MultiMedia by Stephen M. Peters© 2002 South-Western Organizational Design

MultiMedia by Stephen M. Peters© 2002 South-Western Organizations Common Elements Operate with authority Have departments Use line and staff positions

MultiMedia by Stephen M. Peters© 2002 South-Western Organizational Design Objectives Respond to change Integrate new elements Encourage flexibility Coordinate the components

MultiMedia by Stephen M. Peters© 2002 South-Western Mechanistic Structure is Characterized By  Rigidly defined tasks  Formalization  Rules and regulations  Centralized decision making  Emphasis on control from top levels down  Vertical communication

MultiMedia by Stephen M. Peters© 2002 South-Western Mechanistic versus Organic Structures

MultiMedia by Stephen M. Peters© 2002 South-Western Organic Structure 1.Free flowing. 2.Has few rules and regulations. 3.Decentralizes decision making. 4.Referred to as the horizontal structure. 5.Allows changes to be made rapidly as the needs require. 6.Frequently redefines tasks to fit employee and environmental needs.

MultiMedia by Stephen M. Peters© 2002 South-Western Contingency Factors

MultiMedia by Stephen M. Peters© 2002 South-Western Influence of Strategy on Structure

MultiMedia by Stephen M. Peters© 2002 South-Western Uncertain Environment Calls For — Organic structure that emphasizes: coordination less formal procedures flexibility

MultiMedia by Stephen M. Peters© 2002 South-Western Small Organizations Little division of labor Few rules and regulations Informal performance appraisals Informal budget development procedures

MultiMedia by Stephen M. Peters© 2002 South-Western Large Organizations Mechanistic Greater division of labor More elaborate internal systems More rules and regulations

MultiMedia by Stephen M. Peters© 2002 South-Western Organizational Life Cycle and Structural Characteristics

MultiMedia by Stephen M. Peters© 2002 South-Western Producing Goods in Small Quantities Unit production technology Small batch technology

MultiMedia by Stephen M. Peters© 2002 South-Western Large Volume of Standardized Products Technology  Large batch technology  Mass production technology

MultiMedia by Stephen M. Peters© 2002 South-Western

MultiMedia by Stephen M. Peters© 2002 South-Western Functional Structure Groups positions into departments based on similar skills, expertise, and resources. Advantages –Economics of scale –Minimizes duplication of personnel and equipment –Simplifies training Disadvantages –Employees may have little understanding of and concern for the specialty areas outside their own functional area –Barriers in communication, cooperation, and coordination –Functional structure response time to changes may be slow

MultiMedia by Stephen M. Peters© 2002 South-Western Divisional Structure  Groups departments based on organizational outputs.  Self-contained strategic business units.  Creates a set of autonomous mini-companies.

MultiMedia by Stephen M. Peters© 2002 South-Western Divisional Structure Advantages –Focuses the attention of employees and managers on results for the product, the customer, or the geographical area. –Flexible and responsive to change. –Singleness of purpose. –Responsibility and accountability for performance are easier to target.

MultiMedia by Stephen M. Peters© 2002 South-Western Divisional Structure Disadvantages –Duplication of activities and resources. –Loses efficiency and economies of scale. –Lack of technical specialization, expertise, and training can result. –Coordination may suffer.

MultiMedia by Stephen M. Peters© 2002 South-Western Matrix Structure Combines the advantages of functional specialization with the focus and accountability of the divisional structure. Employs dual lines of authority.

MultiMedia by Stephen M. Peters© 2002 South-Western Matrix Design Used in One of Two Situations  First, it is used when a firm offers a diverse set of products, has a complex environment, and requires functional expertise.  Second, it is used when managers want to maximize economies of scale and shared resources.

MultiMedia by Stephen M. Peters© 2002 South-Western Team Structure Advantages —Breaks down barriers across departments. —Speeds up decision making and response time. —Employees are strongly motivated. —Improvement over the matrix structure. Disadvantages —Depends on employees who learn and train for success. —A large amount of time may be required for team meetings.

MultiMedia by Stephen M. Peters© 2002 South-Western Network Structure Known as “Dynamic Network” A small central organization relies on other organizations to perform critical functions on a contract basis. Advantages –Provides flexibility. –Overhead remains low. Disadvantages –Lack of control.