MGT400/420

CHAPTER 4
ORGANIZING
 LEARNING OUTCOMES
• DEFINITION OF ORGANIZING
• THE IMPORTANCE OF ORGANIZING
• THE ORGANIZING PROCESS • THE ORGANIZATIONAL
• THE ORGANIZATIONAL RELATIONSHIPS STRUCTURES/DESIGNS
– ORGANIZATION CHART  TYPES OF
– SPAN OF CONTROL OR DEPARTMENTALIZATION/
MANAGEMENT AND ITS TYPES
– AUTHORITY AND ITS TYPES
DEPARTMENTATION
– LOCUS OF DECISION MAKING  FUNCTION
 CENTRALIZATION VERSUS
DECENTRALIZATION  PRODUCT
– DELEGATION (EMPOWERMENT)  MATRIX
• ITS IMPORTANCE
• REASONS/ADVANTAGES OF  NETWORK
DELEGATION  HYBRID
• MANAGER’S FAILURE TO DELEGATE
• METHODS OF IMPROVING
MANAGER’S DELEGATION SKILLS
 ORGANIZING -DEFINITIONS

1. Organizing is defined as the process 4. Organizing is defined as the

of determining what needs to be done,
how will it be done and who will do process of management which
them. (Norlida and friends) involves the activities like
establishing procedures,
2. Organizing is defined as the process
of determining: developing an organization
structure and providing the
 the tasks to be done
factors necessary to carry out
 who will do them company plans.
 how those tasks will be 5. Organizing is deciding how
managed and controlled best to group organizational
(Lewis) elements (resources) in order
3. The process of arranging people and to achieve organizational
other resources to work together to goals.
accomplish a goal.
Organizing viewed in relationship with the other
management functions.

4
THE IMPORTANCE/BENEFITS/ADVANTAGES OF ORGANIZING
12/16/23
 ADDITIONAL ; THE IMPORTANCE/BENEFITS/ADVANTAGES OF ORGANIZING

12/16/23
 Organizing - additional

12/16/23
THE PROCESS OF ORGANIZING
 organizing process
PLANNING

1.Enterprise objectives Organizing process

2.Identificatio
n
3.Grouping 4.Delegation
And
Classification
Of Of Staffing
activities authorities
Of Leading
activities controlling
The process of organizing
 ORGANIZATIONAL RELATIONSHIPS

• The working relationships that exist within an organization

affect how its activities are accomplished and coordinated.
• These relationships are defined by:
• Organization Chart
• Chain of command
• Span of control
• Authority, responsibility, accountability
• Line and staff authorities

• Centralization and decentralization

• Delegation

12/16/23
 AN ORGANIZATION CHART diagram
An organization chart
• An organizational chart shows the Communi
internal structure of an cation
organization or company in its channels
official state.
• An organization chart is a
diagram describing reporting
relationships and the formal  Division of work – marketing, technology
arrangement of work positions and admin
within an organization.  Supervisory relationship/authority –
• An organization chart identifies president--- marketing, technology and
the following aspects of formal admin
structure:  Communication channels (chain of
command) – the unbroken lines connecting
• The division of work.
the levels of management
• Supervisory relationships.  Major subunits – i.e. – Marketing----
• Communication channels. retail---sales----purchasing
• Major subunits. Technology----- IT -----HRIS
• Levels Admin----- HR-----Accounts/Payroll
of
 Levels of management – President-
management./hierarchy
Supervisors-----asst. supervisors
 Chain of Command and Unity of
Command
CHAIN OF COMMAND UNITY OF COMMAND
The line of authority and
responsibility that flows A principle that each
throughout the organization employee in the
Normally shown in the
unbroken lines connecting organization is
between levels of accountable to one, and
management and
departments and units only one, supervisor

7–14
EXAMPLES OF CHAIN OF COMMAND AND UNITY OF COMMAND
 SPAN OF CONTROL/MANAGEMENT
SPAN OF CONTROL OR
MANAGEMENT
• The number of employees
reporting to a particular
Implications:
manager. • In theory, when tasks are very
• There are two types of span of complex, span of control
control should be relatively narrow.
– Wide span of control followed • In contrast, where jobs are
by flat organizational
structure. The number of highly standardized and
employees reporting to a routine (low complexity), a
manager will be more manager will not need to
– Narrow span of control spend as much time
followed by a tall
organizational structure. The supporting individual
number of employees subordinates, and the span of
supervised by the manager will control may be larger/ wide
be less.
7–16
SPANS OF CONTROL IN “FLAT” VERSUS “TALL”
STRUCTURES.

