Introductory Concepts

 Chapter 8 describes a variety of approaches to

subdividing work at the organizational and unit levels.
 Structure is the hard side of organizations.
 Culture and change are the soft side of organizations.
 Topics of structure, culture, and change are vital to
understanding organizations.
Principles of Organization in
a Bureaucracy
1. Hierarchy of authority (organizational units
controlled by a higher one)
2. Unity of command (subordinates receive assigned
duties from one superior, and only accountable to
that superior)
3. Task specialization (each organizational unit and
each employee concentrates on one function)
Principles of Organization in a
Bureaucracy, continued

4. Responsibilities and job descriptions (each employee

has precise job description; policy and procedure
manuals kept current and accessible)
5. Line and staff functions (line deal with primary
outputs of firm, staff deals with support activities,
and advise line units)
Advantages of a Bureaucracy

 Allows for high level of accomplishment.

 Workers know who is responsible for what, and
whether they have the authority to make a given
decision.
 Facilitates vertical integration, allowing for control of
product development, manufacturing, and distribution.
 Prevents problem of workers not having enough
direction.
Disadvantages of a
Bureaucracy
 Can be rigid in handling people and problems.
 Rules and regulations can lead to inefficiency, such as
getting approvals.
 High frustration often caused by red tape (tight
procedures that must be followed).
 Slow decision making because layers of approval are
necessary.
Functional
Departmentalization
 Departments are defined by functions each one
performs (e.g., accounting).
 Well suited for large-batch processing and for
specialization.
 Can have problems due to its size and complexity.
 People within unit may not communicate well with
workers in other units (functional silo problem).
Geographic
Departmentalization
 Departments are arranged according to geographic
area or territory served.
 A natural unit in global business, such as Honda of
America.
 Allows for decision making at local level.
 Can lead to high costs because of duplication of effort,
and management may not be able to control local
units well.
Product-Service
Departmentalization
 Departments arranged according to products or
services they provide.
 Makes most sense when product or service has own
unique demands.
 In well-run firm, units cooperate for mutual benefit.
 Some problems with duplication of effort, and control
of separate units.
Modifications of the
Bureaucratic Organization
 Project and Matrix Organization
 Flat Structures, Downsizing, Outsourcing
 Horizontal Structure (Organization by Team and
Process)
 Informal Structures and Communication Networks
 Power Sharing (Chairman and CEO)
 Selection of an Organization Structure
Project and Matrix
Organization
 Projects good for performing special tasks involving
multiple specialties.
 Matrix organization is project structure superimposed
on functional structure.
 Capitalizes on advantages of both.
 Big projects function as mini-companies.
 Project managers borrow resources from functional
departments.