Scribd
Upload
29 views

Organizational Structures

This document discusses different types of organizational structures including functional, divisional, matrix, and hybrid structures. It describes the key characteristics of each type of structure and when they are most appropriate depending on factors like the size, goals, and environment of the organization. The document also examines frameworks for linking organizational structure to strategy, environment, and technology.

Uploaded by

Avinash Kamble
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
29 views

Organizational Structures

This document discusses different types of organizational structures including functional, divisional, matrix, and hybrid structures. It describes the key characteristics of each type of structure and when they are most appropriate depending on factors like the size, goals, and environment of the organization. The document also examines frameworks for linking organizational structure to strategy, environment, and technology.

Uploaded by

Avinash Kamble
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 28

Organizational

Organizational
structures
structures
Lecture 7
Definitions of
organizational structures
• They define the levels of management in
organizations;
• Org.structures define relationships between jobs;
• They define the centers of decisions in any
organization.
• They help to achieve organizational goals by
grouping jobs, defining relationship between
positions as well as who takes the responsibility in
organnzation.
Types of organizational
structures
• Functional organizational structure.
Employees are grouped together according
to their similar tasks, skills or activities.
Functional structures are suitable for
SMEs with high level of specialization.
The decision making is centralized at the top
of the organization.
Benefits of functional
organizational structure
• Efficient use of resources;
• In-depth skill development;
• Clear career paths;
• Strategic decisions are made on the
top of the organization.
Disadvantages od
functional design
• Slow decision making
• Less innovative.
• Performance responsibility is unclear;
• Limited management training.
• Poor coordination across functions.
Divisional organizational
structure
• It is suitable for medium sized to big
companies, expanding geographically
or on customer base.
• A Divisional design means that all
activities needed to produce a good
or service are grouped into an
anonymous unit.
Differences between
functional and divisional
design
• Functional designs • Divisional design
are based on considers output
groupings by input; such as product,
• Each department is customer or
not an independent location.
profit center; • Each division is
independent profit
center;
Forms of divisional
responsible design
• Product division. Each unit is for a single product
or a group of related products. Division by
products is created when there is specific in the
production process;
• Customer division. Organization sells products to
diverse group of customers.
• Geographic division. It is advantageous when is
necessary to locate facilities close to customers
who have differences in regional tastes or needs.
Strengths of divisional
design:
• Adaptation to unstable environment;
• High customer satisfaction;
• High task coordination;
• Clear performance responsibility;
• General management training.
Weaknesses of divisional
design
• Inefficient use of resources;
• Low-in depth training. Decrease of the
number of personnel reduces the
specialization;
• Focus on division’s objectives.
• Difficult coordination between
headquarter and the division.
• Loss of control.
Hybrid design
• Hybrid design is one that has
divisional units but also have
functional departments specialized
and centralized in the headquarter.
Group task
• Give example of organizations having
functional, divisional design.
• For which industry is functional
design more appropriate and when
divisional is suitable?
Strengths of hybrid
design
• Simultaneous coordination;
• Integration of goals with objectives;
it provides autonomy for the divisions
to modify their objectives based on
unique situations.
• Adaptability and efficiency. Adapt to
the opportunities of the environment.
Matrix design
• It implements functional and divisional structures
simultaneously in each department.
• The worker in each department is being supervised by two
bosses at the same time.

• It is suitable for the following situations:


- Environmental pressure exists for a dual focus;
- Large amount of information needs to be processed;
- Innovations are performed
- Organization is working on several projects together.
- Efficiency is needed in the use of resources.
Strengths of matrix
design
• Provides flexibility;
• Encourages resource efficiency;
• Enhances skill development;
• Increase motivation and commitment;
• Helps top management in planning
process.
Weaknesses of matrix
design
• Creates dual authority confusion;
• Is time consuming;
• Generates high implementation cost;
• Requires interpersonal skill training;
• Spawns power struggle.
Organizational design and
environment
• The link between design and
environment is examined by Burns
and Stalker.
• There are two types of structures,
according to them:
- Mechanistic;
- Organic
Differences between
mechanistic and organic
designs
• In the mechanistic design, • In the organic design,
tasks are broken down into employees contribute to the
specialized, separate tasks. tasks of the department;
• Tasks are rigidly defined. • Tasks are defined and
• Strict hierarchy of authority adjusted through the
and control is used as well as employee interactions;
too many rules are applied. • Less hierarchy and control
• Knowledge and control of and few rules;
tasks are centralized at the • Knowledge and control are
top of organizations. located anywhere in the
• Communication is vertical. organizations;
• Communication is horizontal.
Task
• Give example of the organizations
with organic and mechanistic design.
• Which of the design forms is more
appropriate in Internet economy?
Relationship between
strategy and environment
• Organizations vary according to the
environment:
- Differentiation. It is the extent to which
the organization is broken down into
departments;
- Integration. It is the degree of
collaboration between the departments;
Relationship strategy and
structure
• Alfred Chandler gives the idea that
”Structure follows the strategy”.
• There are 3 strategies possible
according to Chandler:
- Defender;
- Prospector;
- Analyzer.
Strategies by Chandler
• Defender • Prospector

Strategy: To protect the Strategy: Seek high growth


organization’s market of the organization’s
market
Problem: how to maintain
strict control of the Problem: How to facilitate
organization and coordinate numerous
activities
Structure: Divisional design, Structure: Divisional design
centralized control. and decentralized control.
Strategies by Chandler
• Analyzer

Strategy: protect some markets while seeking


growth in other markets
Problem: How to differentiate the organization’s
structure and processes to accommodate both
stable and dynamic areas of operation.
Structure: Matrix design, centralized control.
Link between strategy and
structure by Mintzberg
• Design consists of 5 elements:
• Strategic apex; top management and its
staff;
• Middle line; Middle and first-line
managers;
• Operating core;
• Technostructure; engineers, researchers,
technician;
• Support staff.
Structures by Mintzberg
• Simple structure. It is used by small and
young organizations run by aggressive
environment.
• Machine bureaucracy. The organization is
large and old, there is standartization of
work processes. It is suited to stable and
simple environment.
Types of structures
• Professional bureaucracy. Operating core is
dominating, coordination is achieved through
standardization of skills. Decentralized decision
making.
• Divisionalised form. Standartization of output is
performed. Decisions are made by middle
managers. Suitable for steady environment.
• Adhocracy. Typical for dynamic and complex
environment. Matrix design with focus on
operating core and technostructure.
Relationship between
technology and
organizational design
• Technology is process that transforms
input into output. It includes technology,
knowledge, tools, techniques.
Woodward identified three categories of
technology:
• Unit, small-batch technology;
• Large batch, mass production technology;
• Continuous process technology.

You might also like