Organizational Structure

Question 1

Building Blocks of Structure

Answer 1

Work specialization: Degree to which tasks are separated into separate jobs

Departmentation: How jobs are grouped

Chain of command (& unity of command): Who reports to whom

Span of control: Number of people reporting to a supervisor/manager

Centralization/Decentralization: Degree to which decision-making is concentrated at a single point in the organization

Formalization: Degree to which jobs are standardized

Question 2

What is organizational structure?

Answer 2

How an organization’s individuals and groups are put together or organized to accomplish work.

The manner in which an organization divides its labor into specific tasks and achieves coordination among these tasks.

Structure affects how effectively and efficiently group effort is coordinated.

 As Organizations grow larger:
		○ The need to divide up the work increases
		○ Division of work pulls people apart
		○ The need to coordinate
 the work increases

Question 3

Subdivision, benefits and downsides

Answer 3

Subdivision
The degree to which tasks in the organization are subdivided into separate jobs, also known as division of labor.
→ Benefits:
○ Efficiency
§ Less time changing tasks, putting equipment away
§ Easier to train employees
→ Downsides:
○ Boredom, stress, low productivity, high turnover,
increased absenteeism

Question 4

Departmentation, types

Answer 4

→ The basis on which jobs are grouped together. 
	→ Types (e.g.):
		○ Functional 
		○ Product
		○ Geographic
		○ Process
		○ Customer

Question 5

Contemporary Organic Structures

Answer 5

→ The removal of unnecessary bureaucracy and the decentralization of decision-making result in a more adaptable organization.
→ Some contemporary organic organizational structures:
○ The Virtual organization
○ The Modular organization
The Boundaryless organization

Question 6

Virtual Organization, advantages and disadvantages

Answer 6

→ A network of continually evolving independent organizations that share skills, costs, and access to one another’s markets.
→ Each partner contributes only in its area of core competencies.
→ A key advantage is its flexibility and adaptability.
→ Network and virtual organizations face some special problems that result in a loss of their technological edge and organic advantage
→ A continually evolving network of independent companies—suppliers, customers, even competitors— linked together to share skills, costs, and access to one another’s markets.
→ Advantages:
○ Organizations can share costs and skills
○ Provides access to global markets.
○ Increases market responsiveness.
→ Disadvantages:
○ Companies give up operational and strategic control to work together.
Managers need to be more flexible, acquire new skills.

Question 7

Modular Organization, advantages and disadvantages

Answer 7

→ An organization that performs a few core functions and outsources noncore activities to specialists and suppliers.
→ The modular organization maintains complete strategic control.
→ By outsourcing noncore activities, modular organizations can keep unit costs low and develop new products more rapidly.
→ Modular organizations work best when they focus on the right specialty and have good suppliers.
→ Requires good suppliers who are reliable, loyal, and can be trusted with trade secrets.
→ They must be careful not to outsource critical technologies. Operational control is reduced due to the dependence on outsiders
→ Mechanistic with some organic components
→ A small core organization that outsources major business functions.
→ Advantages:
○ Can devote technical and managerial talent to most critical activities.
○ Can respond more quickly to environmental changes.
○ Increased focus on customers and markets.
→ Disadvantages:
○ Reduces management’s control over business
Relies on outsiders to get job done.

Question 8

Boundaryless Organization

Answer 8

→ An organization structure that removes vertical, horizontal, and external barriers.
→ This allows employees, managers, customers, and suppliers to work together, share ideas, and identify the best ideas for the organization.
→ It is made up of self-managing and cross- functional teams that are organized around core business processes that are critical for satisfying customers.
→ The teams include employees from different functional areas as well as customers and suppliers.
→ Boundaryless organizations are able to achieve greater integration and coordination within the organization and with external stakeholders.
→ It can be difficult to overcome political and authority boundaries and time consuming to manage.
An organization that seeks to eliminate the chain of command, have limitless spans of control, and replaces departments with empowered teams.

Question 9

Symptoms of Structural Problems

Answer 9

Bad job design

The right hand does not know what the left is doing
○ Problems of coordination and integration.

Persistent conflict between departments

Slow response times

Decisions made with incomplete information

A proliferation of committees

Question 10

Factors affecting Organizational Structure

Answer 10

→ The quicker the environment changes, the more the structure must be flexible (i.e., decentralized authority, organic)
→ Different strategies require the use of different structures. A differentiation strategy needs a flexible structure, low cost may need a more formal structure
→ Highly skilled workers whose jobs require working in teams usually need a more flexible structure (e.g. NASA)
→ More complex technology makes it harder for managers to regulate the organization