DEPARTMENT OF INFORMATION AND

COMMUNICATION TECHNOLOGY
UQF7 A
MEB 2226
INDUSTRIAL MANAGEMENT

ORGANIZATION
STRUCTURE
CONTENTS

• INTRODUCTION

• HISTORY

• ORGANIZATIONAL STRUCTURE DEFINED

• ORGANIZATIONAL STRUCTURE TYPE

• THE NEWEST STRUCTURES

INTRODUCTION

An organizational structure consists of activities such

as task allocation, coordination and supervision, which
are directed towards the achievement of organizational
aims. There is six organizational structure type and
three type still have been developing.
HISTORY

Organizational structures developed from the ancient

times of hunters and collectors in tribal organizations
through highly royal and clerical power structures to
industrial structures and today's post-industrial
structures. Some of prominent names in organizational
structure theory are Mohr, Taylor, Fayol, and Weber.
 ORGANIZATIONAL STRUCTURE DEFINED

• Organizational structure refers to the way in which a group

of people is formed, its lines of communication and its means for
channeling authority and making decisions.
• Organizational chart –the visual representation of an
organization’s structure.
 MECHANISTIC AND ORGANIC
STRUCTURES

• Mechanistic organization –an organizational design

that’s rigid and tightly controlled.
• Organic organization –an organizational design
that’s highly adaptive and flexible.
 Mechanistic STRUCTURES

• Mechanistic structures are typified by

narrow spans of control; high
centralization, specialization, and
formalization; as well as by rigid
departmentalization. And the chain of
command, whether long or short, is
always clear.
 Organic STRUCTURES

• Oppositely, organic structures (also

known as “flat” structures) are typified
by wide spans of control;
decentralization; low specialization and
formalization; and loose
departmentalization. And the chain of
command, whether long or short, can
sometimes be difficult to decipher.
ORGANIZATIONAL STRUCTURE
TYPES
In this rest of this section, we’ll uncover more specific types of organizational
structures, most of which fall on the more traditional, mechanistic side of the
spectrum.
1. Pre-bureaucratic structure
2. Bureaucratic structure
3. Post-bureaucratic structure
4. Functional structure
5. Divisional structure
6. Matrix structure
7. Team
8. Network
9. Virtual
ORGANIZATIONAL STRUCTURE
TYPES
1. Pre-bureaucratic structure
This structure is most common in smaller organizations
and is best used to solve simple tasks. The structure is
totally centralized. The strategic leader makes all key
decisions and most communication is done by one on one
conversations. It is particularly useful for new business
as it enables the founder to control growth and
development.
ORGANIZATIONAL STRUCTURE
TYPES
2. Bureaucratic Structures
Bureaucratic structures have a certain degree of
standardization. They are better suited for more
complex or larger scale organizations. They usually
adopt a tall structure. It is very much complex and
useful for hierarchical structures organization.
ORGANIZATIONAL STRUCTURE
TYPES
3. Post-bureaucratic Structures
The term of post bureaucratic is used in two senses in
the organizational literature: one generic and one much
more specific. In the generic sense the term post
bureaucratic is often used to describe a range of ideas.

A smaller group of theorists have developed the theory

of the Post-Bureaucratic Organization, provide a
detailed discussion which attempts to describe an
organization that is fundamentally not bureaucratic.
ORGANIZATIONAL STRUCTURE
TYPES
4. Functional structure
An organizational structure composed of all the
departments that an organization requires to produce
its goods or services.
A functional organization is best suited as a producer of
standardized goods and services at large volume and low
cost. Coordination and specialization of tasks are
centralized in a functional structure, which makes
producing a limited amount of products or services
efficient and predictable.
 Functional Structure
• Advantages
– Encourages learning from others doing
similar jobs.
– Easy for managers to monitor and evaluate
workers.
– Allows managers to create the set of
functions they need in order to scan and
monitor the competitive environment

10-14
 Functional Structure
• Disadvantages
– Difficult for departments to communicate
with others.
– Preoccupation with own department and
losing sight of organizational goals.

