Organizational Structure and Design Chapter 5 BUSM 12 Ms. Stewart

Organizational Structure How job tasks are formally divided, grouped, and coordinated within an organization When managers develop or change the structure, they are engaged in organizational design

Purposes of Organizing

Departmentalization This is the basis on which jobs are grouped together Common forms:  Functional  Geographical  Product  Process  Customer

Functional Departmentalization Groups jobs by functions performed

Geographical Departmentalization Groups jobs on the basis of territory or geography

Product Departmentalization Groups jobs by product line

Process Departmentalization Groups jobs on the basis of product or customer flow

Customer Departmentalization Groups jobs on the basis of customer who have common needs or problems

Traditional Organization Structure

Line and Staff Managers Line managers are responsible for essential activities of the organization, including production and sales Staff Managers work in supporting activities of the organizations (such as Human Resources or Accounting)

Centralization The degree to which decision making is concentrated at a single point in the organization Example: If the top managers make the organization's key decisions with little to no input from below

Decentralization The degree to which lower level employees provide input or actually make decisions