17
 TALL AND WIDE SPAN OF CONTROL

Narrow span of management

Wide span of management

Source:: Adapted from The Structuring of Organizations by Mintzberg, © 1991. Reprinted by permission of Prentice-Hall, Inc., Upper Saddle River, NJ.
7–18
 Centralization and decentralization – locus of decision making (where
decisions are being made in the organization)

• Centralization
– this is the process of having
responsibility and authority
concentrated in one place so
major decisions are made by
the central controlling body
and little initiative is in the
hands of lower down
management ladder. (top
manager’s decision)
• Decentralization
– Involves delegating
authority to subordinates for
many decisions. Decisions
are made by middle and first
level manager.
Decentralization requires
manager to decide what and
when to delegate, to select
and train personal carefully.
 OTHER DEFINITONS OF CENTRALIZATION AND DECENTRALIZATION

CENTRALIZATION DECENTRALIZATION
• Centralization is the • Decentralization is the
concentration of authority dispersion of authority to
for making most decisions make decisions throughout
at the top levels of the all levels of the organization
organization.

12/16/23
Centralization versus Decentralization in an Organization
 ADVANTAGES AND DISADVANTAGES OF CENTRALIZATION
AND DECENTRALIZATION

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 CENTRALIZATION AND DECENTRALIZATION

12/16/23
 AUTHORITY – RESPONSIBILITY – ACCOUNTABILITY -
DELEGATION
 Authority Accountability
• The formal Responsibility
right • Accountability to the
and Delegation
inherent (built) in an supervisor for results of
organizational position decisions made and actions
to make decisions. taken with delegated
authority.
• Authority can be seen Delegation
also as line, staff and The process of
functional authorities transmuting/transfering the
 Responsibility responsibility for a specific activity
or task to another member of the
• The obligation to organization, or Empowering that
perform the duties individual to accomplish the task
assigned. effectively……
And in delegating you need
authority responsibility and
accountability 7–24
 Line and Staff Departments (Authorities)
• Line Departments • Staff Departments
– Those organizational members
– Those organizational members
that are not directly involved in
that are directly involved in delivering the products and
delivering the products and services to the organization, but
services of the organization. provide support for line personnel.
• Line authority is based on • Staff authority is based on
superior-subordinate expertise in specialty areas –
Legal department, accounts,
relationships and is managerial R&D..
in nature • Provides information, counsel,
• Authority to give orders to advice, and guidance in specialty
subordinates areas and is not managerial in
nature
• The authority to direct
• Their authority is to make
subordinates and require them
recommendations to line
to comply to decisions, policies, organization
plans, and objectives • The recommendations can be
• Generally follows the principle of accepted, rejected, or altered by
unity of command the line organization
7–25
 Functional authority
• The CEO or administrator gives a staff member
special limited right to command
– The right is based on expertise in a specialized
area
– It allows maximum effective use of staff specialists
– It violates the principle of unity of command – the
employees under the manager with this authority
have to answer to two bosses- see matrix
structure.
– i.e.-project manager, event manager
12/16/23
12/16/23
Benefits of Delegation

