MGMT 2100 Chapter Notes - Chapter 9: Departmentalization, Job Performance, Decision-Making
Organizational Structure: the vertical and horizontal configuration of departments, authority,
and jobs within a company
● Who reports to whom?
● Who does what?
● Where is the work done?
Organizational Process: the collection of activities that transform inputs into outputs that
consumers value
● How do things get done?
Departmentalization: subdividing work and workers into separate organizational units
responsible for completing particular tasks
● Most organizational structures are based on some form of departmentalization
Types of Departmentalization:
● Function Departmentalization: organizing work into separate units responsible for
particular business function or areas of expertise
○ Most common organizational structure
○ Companies use this when they are small or just starting out
○ Ex. accounting, sales, marketing, production, and human resource departments
■ Types of departments depends on the business or industry
○ Advantages:
■ Allows work to be done by highly qualified specialists
■ Lowers costs by reducing duplication
● When the engineers come up with a new product, they don’t have
to worry about creating an ad campaign for it, the marketing
department does that
■ Since everyone in the same department has similar work experience or
training, communication and coordination are less problematic for
department managers
● Narrow expertise (all similar)
○ Disadvantages:
■ Cross-department coordination can be difficult
● Ex. marketing and manufacturing traditionally don’t agree
■ Managers and employees are often more interested in doing what’s right
for their function than in doing what’s right for the entire organization
● Product Departmentalization: organizing work and workers into separate units
responsible for producing particular products or services
○ Advantages:
■ Allows managers and workers to specialize in one area of expertise
■ Makes it easier for top managers to assess work-unit performance
● Can easily compare one product’s performance to another
■ Broader set of experience and expertise related to an entire product line
■ Decision making should be faster
find more resources at oneclass.com
find more resources at oneclass.com
● Managers and workers are responsible for the entire product line
rather than for separate functional departments (fewer conflicts)
○ Disadvantages:
■ Duplication of resources
● Multiple product lines have some of the same departments
○ Ex. 2 product lines may both have a customer service,
engineering, and human resources department
● Results in higher costs
○ If they used functional departmentalization they could have
one customer service department for both product lines
■ Challenge of coordination across the different product departments
● Leads to difficulty in standardizing policies and procedures
● Customer Departmentalization: organizing work and workers into separate units
responsible for particular kinds of customers
○ Ex. residential customers, small- and medium-sized business, enterprise
customers, and IT network and innovation
○ Advantages:
■ Focuses the organization on customer needs rather than on products or
business functions
■ Allows companies to specialize and adapt their products and services to
customer needs and problems
● Because there are separate departments to serve special kinds of
customers
○ Disadvantages:
■ Duplication of resources
■ Challenge of coordination across the different customer departments
■ Workers make decisions that please customers but hurt the business
● Because of the emphasis on meeting customers’ needs
● Geographic Departmentalization: organizing work and workers into separate units
responsible for doing business in particular geographic areas
○ Advantages:
■ Helps companies respond to the demands of different markets
■ Reduce costs by locating unique organizational resources closer to
customers
● Ex. it is cheaper to build bottling plants in each region, than to
transport beer to Belgium, where it has 4 plants, after it has been
brewed and bottled in Russia, where it has 8 beverage plants
○ Disadvantages:
■ Duplication of resources
● Ex. While it may be necessary to adapt products and marketing to
different geographical locations, it’s doubtful that they need
significantly different inventory tracking systems from location to
location (they have different ones for each location, but really
could just use mainly 1)
find more resources at oneclass.com
find more resources at oneclass.com
■ Challenge of coordination across the different geographical departments
● Even more difficult than the rest because departments are
thousands of miles away from each other
● Matrix Departmentalization: a hybrid organizational structure in which two or more
forms of departmentalization, most often product and functional, are used together
○ Global business units are responsible for product initiatives or upgrades
○ Most employees report to 2 bosses
■ 1 from each core part of the matrix
○ Lead to much more cross-functional interaction than other forms of
departmentalization
■ Communication between different departments is much better
■ While workers are typically members of only 1 functional department they
are also commonly members of several ongoing project, product, or
customer groups
○ Requires significant coordination between managers in the different parts of the
matrix
■ Because of the high-level of cross-functional interaction
■ Managers have the complex job of tracking and managing the multiple
demands (project, product customer, or functional) on employees’ time
○ Advantage:
■ Allows companies to manage in an efficient manner to large, complex
tasks
● Efficiency comes from avoiding duplication
○ Ex. rather than having an entire marketing function for
each project, the company simply assigns and reassigns
workers from the marketing department as they are
needed at various stages of production
■ The pool of resources available
● Have a much more diverse set of experience because of the
ability to pull in expert help from all functional areas of the
company
○ Disadvantage:
■ High level of coordination required
● Often lots of confusion and conflict
● Disagreements or misunderstanding about schedules, budgets,
available resources, and the availability of employees with
particular functional expertise
○ Many matrix structures evolve from a Simple Matrix: a form of matrix
departmentalization in which managers in different parts of the matrix negotiate
conflicts and resources
○ And turn into a Complex Matrix: a form of matrix departmentalization in which
managers in different parts of the matrix report to matrix managers, who help
them sort out conflicts and problems
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Organizational structure: the vertical and horizontal configuration of departments, authority, and jobs within a company. Organizational process: the collection of activities that transform inputs into outputs that consumers value. Departmentalization: subdividing work and workers into separate organizational units responsible for completing particular tasks. Most organizational structures are based on some form of departmentalization. Function departmentalization: organizing work into separate units responsible for particular business function or areas of expertise. Companies use this when they are small or just starting out. Ex. accounting, sales, marketing, production, and human resource departments. Types of departments depends on the business or industry. Allows work to be done by highly qualified specialists. When the engineers come up with a new product, they don"t have to worry about creating an ad campaign for it, the marketing department does that. Since everyone in the same department has similar work experience or training, communication and coordination are less problematic for department managers.
