Chapter 4: Fundamentals of Organizational Structures

Question 1

Organizational Structure:

Answer 1

1. Designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors (span control - how many people report to you)
2. Identifies the grouping together of individuals into departments and of departments into the total organization;
3. Includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments.

Question 2

Vertical linkages

Answer 2

communication and coordination activities connecting the top and bottom of an organization

Question 3

Hierarchical referral

Answer 3

chain of command - a formal line of authority in a hierarchy

Question 4

Rules and Plans

Answer 4

rules or procedures can be established so employees know how to respond without communicating directly with their manager

Question 5

Vertical Information Systems

Answer 5

the periodic reports, written information, and computer-based communication distributed to managers

Question 6

Horizontal Linkages

Answer 6

overcomes barriers between departments and provides opportunities for coordination among employees to achieve unity of effort and organizational objectives

Question 7

Information systems

Answer 7

computerized information systems can enable managers or workers throughout the organization to routinely exchange information about problems, opportunities, activities, or decisions

Question 8

Direct contact

Answer 8

direct contact between managers or employees

Question 9

Liaison role

Answer 9

the function of a person located in one department who is responsible for communicating and achieving coordination with another department

Question 10

Task forces

Answer 10

a temporary committee composed of representatives from each department affected by a problem

Question 11

Full-Time Integrator

Answer 11

a position or department created solely to coordinate several departments

• Ex - product manager, program manager, brand manager, (located outside the departments being coordinated)

Question 12

Teams

Answer 12

permanent task forces often used in conjunction with a full-time integrator

Question 13

Relational coordination

Answer 13

frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect

Question 14

Virtual cross-functional teams -

Answer 14

• teams comprising individuals from different functions who are separated in space and time as well

Question 15

Virtual team

Answer 15

made up of organizationally or geographically dispersed members who are linked through advanced information and communication technologies, members frequently use the internet and collaborative software to work together rather than meet face to face

Question 16

Organizational Design Alternatives:

Answer 16

1. Required work activites - departments are created to perform tasks considered strategically important
2. Reporting relationships (chain of command) - links all persons in an org shows who reports to who
3. Departmental grouping - employees share a common supervisor and resources, collaborate with one another

Question 17

Functional grouping -

Answer 17

The placing together of employees who perform similar functions or work processes, or who bring similar knowledge and skills t bear on a task

Question 18

Divisional grouping

Answer 18

a grouping in which people are organized according to what the produces

Question 19

Multifocused grouping

Answer 19

a structure in which an organization embraces structural grouping alternatives simultaneously

Question 20

Horizontal grouping

Answer 20

the organizing of employees around core work processes rather than by function, product, or geography

Question 21

Virtual network grouping

Answer 21

organization that is loosely connected cluster of separate components

Question 22

Functional Structure:

Answer 22

the grouping of activities by common function
- Ex - R&D dep, manufacturing, accounting marketing

Question 23

Functional Structure
- pros

Answer 23

• Economies of scale, efficient
• In-depth knowledge and skill development
• Organization can accomplish functional goals
• Best with only one or a few products
• Improve agility by adding more horizontal linkages (direct contact)

Question 24

Functional Structure
- Cons

Answer 24

• Slow response to changes in the environment
• Decisions can pile up: hierarchy overload
• Poor horizontal communication
• Less innovation
• Causes restricted views of company goals

Question 25

Divisional Structure:

Answer 25

- The structuring of the organization according to individual products, services, product groups, or profit centers; also called product structure or strategic business units - Decentralized decision making - Each product has their own departments: marketing, accounting, etc.