7–29
 Reasons for Failing to Delegate
 The “time crunch” – (the manager feels they  Adequate resources were not in place. It’s
can do the job faster) difficult to expect someone to complete a task
 Lack of confidence in the abilities of when the leader hasn’t given the proper tools
subordinates. for the job. Sometimes anxious leaders delegate
a project too soon, before the team is ready,
 Managers try to avoid the potential pitfalls of either in structure or in resources.
dual accountability.  The wrong person was chosen for the task.
 Managers may be insecure about their own Let’s face it. Not everyone is up to every task.
value to the organization. Many times when delegation fails because the
leader picked the wrong person for the job.
 There was no accountability provided in the Selecting the best person on the front end or
delegation process. When someone receives a reassigning when an improper fit is discovered is
project, they need to be given a timeline for critical to assure completion of a task.
completion. They need a system of follow up,
 No Confidence in Team Members
measures of accomplishment or benchmarks
Some leaders resist delegation because they don’t have
towards completion. A predetermined win is faith in their team members. If this is true of you, start
clear and understood in healthy delegation. by taking small risks. Early successes will encourage you
to delegate more. Learn to see the potential in your
 The delegate was not properly trained. team and make sure that you have adequately prepared
Assuming someone knows how to do a task and your team members for the tasks you assign. The more
can figure out their way on their own isn’t only prepared they are, the less worried you will be. You are
naive it’s unfair. Questions need to be asked and not the only one that may be wary of delegation. Your
information given on the front end to make sure team members may also have some anxieties of their
the person has the ability to complete the task own. Next, we describe several barriers to delegation
from the members of your team.
or the ability to learn along the way. This may
involve the leader spending more time in the
beginning phases of a task to ensure completion
is attainable by the delegate.

7–30
 Learning to Delegate Effectively • Assign tasks to people who can do the
work. Match tasks with each
 Match the employee to the task. employee's capabilities and
 Be organized and communicate clearly. developmental plan. Encourage people
to take on stretch assignments and
 Transfer authority and accountability provide remediation as necessary. Be
with the task. sure to explain why you assign tasks to
 Choose the level of delegation carefully. certain individuals.
• Create a plan. Analyze repetitive tasks. • Foster a culture of innovation and
Decide what work belongs to subordinates creativity. Encourage employees to
and what role you need to play in order to propose solutions to problems and
ensure their success. Create a empower them to solve issues on their
responsibility matrix to reinforce roles. own, depending on complexity, cost and
Accept that it may take your subordinate business impact.
longer to complete a task at first. Establish • Give people the resources they need to
a long-term plan that allows subordinates solve problems. Provide training on
to develop speed and accuracy. communication and decision making
• Ask subordinates for input. This skills. Improving interpersonal skills
encourages process improvement. Don't enables your employees to function
assume that problems can be solved in a better as a team. Create checklists that
single way. By conducting a help employees troubleshoot problems
root cause analysis, you may find and correct situations on their own
additional considerations and alternative without requiring management 7–31
solutions. intervention.
 Guidelines for effective delegation:
 Carefully choose the person to whom you delegate.
 Define the responsibility; make the assignment clear.
 Agree on performance objectives and standards.
 Agree on a performance timetable.
 Give authority; allow the other person to act
independently.
 Show trust in the other person.
 Provide performance support.
 Give performance feedback
 Recognize and reinforce progress.
 Help when things go wrong.
 Don’t forget your accountability for performance results.

Management - Chapter 10
32
 DEGREE OF DELEGATION

Source: Adapted from M. E. Haynes, “Delegation: There’s More to It Than Letting Someone Else Do It!” 9–15. Reprinted, by permission
of publisher, from Supervisory Management, January 1980. © 1980, American Management Association, New York. All rights reserved.
7–33
How to Organize Successfully - Tips

7–34
 ORGANIZATIONAL STRUCTURES/DESIGNS

12/16/23
 1. Organizational Structure – components of
organizational design –
DEPARTMENTALIZATION/DEPARTMENTATION
• 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.
– Also call departmentalization or departmentation defined as the
process of grouping similar tasks or jobs under one common
department or unit.
• Common Forms of Organizational structures are:
 Functional structure
 Divisional structure – product, customer, geographical
 Matrix structure
 Network structure
 Hybrid structure
8–36
 Functional Structure: aims for Specialization and Efficiency

