Chapter 10

Designing Adaptive Organizations

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 Organizing*
 All organizations wrestle with structural design and
reorganization

The deployment of organizational resources to achieve

strategic goals
 Division of labor
 Lines of authority
 Coordination

 Organizing is important because it follows from

strategy 2
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 Organizing the Vertical Structure*

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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 10.1 - Sample Organization Chart

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 Organizing Concepts*

Work Specialization is the degree to which

organizational tasks are subdivided into individual
jobs; also called division of labor

 Chain of Command is an unbroken line of

authority that links all individuals in the
organization and specifies who reports to whom

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 Authority, Responsibility,
and Delegation
Authority
 Authority is vested in organizational positions, not
people
 Authority flows down the vertical hierarchy
 Authority is accepted by subordinates

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 Authority, Responsibility,
and Delegation
 Responsibility is the duty to perform the task or
activity as assigned
 Accountability is the mechanism through which
authority and responsibility are aligned
 Delegation is the process managers use to transfer
authority and responsibility down the chain

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 Line and Staff Authority

Line departments perform primary business tasks

 Sales
 Production

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 Line and Staff Authority

Staff departments support line departments

 Marketing
 Labor relations
 Research
 Accounting
 Human Resources

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 Line and Staff Authority
 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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 Span of Management
 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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 Span of Management
 Tall structure have more levels and
narrow span
 Flat structure have a wide span and
fewer levels

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 10.2 - Reorganization and
Span of Management

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 Centralization and
Decentralization
 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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 Departmentalization:
Functional and Divisional*
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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 Departmentalization:
Functional and Divisional
 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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 10.4 - Functional versus
Divisional Structures

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 10.5 - Geographic-Based Global
Organization Structure

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 Departmentalization*:
Matrix and Team Approach
 Matrix approach combines functional and
divisional approaches
Improve coordination and information
Dual lines of authority
 Team approach is a very widespread trend
Allows managers to delegate authority
Flexible, responsive

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 10.6 - Dual-Authority Structure in
a Matrix Organization

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 10.7 - Global Matrix Structure

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 Virtual Network Approach
 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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 10.8 - Network Approach to
Departmentalization

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 10.9 - Structural Advantages and
Disadvantages

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 Organizing for Horizontal
Coordination*
 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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 10.10 - Evolution of Organization
Structures

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 Reengineering

 Radical redesign of business processes to achieve

dramatic improvements in cost, quality, service, and
speed

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 Task Forces, Teams, and
Project Management

Task Force – a temporary team or

committee formed to solve a
specific short-term problem  Project Manager –
involving several departments person responsible for
coordinating activities
of several departments
Cross-functional Team – furthers for the completion of a
horizontal coordination by specific project
including members across the
organization

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 10.11 - Project Manager
Relationships to Departments

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 Relational Coordination
 Frequent, timely, problem-solving communication
carried out through [employee] relationships of
shared goals, shared knowledge, and mutual respect.

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 Structure Follows Strategy*
 Business performance is influenced by
structure
 Strategic goals should drive structure
 Structure should facilitate strategic
goals

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 10.12 - Factors Affecting
Organization Structure

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 10.13 - Relationship of Structural
Approach to Strategy

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 Structure Fits the Technology
 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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