COMMERCE 1AA3 Chapter Notes - Chapter 14: Virginia Department Of Alcoholic Beverage Control, Ambidexterity

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Teal Mc Ateer Mc Master University C O M M E R C E1 A A3

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Chapter 14: Organizational Structure
What is Org’al Structure
Organizational structure
- the manner in which an org divided its labour into specific tasks and achieves coordination
among these tasks
-Refers to how an org’s individuals and groups are put together or organized to accomplish
The division and coordination of labour - 2 basic dimensions to the division of
1)Vertical Division of labour
-appointing authority for planning and decision making(who tells who wat to do)
-ex-university(president to dean to chairman)
Themes of vertical division of labour
Autonomy and control-managers have less authority over fewer matters(authority is reduced
as hierarchy increases) -flatter hierarchy pushes authority lower meaning ppl further down
hierarchy are involved in more decisions
Communication-as labour is divided vertically more, timely communication and coordination
can become harder to achieve
-as the number of levels in hierarchy increases , more filtering occurs
2)Horizontal Division of Labour
-groups jobs into departments so the org can achieve its goal
Themes of horizontal division of labour
Job Design-suppose you have a org that consists of work A, work B, work C. there are three
ways to structure this org horizontally
1)form an ABC department where everyone can do each A,B,C work
2)form an ABC department where workers specialize in either A work, B work, C work
3)form a separate A dept, B dept, C dept
Differentiation-org that engages in more and more horizontal division of labour usually
becomes more differentiated(differentiation-the tendency for managers in separate units,
functions, or departments to differ in terms of goals, time spans and interpersonal styles)
Departmentation- the assignment of jobs into a department(core aspect of horizontal division
of labour)
Methods of depatmentation
1)Functional departmentation-employees with closely related skills and responsibilities are
assigned to the same department(those with skills in sales and advertising are assigned to
Adv of functional departmentaion-very efficient, communication within departments should be
enhanced, performance is easier to measure and evaluate since all are located in the same
Disadv of functional departmentation-poor coordination and slow response to org’al
problems because high differentiation between functional departments
2)Product departmentation-departments are formed on the basis of a particular product,
product line and or service
Adv of product d-better coordination among functional specialists who work on product line, less
barriers to communication, can be evaluated as profit centres since they have independent
control over costs and revenues, flexibility

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3)matrix departmentation-attempt to capitalize simultaneously on the strengths of both
functional and product departmentation
-employees remain members of a functional department while also reporting to a product
-ex-a mechanical eng for a global eng company can report to both the mechanical eng’ing
department as world headquarters and the regional manager for middle east operations
Two problems for the matrix departmentation
1)there is no guarantee that product or project managers will see eye to eye with various
functional managers
2)employees report to two managers, their functional manager and their product manager, this
violates the classical management principle of every employee shud only have 1 boss and can
result in role conflict and stress
Geographic departmentation-self contained units deliver an org’s products or services in a
specific geographic territory
Customer departmentation-self contained units deliver an org’s products or servies to a
specific customer group
Hybrid departmentation-a structure based on some mixture of functional, product, geographic
and or customer departmentation
Basic Methods of coordinating divided labour- 5 basic methods of coordination which is a
process of facilitating timing, communication and feedback
Direct supervision-working through the chain of command, designated supervisors or
managers coordinates the work of his or her subordinates
Standardization of work processes-technology itself provides a mean of coordination, little
direct supervision is necessary for this job(automobile assembly line)
Standardization of outputs-ensure that the work is done correctly and meets certain physical
or economic standards
-usually used to coordinate the work of separate product or geographic divisions
Standardization of skills-a large surgery team can often coordinate its work with minimal
verbal communication because of its high degree of interlocking training(each know what to
expect from each other because of their training)
Mutual Adjustment-relies on informal communication to coordinate tasks
-useful in corrdinating the most simple and the most complicated divisions of labour
-ex-a small florist shop has a owner-operater, a shop assistant, and a delivery person. It is likely
that these individuals will coordinate their work through informal processes, mutually adjusting
to each other needs.
Other methods of coordination- the ones above are very basic and are used by every
-the process of attaining coordination across differentiated departments is called integration
3 methods of integration in ascending order of elaboration are:
Liaison Roles- a liaison role is occupied by a person in one department who is assigned to help
achieve coordination between their department and another department
-one person serves as a part time link between both departments
Task forces and teams-task force-temporary groups set up to solve coordination problems
across several departments
-representatives from each department are included in the group, when integration is achieved
the group is dismantled
-Self managed and cross functional teams are also an effective means of achieving coordination
-such teams involve interaction among employees who would have otherwise been in an
independent vacuum
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