FUNCTIONAL STRUCTURE
• Members of the
organization are grouped
according to the particular
• Disadvantages
function that they perform
– Focus on departmental versus
within the organization.
organizational issues
• Appropriate when an – Difficult to develop
organization’s greatest generalists needed for top-
source of complexity comes level management
from the diverse tasks that – Only top-level management
must be performed held accountable for
profitability

12/16/23
 EXAMPLES OF A FUNTIONAL
STRUCTURE DEPARTMENTATION

12/16/23
 Divisional Structures: • Product Divisions
Providing Focus – For organizations with relatively
diverse product lines that require
specialized efforts to achieve high
DIVISIONAL STRUCTURE product quality. Contains the
functions necessary to the specific
• Members of the goods or services a product/service
organization are grouped on division produces.
the basis of: • Geographic Divisions
– Common products – For organizations with limited
product lines that either have wide
• PRODUCT DIVISION geographic coverage or desire to
– Geographic markets grow through geographic
• GEOGRAPHIC expansion.
DIVISIONS • Customer Divisions
- For organizations that have
– Customers served
separate customer groups with
• CUSTOMER DIVISIONS very specific and distinct needs.

12/16/23
PRODUCT DIVISIONAL STRUCTURE
Advantages Disadvantages

• Enhanced • Managers may lack

coordination. expertise to operate
• Better assessment of in wide geographic
manager performance areas.
and responsibility. • Duplication of
• Development of resources.
generalist managers.

8–40
 FIGURE 8.3 PRODUCT DIVISIONAL STRUCTURE

PRODUCT LINE

FUNCTIONS

IN ONE ORGANIZATION WE
MAY FIND COMBINATION OF
STRUCTURES
Source: From the website http://www.clariant.com. Copyright by Clariant 2005. All rights reserved.
8–41
 GEOGRAPHICAL DIVISIONAL STRUCTURE

Advantages Disadvantages

• Allows for focus on • Duplication of product or

specific new product/technology
markets. efforts.
• Coordination and
• Good structure for integration are difficult.
growth along • May be difficult to
geographic lines. manage diverse product
• Adaptable to local lines.
needs.
12/16/23
 FIGURE 8.4GEOGRAPHIC DIVISIONAL
STRUCTURE
PRINCIPLE OF UNITY OF
COMMAND -
ANSWER TO ONLY ONE
BOSS

FUNCTIONS

PRODUCT

GEOGRAPHY

Source: “Illinois Central Spurs Reorganization by Canadian National,” Wall Street Journal, 15 April 1999, A4.
8–43
 CUSTOMER DIVISIONAL STRUCTURE

Advantages Disadvantages
• Good structure for • Ineffective and
serving large customer inefficient use of
groups. resources if most
customer groups served
• Helps allocate
are small.
resources to meet
demands of specific • Internal competition for
customer groups. resources to serve
customers groups may
• Best for growth by cause loss of market
targeting new and focus.
distinct groups. 8–44
 CUSTOMER DIVISIONS STRUCTURE

CUSTOMERS/
MARKETS

FUNCTIONS

FIGURE 6–3
Copyright © 2004 Prentice Hall. All
rights reserved.
6–45
 Divisional Organization
for a Pharmaceuticals Company

FIGURE 6–2
Copyright © 2004 Prentice Hall. All
rights reserved.
6–46
12/16/23
 • An organization structure in which
Matrix Structure: A Dual
employees are permanently attached to
Focus – Violates the unity
one department but also simultaneously
of command principle
have on-going assignments (not
permanent by timely basis) in which they
MATRIX STRUCTURE report to project, customer, product, or
• A structure in which geographic unit heads.
the tasks of the • People with similar skills are pooled for
organization are work assignments. For example, all
grouped along two engineers may be in one engineering
organizational department and report to an engineering
dimensions manager, but these same engineers may
simultaneously. be assigned to different projects and
report to a different engineering
• Examples include:
manager or a project manager while
– Product/function working on that project.
– Product/geographic • Therefore, each engineer may have to
region work under several managers8–48
at one time
 FIGURE 8.5 MATRIX STRUCTURE
The principle of unity of command
is violated-
employees have to answer to two
Functional
bosses – product line heads and
managers -
functional managers
permanent

employees
Projects or product heads - temporary
8–49
 MATRIX
ORGANIZATION
DEPARTMENTA-
LIZATION