10-15
 The
Functional
Structure

10
ORGANIZATIONAL STRUCTURE
TYPES
5. Divisional structure
Managers create a series of business units to produce a
specific kind of product for a specific kind of customer.
Also called a "product structure", the divisional
structure groups each organizational function into a
division. Each division within a divisional structure
contains all the necessary resources and functions
within it. Divisions can be categorized from different
points of view. One might make distinctions on a
geographical basis. In another example, an
automobile company with a divisional structure might
have one division for SUVs, another division for
subcompact cars, and another division for sedans.
Product,
Market,
and
Geographic
Structures

Figure 10.4 10-18

Types of Divisional Structures
• Product Based Structure
– Managers place each distinct product line
or business in its own self-contained
division
– Divisional managers have the
responsibility for devising an appropriate
business-level strategy to allow the
division to compete effectively in its
industry

10-19
 Product Structure
• Allows functional managers to specialize
in one product area
• Division managers become experts in
their area
• Removes need for direct supervision of
division by corporate managers
• Divisional management improves the use
of resources

10-20
Types of Divisional Structures
cont…
• Geographic Structure
– Divisions are broken down by geographic
location
– Managers locate different divisions in
each of the world regions where the
organization operates.
– Generally, occurs when managers are
pursuing a multi-domestic strategy

10-21
 Global Geographic and
Global Product Structures

Figure 10.5
10-22
 Matrix Design Structure
• 6. Matrix Structure
– An organizational structure that
simultaneously groups people and
resources by function and product.
• Results in a complex network of superior-
subordinate reporting relationships.
• The structure is very flexible and can
respond rapidly to the need for change.
• Each employee has two bosses (functional
manager and product manager) and possibly
cannot satisfy both.

10-23
 Matrix Structure

Figure 10.6 10-24

THE NEWEST STRUCTURES

Team: One of the newest organizational structures

developed in the 20th century is team. In small
businesses, the team structure can define the entire
organization. Teams can be both horizontal and vertical.
THE NEWEST STRUCTURES

Network: Another modern structure is network.

While business giants risk becoming too clumsy to
proact , act and react efficiently, the new network
organizations contract out any business function, that
can be done better or more cheaply. In essence,
managers in network structures spend most of their
time coordinating and controlling external relations,
usually by electronic means.
THE NEWEST STRUCTURES

Virtual: A special form of boundaryless organization

is virtual. Hedberg, Dahlgren, Hansson, and Olve (1999)
consider the virtual organization as not physically
existing as such, but enabled by software to exist. The
virtual organization exists within a network of alliances,
using the Internet. This means while the core of the
organization can be small but still the company can
operate globally be a market leader in its niche.
 DIMENSION OF STRUCTURE
• The structure has two dimensions:
• Horizontal
• Vertical
• The horizontal dimension defines the basic
departmentation
• The vertical aspects of the structure relates to
the creation of a hierarchy of superiors and
subordinates.
 DESIGN OF ORGANIZATIONAL
STRUCTURE
• In design of the structure of an organisation
there are two main considerations:
• Differentiation
• Integration
 Differentiation

• Differentiation is the process of deciding how

to divide the work in an organization. It
ensures that all essential tasks are assigned to
jobs and will be accomplished.
 Integration

• Integration is the process of coordinating the

different parts of an organization. Vertical
linkages integrate activities up and down the
organizational chain of command. Horizontal
linkages provide for communication and
coordination across jobs and departments.
The flatter the organization, the more
necessary horizontal integration linkages
become.
Factors Governing Design of an Organizational
Structure

10-32
 The Organizational
Environment
– The quicker the environment changes, the
more problems face managers.
– Structure must be more flexible (i.e.,
decentralized authority) when
environmental change is rapid.

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 The Organizational
Environment cont.
• Environment are of two types:
• Internal environment: Everything within the
organization, including its workers, managers, working
conditions and culture.
• External environment: The environment outside the
organization, for example suppliers of raw materials
and energy, customers, competitors, government
agencies etc.
 Strategy
– Different strategies require the use of
different structures.
• A differentiation strategy needs a flexible
structure, low cost may need a more formal
structure.
• Changes in corporate strategy should lead to
changes in an organization’s structure that
support that strategy

10-35
 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.

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 Technology cont.
– Technology can be measured by:
• Task variety: the number of new problems a
manager encounters.
• Task analyzability: the availability of
programmed solutions to a manager to solve
problems.

10-37
 Human Resources
– Highly skilled workers whose jobs require
working in teams usually need a more
flexible structure.
– Higher skilled workers (e.g., doctors,
engineers etc) often have internalized
professional norms and values.

