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Organizational Design Defined

This document discusses different types of organizational design, including organizational structure, integrating mechanisms, and locus of decision making. It focuses on three common organizational structures: functional structure, which groups members by function; divisional structure, which groups members by products, geographic markets, or customers; and matrix structure, which groups members along two dimensions simultaneously. The document provides examples and compares the advantages and disadvantages of each structure type.

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Piyush Chaturvedi
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26 views18 pages

Organizational Design Defined

This document discusses different types of organizational design, including organizational structure, integrating mechanisms, and locus of decision making. It focuses on three common organizational structures: functional structure, which groups members by function; divisional structure, which groups members by products, geographic markets, or customers; and matrix structure, which groups members along two dimensions simultaneously. The document provides examples and compares the advantages and disadvantages of each structure type.

Uploaded by

Piyush Chaturvedi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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81

Organizational Design
Organizational Design Defined
A plan for arranging and coordinating the activities of
an organization for the purpose of fulfilling its mission
and achieving its goals.
Components of Organizational Design
Overall organizational design is defined by three
primary components:
Organizational structure
Integrating mechanisms
Locus of decision making
82
Figure 8.1 Dimensions of Organizational Design
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Organizational Structure
Defines the primary reporting relationships that
exist within an organization.
The chain of command and hierarchy of
responsibility, authority, and accountability are
established through organizational structure.
Common Forms of Organizational Structure
Functional structure
Divisional structure
Matrix structure



84
Functional Structure: Specialization and
Efficiency
Members of the organization are grouped
according to the particular function that they
perform within the organization.
Appropriate when an organizations greatest source
of complexity comes from the diverse tasks that must
be performed rather than from its products,
geographic markets, or consumer groups.
85
Figure 8.2 Functional Structure
86
Functional Structure
Advantages
Facilitates
specialization
Cohesive work groups
Improved operational
efficiency
Disadvantages
Focus on departmental
versus organizational
issues
Difficult to develop
generalists needed for
top-level management
Only top-level
management held
accountable for
profitability
87
Divisional Structures: Providing Focus
Members of the organization are grouped on the
basis of:
Common products
Geographic markets
Customers served
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Types of Divisional Structure
Product Divisions
For organizations with relatively diverse product lines
that require specialized efforts to achieve high
product quality.
Geographic Divisions
For organizations with limited product lines that either
have wide geographic coverage or desire to grow
through geographic expansion.
Customer Divisions
For organizations that have separate customer
groups with very specific and distinct needs.
89
Product Divisional Structure
Advantages
Enhanced coordination.
Better assessment of manager performance and
responsibility.
Development of generalist managers.
Disadvantages
Managers may lack expertise to operate in wide
geographic areas.
Duplication of resources.
810
Figure 8.3 Product Divisional Structure: Clariant
*Services
Production Services, Supply Chain
Management, Sourcing, ESHA, IT,
International Coordination
**Technology
Intellectual Property, Innovation &
Knowledge Management, New
Business Development
811
Geographic Divisional
Advantages
Allows for focus on specific new markets.
Good structure for growth along geographic lines.
Adaptable to local needs.
Disadvantages
Duplication of product or product/technology efforts.
Coordination and integration are difficult.
May be difficult to manage diverse product lines.
812
Figure 8.4 Geographic Divisional Structure: Canadian National Railway
Company
813
Matrix Structure: A Dual Focus
A structure in which the tasks of the organization
are grouped along two organizational
dimensions simultaneously.
Examples include:
Product/function
Product/geographic region
814
Figure 8.5 Matrix Structure
- Team-Based Structures - entire organization is
made up of work teams
employee empowerment is crucial teams
responsible for all work activity and
performance
complements functional or divisional structures
in large organizations
-allows efficiency of a bureaucracy
-provides flexibility of teams
10-28
- Boundary less Organization - design is not defined by, or
limited to, the horizontal, vertical, or external boundaries
imposed by a predefined structure
strategic alliances break down barriers between the
company and its customers and suppliers
seeks to eliminate the chain of command, to have
limitless spans of control, and to replace departments
with empowered teams
flattens the hierarchy by removing vertical boundaries
horizontal boundaries removed by organizing work
around processes instead of functional departments
10-33
Learning Organization - an organizational mind-set
rather than a specific organizational design
has developed the capacity to continuously adapt
all members take an active role in identifying and
resolving work-related issues
practice knowledge management by continually
acquiring and sharing new knowledge
environment is conducive to open communication
empowered teams are important
leadership creates a shared vision for the future
organizational culture provides sense of community
10-34
Characteristics Of A Learning Organization
Organizational Design
Boundaryless
Teams
Empowerment
Organizational Culture
The
Strong Mutual
Information Sharing
Relationships
Learning
Open
Sense of Community
Timely
Organization
Caring
Accurate
Trust
Leadership
Shared Vision
Collaboration
10-35

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