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Chapter 3

Chapter 3 -Fundamentals of Organizational Structure.docx

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Wilfrid Laurier University
Steve Risavy

Sunday, January 13 , 2013 Fundamentals of Organizational Structure  Organizations use various structural alternatives to help them achieve their purpose and goals  Nearly every firm needs to undergo structural reorganization to help them meet new challenges Organizational Structure  Three key components: 1. designates formal reporting relationships – hierarchy, span of control 2. groups individuals together into departments, developing the entire organization 3. design of systems for effective communication, coordination, integration across all departments  structure is reflected in an organizational chart; visual representation of a whole set of underlying processes and activities in an organization at a particular point in time Information-Processing Perspective on Structure  vertical linkages are designed primarily for control  horizontal mechanisms are for coordination and collaboration, which reduces control  organizations must be designed for both horizontal and vertical information flow, find the best combination  more vertical is built for efficiency, more horizontal is built for learning Vertical - EFFICIENCY Horizontal – LEARNING  specialized tasks  shared tasks  few teams  horizontal hierarchy  strict hierarchy  few rules  vertical reporting system  face-to-face communications  centralized decision making  many teams/task forces  communication among  decentralized decision making employees an departments necessary  overcomes barriers between departments and to accomplish the overall task provides opportunities for coordination among  lower level employees carry employees to achieve unity of effort and organizational out activities consistent with top- objectives level goals  Devices:  Devices: 1. Information Systems: computerized way for 1. Hierarchical Rules: chain of front-line employees and managers to routinely command acting as communicate, provide support communication channels 2. Direct Contact: one way of doing this I through 2. Rules and Plans: makes a liaison role where a person is responsible for problems and decisions communicating and achieving coordination Sunday, January 13 , 2013 repetitions because they guide between departments how they are to resolve 3. Task Forces: temporary committee composed things, they provide structure of representatives of each organizational unit and unspoken guidance and affected by a problem expectations 4. Full-time Integrator: a position or department 3. Vertical Information responsible solely for the purpose of System: periodic reports, coordination, located outside departments – written information, like a brand manager – lot of responsibility, but computer-based little authority communications distributed 5. Teams: strongest horizontal linkage to managers mechanism, permanent – strong coordination over long periods of time Organizational Design Alternatives Required Work Activities  Departments are created to perform tasks created strategically important to the company Reporting Relationships  How the departments should fit together in the organizational hierarchy  Chain of command, reped through vertical lines linking people together Departmental Grouping Options  Five options: 1. Departmental: employees share a common supervisor and common resources, jointly responsible for performance, identify and collaborate, 2. Functional: employees who perform similar work processes, have similar knowledge, skills – not as common today, hard to maintain pure functional organization – ex. University Strengths Weaknesses  Allow economies of scale  Slow response to within functional environmental changes departments  May cause decisions to pile  Enables in-depth skills and up, hierarchy overload knowledge development  Leads to poor horizontal  Enables organizations to communication accomplish functional goals  Less innovation  Best with only one or few  Restricted view of products organizational goals  Valuable when in-depth expertise is critical to meet organizational goals and efficiency is necessary Sunday, January 13 , 2013 3. Divisional: people organized according to what the organization produces, sometimes called a product structure or strategic business units Strengths Weaknesses  Suited to fast change in  Eliminates economies of unstable environment scale in functional  Customers satisfaction departments because contact points and  Leads to poor coordination product responsibility is across product lines clear  Eliminates in-depth  Involves high coordination competence and technical across functions specialization  Allows units to adapt to  Makes integration and different regions, customers, standardization across products product lines difficult  Best in large organizations with several products  Decentralizes decision making 4. Multi-focused/Matrix: organization embraces two structural grouping alternatives, both product division and functional structure are implemented simultaneously  Conditions: 1. pressure exists to share resources across product lines, medium- sized organization with moderate number of products 2. environmental pressure from 2 or more critical outputs, this means balance of power is needed between functional and product side 3. environment is complex and unstable, frequent changes and high interdependence between departments require a large amount of coordination and information processing  formalizes horizontal teams and traditional vertical hierarchy, trying to give equal balance  usually one side, product of functional, dominates and has more power Strengths Weaknesses  Strong form of horizontal  Causes participants to linkage experience dual authority,  Produc
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