10-38
 Size
• As an organization structure grows
larger, it structure tends to change
 Contents
• Introduction
• Types
• Advantages
• Disadvantages
 Introduction
• Division of labor means that the main process
of production is split up into many simple
parts and each part is taken by different
workers who are specialized in the production
o f t h a t s p e c i f i c p a r t .
• As our resources are scarce, to satisfy the
largest possible number of wants, we have to
organize them by division of labor - a way that
yields the greatest volume of output. .
 Types of Division of labour
There are three types of division of labor :
• Simple division of labor
• Complex division of labor
• Regional and international division of labour
 Simple division of labour
• A person specializes in producing a particular
product or service.
• It is more common in a primitive society.
• E.g. farming
 Complex division of labour
• A person specializes in a sub-process of the
production of a good or service.
• It is more common in modern society

Click for examples

 Regional and international
division of labour
• Different countries specialize in certain types
of products.

E.g. production
of garments in HK

Country A
Country B
Practice makes perfect
choosing the best person to do a job
Economy of time
Economy of capital goods
Possibility of mechanization
Repetition of the same
task means practice
makes perfect , it
develops skills in the
particular job , it
increases labour
productivity
With different talent, workers perform
different jobs. It can be able to handle
the job more easily.
•Efficiency of labour
•total output
•Save time in training
workers
•save time in changing
tools from one task to
another
increase labour productivity
•Increase duplication of tools and
equipment
•increase capital goods needed
•decrease average cost of
production
Mass production means possible to
employ machines to replace the
workers
• increase labour productivity
•increase total output
 Disadvantages
Work becomes dull & monotonous
Greater degree of interdependence
Greater risk of unemployment
Decline in the quality of
craftsmanship
Work becomes dull
and Monotonous
Worker repeats the same job every day

Work becomes dull and monotonous

Worker lose interest

Decline in productivity
 Greater Degree of
Interdependence
• Different departments are
more interdependent because
the output of one department
is the input of another
department
 Greater Degree of
Interdependence
• Different industries are more
dependent on each other for
the raw materials produced

rubber plantations automobile industry

tyre-making industry
 Greater Degree of
Interdependence
• Countries become more
dependent on each other
eg.Tanzania depends on Arab Emirates for
refined petroleum
Tanzania depends on imported petroleum
 Greater risk of
unemployment
• It is often difficult for a worker
trained for a particular task or
profession to change over to
another job
Decline in the quality of
craftsmanship
Mass production method used in
modern factories results in highly
standardized products
Fewer people will specialize in the
hand-made products
Overall quality of craftsmanship
will drop
 DELEGATION OF AUTHORITY

