GMS Chapter 8
Organization as a Management
- Organizing: arranges people and resources to work toward a goal.
- Organizing viewed in relationship with other management functions.
o Organizing: to create structures
Divide up the work
o Controlling: to ensure results
o Leading: to inspire effort
o Planning: to set the direction
What is Organization Structure?
- Organization Structure: is a system of tasks, reporting relationships, and
- Formal structure: is the official structure of the organization.
- An organization chart: describes the arrangement of work positions within
- By reading an organization chart, you can learn the basics of an
organization’s formal structure, including:
o Division of work: Position and titles show work responsibilities.
o Supervisory relationships: Lines show who reports to whom.
o Communication channels: Lines show formal communication flows.
o Major subunits: Positions reporting to a common manager are shown.
o Levels of management: Vertical layers of management are shown.
- Informal structure: is the set of unofficial relationships among an
- Social network analysis: Identifies the informal structures and their
embedded social relationships that are active in an organization.
Traditional Organization Structures
- decisions must be made regarding departmentalization
- Departmentalization: is the process of grouping people and jobs into work.
- Functional structure: groups together people with similar skills who perform
- Advantages of functional structures
o Economies of scale with efficient use of resources.
o Task assignment consistent with expertise and training.
o High-quality technical problem solving. o In-depth training and skill development within functions.
o Clear career paths within functions.
- Disadvantages of Functional Structures
o There are potential disadvantage of functional structures. Common
problems difficulties in pinpointing responsibilities for things like cost
containment, product or service quality, and innovation. A significant
concern with the functional chimneys problem.
o Functional chimneys problem: is a lack of communication and
coordination across functions.
- Divisional structure: groups together people working on the same product, in
the same area, with similar customers, or on the same processes.
- Product Structures: groups together people and jobs focused on a single
product or service.
Geographical Structures: Geographic structure: groups together people and
jobs performed in the same location.
- Customer structures: Customer Structure: groups together people and jobs
that serve the same customer or clients.
- Work Process: is a group of related tasks that collectively creates a valuable
- Process structure: Groups jobs and activities that are part of the same
- Advantages and Disadvantages of Divisional Structures:
o More flexibility in responding to environmental changes.
o Improved coordination across functional departments.
o Clear points of responsibility for product or service delivery.
o Expertise focused on specific customers, products, and religions.
o Greater ease in changing sixe by adding or closing down divisions.
- Matrix Structure: combines functional and divisional approaches to
emphasize project or program teams.
- Advantages of Matrix Structures:
o Better cooperation across functions.
o Improved decision- making problem solving takes place at the team
level where the best information is available.
o Increased flexibility in adding, removing, or changing operations to
meet changing demands.
o Better customer service; there is always a program, product, or
o Improved strategic management; top managers are freed from lower-
level problem solving to focus more time on strategic issues.
- Disadvantages of Matrix Structures
o The two boss system is susceptible to power struggle, as functional
supervisors and team leaders vie with one another to exercise
authority. o The two boss system can also be frustrating if it creates task confusion
and conflicting work priorities.
Horizontal Organization Structure
- Team structure: uses permanent and temporary cross-functional teams to
improve lateral relations.
- Cross-functional team: brings together members from different functional
- Project Teams: are convened for a particular task or project and disband
once it is completed.
- Advantages of Team Structures: Team structures help eliminate difficulties
with communication and decision making that result form functional
chimney problem. Team assignment break down barriers between
departments as people from different parts of an organization get to know on
- Disadvantages of Team Structures: T