Question 26

Divisional Structure - pros

Answer 26

- Suits fast change, unstable environment - High coordination across functions - Units adapt to different customers, regions, products - Improves customer satisfaction - Decentralizes decision-making - Best for large orgs with multiple products

Question 27

Divisional Structure - Cons

Answer 27

- Eliminates economies of scale in functional departments - Poor coordination across product lines - Reduces specialization and in-depth competence - Integration and standardization across product lines is difficult

Question 28

Geographical Structure

Answer 28

splitting up different regions of the country who may have distinct tastes and needs

Question 29

Matrix Structure

Answer 29

A strong form of horizontal linkage in which both product and functional structures (horizontal and vertical) are implemented simultaneously

Question 30

Conditions for the matrix

Answer 30

- Pressure exists to share scare resources across product lines - Environmental pressure exists for two or more critical outputs, such as for in-depth technical knowledge (functional structure) and frequent new products (divisional structure) - The environmental domain of the organization is both complex and unstable

Question 31

Functional matrix

Answer 31

a structure in which functional bosses have primary authority, and product or project managers simply coordinate product activities.

Question 32

Product matrix

Answer 32

a variation of the matrix structure in which project or product manager have primary authority, and functional managers simply assign personnel to projects and provide advisory expertise

Question 33

Matrix Strengths

Answer 33

- Achieves coordination necessary to meet dual demands from consumers - Flexible sharing of human resources across products - Suited to complex decisions and frequent changes in unstable environment - Provide opportunity for both functional and product skill development - Best in medium-sized organizations with multiple products

Question 34

Product Matrix - Weakness

Answer 34

- Causes participants to experience dual authority, which can be frustrating and confusing - Means participants need good interpersonal skills and extensive training - Is time consuming; involves frequent meetings and conflict resolution sessions - Will not work unless participants understand it and adopt collegial rather than vertical type relationship - Requires great effort to maintain power balance

Question 35

Horizontal Structure

Answer 35

A structure that virtually eliminates both the vertical hierarchy and departmental boundaries by organizing teams of employees around core work processes; the end-to-end work, information, and material flows that provide value directly to customers

Question 36

Re-engineering

Answer 36

redesigning a vertical organization along its horizontal workflows and processes

Question 37

Process

Answer 37

organized group of related tasks and activities that work together to transform inputs into outputs that create value for customers

Question 38

Horizontal Structure Characteristics

Answer 38

- created around cross-functional core processes - self directed teams - team members are given skills, tools - they are cross trained - teams have freedom to think creativly and flexability - culture is on of openess and trust

Question 39

Horizontal structure strengths

Answer 39

- Promotes flexibility and rapid responses to changes in customer needs - Directs attention of everyone toward the production and delivery value to the customer - Each employee has a broader view of organizational goals - Promotes a focus on teamwork and collaboration - Improves quality of like from employees by offering them the opportunity to share responsibility, make decisions, and be accountable for outcomes

Question 40

Horizontal structure weaknesses

Answer 40

- Determines core processes is difficult and time consuming - Requires changes in culture, job design, management philosophy, and information and reward systems - Traditional managers may balk when they have to give up power and authority - Requires significant training of employees to work effectively in a horizontal team environment - Can limit in depth-skill development

Question 41

Virtual Network Structure:

Answer 41

the organization that is loosely connected cluster of separate components. The firm subcontracts many or most of its major processes to separate companies and coordinates their activities from a small headquarters organization

Question 42

Outsourcing

Answer 42

contracting out certain functions, such as manufacturing, information technology, or credit processing, to other organization

Question 43

Virtual network - Strengths

Answer 43

- Enables even small organizations to obtain talent and resources worldwide - Gives a company immediate scale and reach without huge investments in factories, equipment, or distribution facilities - Enables the organization to be highly flexible and responsive to changing needs - Reduces administrative overhead cost

Question 44

Virtual network - weaknesses

Answer 44

- Managers do not have hands on control over many activities and employees - Requires a great deal or time to manage relationships and potential conflicts with contract partners - There is a risk of organizational failure if a partner fails to deliver or goes out of business - Employee loyalty and organizational culture might be weak because employees feel they can be replaced by contract services

Question 45

Hybrid Structures

Answer 45

A structure that combines characteristics of various structural approaches (functional, divisional, geographical, horizontal) tailored to specific strategic needs

Question 46

Symptoms of Structural Deficiency

Answer 46

Signs of the organization structure being out of alignment, including delayed or poor-quality decision making, failure to respond innovatively to environmental changes, and too much conflict