Management #2

an organization is a system of consciously coordinated activities or forces of two or more people
Why do organizations organize?
For-Profit Organizations
These are formed to make money, or profits, by offering products or services.
Nonprofit Organizations
These are formed to offer services to some clients, not to make a profit (examples: hospitals, colleges).
Mutual-Benefit Organizations
These are voluntary collectives whose purpose is to advance members’ interests (examples: unions, trade associations).
Simple-Structure Organization
An organization with a simple structure has authority centralized in a single person, a flat hierarchy, few rules, and low work specialization
Functional Structure Organization
a functional structure, people with similar occupational specialties are put together in formal groups
Advantages/ Disadvantages of Functional Structure
Positive: Greater efficiency, Better control, Easier to manage.

Negative: Differing agendas, Communication & coordination issues, Stress short term-not the strategic

Divisional Structure-Product Division
Grouping by Similar Products or Services- Product divisions group activities around similar products or services
Divisional Structure- Customer Division
Grouping by Common Customers or Clients- Customer divisions tend to group activities around common customers or clients.
Divisional Structure- Geographic Division
Grouping by Regional Location-Geographic divisions group activities around defined regional locations
Advantages of Product/Geographic/Customer Structure
Greater efficiency & specialization
Tailoring of activities
Better coordination with market
P/L responsibility
Managerial farm team
Disadvantages of Product/Geographic/Customer Structure
Allowable uniformity vs. diversity issues
Adds another layer
Duplication of staff support services $$$$$
The Matrix Structure
Grid of Functional & Divisional for Two Chains of Command-In a matrix structure, an organization combines functional and divisional chains of command in a grid so that there are two command structures—vertical and horizontal.
Advantages of Matrix Structure
Great cooperation & coordination
Enhance communication between entities
Best for projects
Disadvantages of Matrix Structure
Must serve 2 masters
Hard to move quickly
Complex to manage at the corporate level
Expensive due to skilled employee costs
A company engaged in varied business operations, many of which seem
unrelated. Similar Advantages/Disadvantages to the Multi-divisional structure … only more so, since we are dealing with several units comprised of several units
Advantages of Multi-Divisional Structure
Each unit organizes as required
Clear-cut P/L responsibility
CEO concentrates on corporate strategy
Disadvantages of Multi-divisional Structure
Great rivalry for resources
Communication issues
Autonomy may conflict w/corporate aims
Getting pretty tall
Product Teams
Does anyone know? I cant find it anywhere. Heres a possible option off of the internet-An Integrated Product Team (IPT) is a multidisciplinary group of people who are collectively responsible for delivering a defined product or process.[
Organizational Design
concerned with designing the optimal structures of accountability and responsibility that an organization uses to execute its strategies. We may categorize organizational designs as three types: (1) traditional designs, (2) horizontal designs, and (3) designs that open boundaries between organizations.57
Why Study Structure
Organizational structure is the plan for, and the reality of, how power and responsibility are distributed across an organization. We humans are social animals. So, inside our groups, we focus on hierarchy; outside, we focus on the identifiable groups or individuals who represent opportunity or threat. Thus, organizational structure is a powerful vehicle for focusing employees’ and external stakeholders’ attention on a particular aspect of the business. It sends a message that some issues are more important than others.””
Organization Chart
a box-and-lines illustration showing the formal lines of authority and the organization’s official positions or work specializations. This is the family tree-like pattern of boxes and lines posted in staff break rooms and given to new hires
Vertical Hierarchy of Authority (who reports to whom)
A glance up and down an organization chart shows the vertical hierarchy, the chain of command. A formal vertical hierarchy also shows the official communication network—who talks to whom.
Horizontal Specialization (who specializes in what)
A glance to the left and right on the line of an organization chart shows the horizontal specialization, the different jobs or work specialization.
Contingency Design
The process of fitting the organization to its environment is called contingency design.
Factors Considered for Contingency Design
Environment—mechanistic versus organic
Environment—differentiation versus integration
Life cycle
Link between strategy and structure
Division of Labor
Division of labor, also known as work specialization, is the arrangement of having discrete parts of a task done by different people
Span of Control
The span of control, or span of management, refers to the number of people reporting directly to a given manager.5
Line Position
Line managers have authority to make decisions and usually have people reporting to them. Example: President, Vice-President, Head of accounting
Staff Position
Staff personnel have authority functions; they provide advice, recommendations, and research to line managers. Examples: specialists such as legal counsels and special advisers for mergers and acquisitions or strategic planning
Centralized Authority
centralized authority, important decisions are made by higher-level managers. Very small companies tend to be the most centralized, although nearly all organizations have at least some authority concentrated at the top of the hierarchy
Decentralized Authority
With decentralized authority, important decisions are made by middle-level and supervisory-level managers. Here, obviously, power has been delegated throughout the organization.
Delegation is the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy. To be more efficient, most managers are expected to delegate as much of their work as possible.
Mechanistic Organization
In a mechanistic organization, authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. Mechanistic organizations, then, are bureaucratic, with rigid rules and top-down communication. This kind of structure is effective at McDonald’s because the market demands uniform product quality, cleanliness, and fast service.
Organic Structures
In an organic organization, authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks. Tom Peters and Robert Waterman called this kind of organization a “loose” structure.76
Chain of Command
The hierarchy of authority, or chain of command, is a control mechanism for making sure the right people do the right things at the right time. If coordinated effort is to be achieved, some people—namely, managers—need to have more authority, or the right to direct the work of others.
Tall Organization
This means a manager has a limited number of people reporting—three vice presidents reporting to a president, for example, instead of nine vice presidents. An organization is said to be tall when there are many levels with narrow spans of control.
Advantages/ Characteristics of Tall Structure
Harder to communicate
More managers
Narrow span of control; more controls
Stricter Policies standardization
More centralization; oversight
More opportunities for advancement
Mangers may have more expertise and be involved in the work
Flat Organization
This means a manager has several people reporting—a first-line supervisor may have 40 or more subordinates, if little hands-on supervision is required, as is the case in some assembly-line workplaces. An organization is said to be flat when there are only a few levels with wide spans of control.
Advantages/ Characteristics of Flat Structure
Few levels; quicker communication
Wide span of control; fewer controls
Greater flexibility
Fewer managers-more responsibilities; less knowledge
More economical
More decentralized