6–50
 Matrix Structure (cont’d)
Advantages
Disadvantages
• Complex, leading to • Can achieve
difficulties in simultaneous
implementation objectives
• Behavioral difficulties • Managers focus on
from “two bosses”
two organizational
• Time consuming from dimensions, resulting
a in more specific job
planning/coordination skills
perspective
8–51
Types of departmentation/departmentalization/organizational
structures

12/16/23
 NETWORK STRUCTURES:
FLEXIBILITY

NETWORK STRUCTURE
• An organizational structure
that is founded on a set of
alliances with other
organizations that serve a
wide variety of functions.
• An organization that has a
core coordinating with
other organizations or
organizational units.
STABLE/DYNAMIC

8–53
Types of Network Structure

8–54
FIGURE 8.6 NETWORK STRUCTURE (BUILDING CONTRACTOR)

INTERNAL NETWORK

8–55
 Network Structure (cont’d)
ADVANTAGES
DISADVANTAGES

• Maximizes the • Fragmentation makes it

effectiveness of the difficult to develop control
systems
core unit
• Success is dependent on
• Do more with less ability to locate sources
resources • Difficult to develop
employee loyalty
• Flexibility

8–56
 network

12/16/23
TABLE 8.1 POTENTIAL ADVANTAGES AND DISADVANTAGES OF
ORGANIZATIONAL STRUCTURES

8–58
DEPARTMENTALIZATION IN PRACTICE: A HYBRID

6–59
 A Hybrid
Organization

FIGURE 6–7a
Copyright © 2004 Prentice Hall. All
rights reserved.
6–60
 A Hybrid
Organization
(cont’d)

FIGURE 6–7b
Copyright © 2004 Prentice Hall. All
rights reserved.
6–61
2.INTEGRATING MECHANISMS – COMPONENTS
OF ORGANIZATIONAL DESIGN
• Methods for managing the flow of
information, resources, and tasks within the
organization.
• Major categories of integrating mechanisms
are:
General management systems.
Methods of increasing coordination potential.
Methods of reducing the need for coordination.

8–62
 Integration of tasks and duties
coordination

12/16/23
 FIGURE 8.8 INTEGRATING MECHANISMS - coordinatin

Source: Adapted by permission, J. R. Galbraith, “Organizational Design: An Information Processing View,” Interfaces 4
(May 1974): 3. Copyright 1974, The Institute of Management Sciences and the Operations Research Society of America
(currently INFORMS), 2 Charles Street, Suite 300, Providence, RI 02904 USA.
8–64
 General Management Systems
• Some coordination of work units may be
achieved through the development of general
management systems such as:
– The managerial hierarchy
– Rules and procedures
– Plans and goals
• Such mechanisms form the foundation of an
organization’s integration system.
8–65
Increasing Coordination Potential

8–66
 Boundary Spanning Coordination
• Lateral relationships that help to integrate and
coordinate the activities of the organization.
• Examples include:
– Liaisons
– Committees
– Task forces
– Integrating positions
– Inter-functional work teams
8–67
 Reducing the Need for Coordination
• The organization creates “slack resources” (enough
resources for everybody) in which will/ that reduce the
interdependence of the work groups.
• Actions that reduce the need for coordination:
– Longer lead times (longer completion time given to
complete a job or task)
– Larger inventories
– Work units that have only pooled interdependence
(organizational department or business unit performs
completely separate functions rather than depend on one
another)
• As a result, the need for integrating mechanisms is
reduced. 8–68
3. Locus of Decision Making - components of
organizational design – centralization and
decentralization

8–69
 The Impact of Environmental Stability –will influence
the structure design - organic or mechanistic

• Stable Environments
– Environments that experience little change.
• Turbulent Environments
– Environments that are characterized by rapid and
significant change.
• Organizational Design for a Changing
Environment
– An adaptive organization eliminates bureaucracy
limiting employee creativity and brings the decision
makers closer to the customer.

