1. Chapter 7 ORGANIZATIONAL STRUCTURE Done By: Samin Ghazal Gr:12A
Tutor: Mr.Mohamed Motawea

2. Learning Objectives: How to read an organizational chart.
The four types of organizational structures and the advantages and disadvantages of each type.
Name the factors that affect the type of structure an organization adopts.
Describe the roles of the chief executive officer and the board of directors.

3. Section 7.1
Understanding How Organizational Structures Work

4. What is organizational structure?
Business organizations exist to earn profits.
To meet their goals, they organize their employees into some kind of structure.
Companies adopt organizational structure in order to minimize confusion over job expectations.
Organizational structure helps them coordinate activities by clearly identifying which individuals are responsible for which tasks.

5. Types of organizational structure :
Companies generally adopt one of four organizational structures:
Line Structure
Line & Staff Structure
Matrix Structure
Team Structure
Each of these different types of organizational structures can be shown in an Organizational Chart.
Organizational chart is a visual representation of a business’s organizational structure.
An Organizational Chart shows who report to whom within the company. it also shows what kind of work each department does.

6. Line Structure :
In a line organization, authority originates at the top and moves downward in a line.
All managers perform Line Functions.
(functions contribute directly to company profits )
Ex: production managers ,marketing managers .
Line managers collect and analyze all of the information they need to carry out their responsibility.
Line organization are common among small business.

7. Non management employees
CEO
Senior Managers
Mid-level Managers
Lower-level Managers
Non management employees
Line structure

8. Line & Staff Structure
In mid-sized and large companies line managers can’t perform all of the activities to run their department.
Other employees are hired to help line managers.
These employees perform staff function.
Staff functions advise and support the line function
Staff department include the legal department, the
human resources and the public relations department.
They help line managers to do their job.
They contribute only indirectly to corporate office.
Staff people are specialist in one field.

9. line and staff Structure:
President
Vice President
Sales
Manufacturing
Advertising
Fabrication
Personnel
Assembly

10. Matrix Structure:
A Matrix Structure allows employees from different department to come together temporarily to work on special project teams.
The purpose is to allow companies to respond quickly to a customer.
Once the team completes the project, the team members return to their department or join a new project team.
Companies that undertake very large projects often use the matrix structure .

12. Team Structure:
Many companies have abandoned the line and staff approach to organizational structure in favor of the team approach.
A team structure brings together people with different skills in order to meet a particular objective.
More and more companies are using the team structure.
They believe team structure allows them to meet customers needs more effectively than traditional structure .
In Team structure senior managers need not approve decisions by lower-level managers.
Teams have the authority to make their own decisions.

13. Team structure : senior Team B Research Team A Team C Marketing
production
Research
Finance
Team A
Team C
Marketing
production
Marketing
production
Research
Finance
Research
Finance

14. Flat vs. Tall Structures
A flat structure is an organization that has a small number of levels and a broad span of management at each level.
Employees have more power within the company.
A Tall structure is an organization that has many levels with small spans of management.
In this case, power is centralized on the top levels and there is more employee control.

15. Advantages of flat structure:
Greater job satisfaction
More delegation
Increased communication between the levels of management.
Advantages of tall structure:
Great control
Better performance

16. Flat vs. Tall Structures:1 1 2 2 3 3 4 4 5
Span of management 8:1
Four levels
Flat structure 6 7
Span of management 5:1
Seven levels
Tall structure

17. Answer: What is the purpose of an organization chart?
What is a staff function?
How does the team structure differ from the line and staff structure?

18. Section 7.2
Creating An Organizational Structure

19. Factors Affecting Organizational Structure
The organizational structure a company chooses depends on the nature of its business.
The most important factors that affect the choice of the choice of organizational structure are:
Size
Type of the product or service

20. Size
The size of the business has a very important effect on the organizational structure of that business.
For a business to be successful, its structure must change as the business continues to grow.

21. Stages Of Growth
Typically businesses go through three organizational life cycle stages:
Growth Through Creativity
Growth Through Direction
Growth Through Delegation, Coordination and Collaboration

22. Growth Through Creativity
Entrepreneurs with new ideas create products or services which there is a market.
The business tends to be small.
Lacks formal structure, policies and objectives.
The company founder makes all the decisions.
Management skills are less important than they are later on. (because of few employees)
The ideas must appeal to consumers.

23. Growth Through Direction
When the company grows, it enters the second stage of its growth cycle…
Grows in size
Managers are responsible for various tasks like planning, organizing and staffing.
Written policies, plans and procedures will be created.
They establish rules for: hiring, firing and rewarding employees.
They set up systems for communicating information among employees.
They also set up financial controls, which determines how much each department can spend.

24. Growth Through Delegation, Coordination and Collaboration
Business delegates more responsibility to lower-level employees,
Which helps business in two ways:
Motivates people at lower levels.
It allows senior executives to spend most of their time on long-management issues

25. Summary of stages of growth
Creativity
Management
delegation

26. Type of the Product or Service
Its another important factor which affects organizational structure.
As the level of technical complexity increases, the level of numbers in an organization will increase.

27. Organizing a Company into Departments
All of the big companies are organized into departments.
The departments may be based on:
Work Functions
Products
Geography
Customers

28. Organizing Departments by Work Functions
Functions include:
Production: creation of company’s goods or services.
Marketing: product development ,pricing, distribution, sales, and advertising.
Finance: financial statements, obtaining credit.
Human resources: Hiring employees and placing them in appropriate job.

29. Advantages It allows for functional specialization.
Each group can be professional in one thing and spend its time on it completely.  manage of time
It may save money by allowing the company to use the resources most efficiently.

30. Negative Effects Conflicts through departments
It may also hurt the company by creating managers whose scope is narrow.

31. Organizing Departments by Product
A single manager oversees all the activities needed to produce and market a particular product.
Lets the employees to identify with the product rather than their job function.
Helps the company identify which products are profitable.

32. President Chemical Automotive Oil and Gas Aerospace
Industrial and technology
Chemical
Automotive
Oil and Gas
Aerospace

33. 3. By Geographical Areas
Some companies organize their organization by geographical areas.
For example one senior management can be responsible for all of company’s activities within a specific area.

34. By type of customer
Ex:
A company might have one division responsible for sales to governments, another to for-profit businesses and another to nonprofit organizations.

35. Understanding the role of Company Leadership
Organizational structures often appoint individuals or groups in leadership positions for the company.
Committee
Chief Executive Officer
Board Of Directors

36. Committee
Committee: Organized group of people appointed to consider or decide upon certain matters.
Ex: to work on a new budget
Can be permanent or temporary.

37. Managers can increase the efficiency of a committee, to do so:
Clearly define the committee’s function
Establish authority figures within a committee.
Set clear goals for members to attain
Decide on the limits of a committee’s power.

38. Chief Executive Officer
Senior manager initiates all of a company’s major decisions.
(producing new products, expanding internationality, building new factories.)
These managers are led by CEO.

39. The chief executive officer is the top executive in a company,
Together with senior management the CEO
Set the company’s objectives
Makes decisions about meeting the company’s objectives
Determines who fills senior management positions
Develops the long-term strategies

40. Attends the company’s annual stockholder’ meeting and answers questions about the company’s activities
Takes charge of the company in a crisis
Works with the board of directors

41. Board Of Directors
A Board of Directors is the legal representative of a company’s stockholders.
The board approves the most important decisions made by the company’s chief executive officer.
Makes it more difficult for corporate managers to act in ways that benefit them personally at the expense of the company’s owners.