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Lecture 12

ADM 1100 Lecture Notes - Lecture 12: Organizational Architecture, Decision-Making


Department
Administration
Course Code
ADM 1100
Professor
Alan O' Sullivan
Lecture
12

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Lecture 12 - Broad kinds of organization design
III. Broad kinds of organization design
Functional: group by activity (marketing ,production, etc)
Prioritizes achieving profitability through gains of specialization
Advantages:
It focuses attention on the key activities that must be performed
Expertise develops within each function
Employees have clearly defined career paths
The structure is simple and easy to understand
It eliminates duplication of activities
Disadvantages:
Conflicts may arise among the functional areas.
No single function is responsible for overall organizational performance.
Employees in each functional area have a narrow view of the
organization
Decision making is slowed because functional areas must get approval
form top management for a variety of decisions.
Coordinating highly specialized functions may be difficult.
Divisional: group first by output (product, geographic market), then by
activity
Prioritizes achieving profitability through gains from integration
Advantages:
It accommodate change and expansion.
It increases accountability.
It develops expertise in the various divisions.
It encourages training for top management.
Disadvantages:
Activities may be duplicated across divisions.
A lack of communication among divisions may occur.
Adding diverse divisions may blur the focus of the organization.
Company politics may affect the allocation of resources.
Matrix/project: cross-organizes by activity and output
Prioritizes achieving profitability through gains from ad hoc
Matrix - or project-based structure
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