8–70
 Mechanistic vs organic structure

12/16/23
 Types of Interdependence –
coordination
• The type of interdependence between tasks or work units
influences the type of coordination that is appropriate.
– RECIPROCAL (HIGHLY) INTERDEPENDENT
• Units can be coordinated with a mechanism or coordinated with
centralized decision making.
– SEQUENTIAL INTERDEPENDENCE
• Centralized decision making and authority are needed to keep
units in alignment with each other.
– POOLED INTERDEPENDENCE
• Allows for a decentralized approach as long as unit efforts are
aligned with the overall goal or mission.

8–72
 continue
• The level of interdependence between work groups
will affect the need for integrating mechanisms.
• Three primary levels of work group integration:
– Pooled interdependence
– Sequential interdependence
– Reciprocal interdependence
 Pooled Interdependence
• Occurs when
organizational units A
have a common
resource but no F B
interrelationship with Head-
one another if a quarters
particular E C
task is performed.
i.e.: A local bank with D
branch offices.
 Sequential Interdependence
• Occurs when organizational units must coordinate
the flow of information, resources, and tasks from
one unit to another.

A B C

• i.e. – In a typical manufacturing assembly line we can

observe a greater coordination between units are
needed.
 Reciprocal Interdependence
• Occurs when information,
resources, and tasks must be
passed back and forth between
work groups. A B
• Presents the greatest
interdependence between work
groups.
• The final product requires several C D
information from various
department.
• i.e. : exam in UiTM,
• Students ---lecturers---- E F
administration -----lecturers-----
admin-----students
 continue
• The higher the level of interdependence of an
organization’s work group, the greater its need for
coordination, thus the integration should be more
sophisticated and vice versa.
• the pooled and reciprocal interdependence.
 SUMMARY
• DEVELOP A MIND MAP OF THIS TOPIC

12/16/23
PAST YEAR QUESTIONS
MGT400-420
ORGANIZING
 ILLUSTRATE AN An organization chart identifies the
ORGANIZATION following aspects of formal structure:
CHART The division of work.
Supervisory relationships.
Communication channels.
Major subunits.
Levels of management.

An organization chart is
a diagram describing
reporting relationships
and the formal
arrangement of work
positions within an
organization.
DIFFERENTIATE CHAIN OF COMMAND
AND UNITY OF COMMAND
UNITY OF COMMAND
CHAIN OF COMMAND

The line of authority and

responsibility that flows from
top management to bottom
line management Applied in most organization structure
throughout the organization except the matrix structure where here
Normally shown in the the employees have to answer to two
unbroken lines connecting bosses
between levels of
management and
departments and units in the
organization chart
 Contrast narrow span of control and wide span of
control illustration
Span of control – wide and narrow

• Span of control or span of management

is the number of employees reporting
to a particular manager in an
organization
• There are two types:
• Wide span of control
• Wide span of control is followed
by a flat organizational
structure. The number of
employees reporting to a
manager will be more
• Narrow span of control
• Narrow span of control is
followed by a tall organizational
structure. The number of
employees supervised by the
manager will be less.
Distinguish Centralization and decentralization and advantages and
disadvantages – locus of decision making (where decisions are being made in
the organization)

