2. Designing Organizational Structure
Chapter 7
Designing Organizational Structure

3. Designing Organizational Structure
Formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals

4. The Organizational Environment
Strategy
Different strategies require the use of different structures
A differentiation strategy needs a flexible structure, low cost may need a more formal structure
Increased vertical integration or diversification also requires a more flexible structure

5. The Organizational Environment
Technology
The combination of skills, knowledge, tools, equipment, computers and machines used in the organization
More complex technology makes it harder for managers to regulate the organization

6. Job Design Job Design Job Simplification
The process by which managers decide how to divide tasks into specific jobs
Job Simplification
The process of reducing the number of tasks that each worker performs

7. Job Design Job Enlargement Job Enrichment
Increasing the number of different tasks in a given job by changing the division of labor
Job Enrichment
Increasing the degree of responsibility a worker has over a job

8. Job Characteristics Model

9. Grouping Jobs into Functions
Functional Structure
An organizational structure composed of all the departments that an organization requires to produce its goods or services

10. Divisional Structures
An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer
Divisions create smaller, manageable parts of a firm
Divisions develop a business-level strategy to compete
Divisions have marketing, finance, and other functions
Functional managers report to divisional managers who then report to corporate management

11. Types of Divisional Structures
Product Structure
Each product line or business is handled by a self-contained division

12. Types of Divisional Structures
Geographic Structure
Each region of a country or area of the world is served by a self-contained division

13. Types of Divisional Structures
Market Structure
Each kind of customer is served by a self-contained division
Also called customer structure

14. Matrix Design Structure
Matrix Structure
An organizational structure that simultaneously groups people and resources by function and product

15. Product Team Design Structure
Product Team Structure
Members are permanently assigned to a cross-functional team and report only to the product team manager or to one of his subordinates
Cross-functional team – group of managers brought together from different departments to perform organizational tasks

16. Hybrid Structures Hybrid Structure
The structure of a large organization that has many divisions an simultaneously uses many different organizational structures
Managers can select the best structure for a particular division—one division may use a functional structure, another division may have a geographic structure.
The ability to break a large organization into smaller units makes it easier to manage.

17. Coordinating Functions and Divisions
Authority
The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources
Hierarchy of Authority
An organization’s chain of command, specifying the relative authority of each manager

18. Allocating Authority Span of Control Line Manager Staff Manager
The number of subordinates that report directly to a manager
Line Manager
Managers in the direct chain of command who have formal authority over people and resources lower down
Staff Manager
Managers who manage a specialist function

19. Types of Integrating Mechanisms
Organizing tools that managers can use to increase communication and coordination among functions and divisions

20. Strategic Alliances Strategic Alliance
An agreement in which managers pool or share firm’s resources and know-how with a foreign company and the two firms share in the rewards and risks of starting a new venture.

21. Strategic Alliances Knowledge Management System
A company-specific virtual information system that allows workers to share their knowledge and expertise and find others to help solve problems.