INTRODUCTION
• An individual is only one man power. Single-
handed, he can accomplish only so much in a
day. The only way he can achieve more is
through delegation- through dividing his load
and sharing his responsibilities with others.
• Probably the most important of all the skills a
manager must posses is delegation- the ability
to get results through others.
• Delegation is important because it is both the
gauge and a means of a manager’s
accomplishment. Once a man’s job grows his
beyond his personal capacity, his success lies
in his ability to multiply himself through other
people(subordinates).How well he delegates
determines how well he can manage.
• A manager who carries full briefcase home, is
often overloaded-overworked because he
does not know how to delegates.
 DELEGATION OF AUTHORITY
Delegation defined:
• Delegation may be defined as the entrustment
of responsibility and authority to another and
creation of accountability for performance.
• Delegation of authority merely means the
granting of authority to subordinates to
accomplish particular assignment while
operating within prescribed limits and
standard established.
 ESSENTIAL ELEMENTS OF
DELEGATION
1. Assignment of work(or responsibility) to
another(person) for performance.
2. Grant authority to be exercised.
3. Creation of an obligation or accountability on
the person accepting the delegation to
perform in terms of the standard established.
• The word accountability indicates liability for
the proper discharge of duties by the
subordinate. It is the obligation to carry out
responsibility and exercise authority in terms
of performance standard established.
• Responsibility is the work assigned to a
position. Responsibility refers to the mental
and physical activities which must be
performed to carry out a task or duty.
 PRINCIPLES OF DELEGATION OF
AUTHORITY
I. Parity between authority and responsibility.
II. Responsibility in terms of results.
III. Principle of unity of command(The principle
that no subordinate in an organization
should report to more than one boss)
IV. Delegation of responsibility
V. Free flow of information
VI. Delegated authority.
 PROBLEM OF DELEGATION OF
AUTHORITY
Though delegation appears to be a simple
process, many problems or difficulties come in
the way of effective delegation authority.
These difficulties may be classified as under
the following heads:
• On the part of management/executive.
• On the part of the subordinate.
• On the part of the organization
 On the part of
management/executive.
• Feeling of perfection
• Lack of ability to direct.
• Lack of confidence in subordinate
• Fear of being exposed
• Absence of controls.
• Desire of dominance
 On the part of the subordinate.
• Dependence on boss
• Fear of criticism
• Lack of self confidence
• Overburden with work
• Lack of proper facilities
• Lack of incentives
 On the part of the organization
• Defective organization structure and non
clarity of authority-responsibility relationship
• Defective and inadequate planning and policy
formulation
• Lack of unity of command
• Lack of effective control mechanism in the
organization
 AUTHORITY AND RESPONSIBILITY
RELATIONSHIP
• Authority implies right to command and power to act.
• Authority empowers the superior to make a
subordinate to do work.
• Responsibility may be defined as the obligation of a
subordinate to whom a duty has been assigned, to
perform the duty.
• Responsibility is the assignment of duties(task) by
the executive to the subordinates, which the
subordinate is expected to perform. This now
becomes the responsibility of the subordinate to
complete the task given to him by the executive.
• Responsibility arises from the superior-subordinate
relationship, from the fact that the superior has the
authority to take the specified service from the
subordinate.
• In order to enable the subordinate to perform his
responsibility well, the superior must clearly tell the
former as to what is expected of him.
 DERPARTMENTATION
Definition: Departmentation is the process of breaking
down an enterprise into various department, divisions
and other homogenous units
Identifying and grouping of similar activities into on
some logical basis so that a team of persons can be
organized in order to attain the objectives of the
enterprise may called departmentation
When the size of an enterprise grows, the number of
employees(persons) also increase. There is a
limitation on the number of persons an enterprise can
manage directly. This limitation restricts the of
enterprise if the enterprise does not opt for the
device of Departmentation( i.e. horizontal
differentiation)
Hence, departmentation or grouping of
activities into department is very essential
because it limits number of
subordinates(manpower ) to be supervised by
a manager; it would have otherwise been
difficult to manage a team of large number of
subordinate by a single superior and thus the
size of the business enterprise would be very
limited. A department is a work group
combined together for performing certain
 Aims of departmentation
a) To group activities and personnel to make
manageable units.
b) To bring specialization in the performance of
various units.
c) To fix responsibility of the heads of various
departments for the achievement of
organization goals
 Advantages of Departmentation
I. Since every one knows precisely his duties
and authority, the efficiency of the
enterprise e increases.
II. As jobs are well-defined and responsibilities
well clarified, it is easy to fix accountability
for the results.
III. The departmental managers are given
opportunity to take initiative and learn new
managerial skills
IV. Departmentation provides a basis on which
top management can coordinate the
activities of different department
 Key Factors in Departmentation
• It should ensure proper coordination.
• It should take into consideration the benefits
of specialization.
• It should not result in excess cost.
• It should give due consideration to Human
Aspects.
 Methods of Departmentation
• Departmentation takes place in various
patterns like departmentation by
functions,products,customers, geographic
location.
 Functional Departmentation

• Functional departmentation is the process of

grouping activities by functions performed.
• Activities can be grouped according to
function (work being done) to pursue
economies of scale by placing employees with
shared skills and knowledge into departments
for example human resources, finance,
production, and marketing. Functional
departmentation can be used in all types of
organizations.
 Product Departmentation
• Product departmentation is the process of
grouping activities by product line. Tasks can
also be grouped according to a specific
product or service, thus placing all activities
related to the product or the service under
one manager. Each major product area in the
corporation is under the authority of a senior
manager who is specialist in, and is
responsible for, everything related to the
product line. Dabur India Limited is the India’s
 Customer Departmentation

• Customer departmentation is the process of

grouping activities on the basis of common
customers or types of customers. Jobs may be
grouped according to the type of customer
served by the organization. The assumption is
that customers in each department have a
common set of problems and needs that can
best be met by specialists.
• UCO is the one of the largest commercial
banks of India is an example of company that
uses customer departmentation. Its structure
is based on various services which includes
Home loans, Business loans, Vehicle loans and
Educational loans.
 Geographic Departmentation

• Geographic departmentation is the process of

grouping activities on the basis of territory. If
an organization's customers are geographically
dispersed, it can group jobs based on
geography. For example, the organization
structure of Coca-Cola Ltd has reflected the
company’s operation in various geographic
areas such as North Zone- Bonite Bottlers,
Western North – Lake Bottlers, Eastern Zone –
Coca Cola Kwanza.
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