• Centralization
•this is the process of
having responsibility and
authority concentrated in
one place so major
decisions are made by the
central controlling body
and little initiative is in the
hands of lower down
management ladder. (top
manager’s decision)
• Decentralization
• Involves delegating
authority to subordinates
for many decisions.
Decisions are made by
middle and first level
manager.
Decentralization requires
manager to decide what
and when to delegate, to
select and train personal
carefully.
 Write short notes on the following;
i. authority
ii. Responsibility
 Authority iii. Accountability
iv. delegation
• The formal right
inherent (built) in an
organizational position
Accountability
to make decisions.
Responsibility to the supervisor for
• Authority can be seen results of decisions made and actions
also as line, staff and taken with delegated authority.
functional authorities Delegation
The process of transferring the
 Responsibility responsibility for a specific activity or
• The obligation to task to another member of the
perform the duties organization, or Empowering that
individual to accomplish the task
assigned. effectively……
And in delegating you need authority
responsibility and accountability
Differentiate line, staff and functional
authorities
 DEFINE DELEGATION(EMPOWERMENT)
AND DISCUSS THE BENEFITS AND
REASONS WHY DELEGATION FAILS
Reasons fail are:
DEFINITION AND BENEFITS
• Delegation is the process of • The “time crunch” –
transferring the responsibility for (the manager feels they • So to overcome the
a specific activity or task to can do the job faster) problems
another member of the • Lack of confidence in  Match the employee to
organization the abilities of the task.
• The benefits/advantages are: subordinates.  Be organized and
Leads to a more involved and • Managers try to avoid communicate clearly.
empowered workforce. the potential pitfalls of  Transfer authority and
Improved response time as a dual accountability. accountability with the
result of decisions and task.
information not needing to be • Managers may be 
Choose the level of
passed up and down the insecure about their
organization. own value to the delegation carefully.
Leads to better decision making organization.  Give people the
Provides opportunity for • No Confidence in Team resources they need to
employee to develop analytical solve problems
and problem solving skills.
Members Some leaders
resist delegation
Provides managers the because they don’t
opportunity to accomplish more
complicated, difficult, or have faith in their team
important tasks. members
Discuss the types of organizational structure
With the aid of diagrams, explain departmentalization
by function, geography, matrix, and network.
With the aid of diagrams explain departmentalization
by function, geography, matrix, and network and their
suitability and advantages and disadvantages. • Disadvantages
Organizational design/structure is defined –Focus on departmental versus
as a plan for arranging and coordinating organizational issues
the activities of an organization for the –Difficult to develop generalists
purpose of fulfilling its mission and needed for top-level management
achieving its goals.
–Only top-level management held
• FUNCTIONAL STRUCTURE - accountable for profitability
Members of the organization are
grouped according to the
particular function that they
perform within the organization.
• Appropriate when an
organization’s greatest source of
complexity comes from the
diverse tasks that must be
performed
DIVISIONAL
STRUCTURE

Members of the
organization are grouped on
the basis of:
Common products
PRODUCT DIVISION
Geographic markets
GEOGRAPHIC DIVISIONS
Customers served
CUSTOMER DIVISIONS
 FIGURE 8.4GEOGRAPHIC DIVISIONAL
STRUCTURE

PRINCIPLE OF UNITY OF
COMMAND -
ANSWER TO ONLY ONE
BOSS

FUNCTIONS

PRODUCT

GEOGRAPHY

Source: “Illinois Central Spurs Reorganization by Canadian National,” Wall Street Journal, 15 April 1999, A4.
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 CUSTOMER DIVISIONS STRUCTURE

CUSTOMERS/
MARKETS

FUNCTIONS

FIGURE 6–3
Copyright © 2004 Prentice Hall. All
rights reserved.
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 • An organization structure in which employees are
With the aid of a diagram permanently attached to one department but also
simultaneously have on-going assignments (not permanent by
discuss the matrix timely basis) in which they report to project, customer,
structure product, or geographic unit heads.
• People with similar skills are pooled for work assignments. For
example, all engineers may be in one engineering department
and report to an engineering manager, but these same
MATRIX STRUCTURE engineers may be assigned to different projects and report to
a different engineering manager or a project manager while
• A structure in which the working on that project.
tasks of the organization • Therefore, each engineer may have to work under several
are grouped along two managers at one time
organizational dimensions
simultaneously.
• Examples include:
• Product/function
• Product/geographic region

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