structure means that the firm

 Lack of coordination and cooperation can

 Strategic goals should drive

 Structure should facilitate

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