Organization

An organization is the

structure and process by which a group of people allocates the tasks among its members, identifies relationships and integrate their activities towards common objectives.

Organizing
Arranging the activities

of the enterprise in such a way that they systematically contribute to the enterprises goals.

Organization Structure
Organization structure

is designed to clarify Who is to do what tasks and Who is responsible for what results Structure is an important tool that orients managers and subordinates to think and act within a specified framework.

Organization Chart
Organization Chart
A chart that shows the

structure of the organization including the title of each managers position and, by means of connecting lines, who is accountable to whom and who has authority for each area.

Organizational Structure: Terminologies

Chain of command The management principle that no person should report to more than one boss Span of control The number of subordinates a manager can direct efficiently and effectively

Authority The rights inherent in a managerial position to give orders and expect them to be obeyed
Responsibility An obligation to perform assigned activities Power An individuals capacity to influence decisions

Departmentation and Decentralization

Departmentation: The process through which an

organizations activities are grouped together and assigned to managers; the organization wide division of work.

Decentralization: The pushing down of decision-making

authority to the lowest levels of an organization

Departmentation can be done based on: Functional Product Customer Geographic Process

Functional Structure
An organizational form in which the major functions of

the firm, such as production, marketing, R&D, and accounting, are grouped internally.

Functional Structure
Advantages Enhanced coordination and control Centralized decision making More efficient use of managerial and technical talent Facilitated career paths and development in specialized areas Disadvantages Prevent communication and coordination due to differences in values and orientations May lead to short-term thinking (functions vs. organization as a whole) Difficult to establish uniform performance standards

Matrix Organizations
Matrix Organization An organization structure in which employees are

permanently attached to one department but also simultaneously have ongoing assignments in which they report to project, customer, product, or geographic unit heads.

Matrix Structure

Matrix Structure
Advantages: Better cooperation across functions Improved decision making Increased flexibility Better customer service Better performance accountability Disadvantages: Two-boss system is susceptible to power struggles Team meetings in the matrix are time consuming Teams may develop Groupitis Requirements of adding team leaders to a matrix structure can result in increased costs Groupitis- strong team loyalties that cause a loss of focus on larger organizational goals

Tall And Flat Organizations Span Of Control

Span of Control The number of subordinates reporting directly to a supervisor.
Wide spans: larger number of direct reports. Narrow spans: fewer number of direct reports.

Tall vs. Flat Organizations Tall organizations: more management layers and more hierarchical controls. Flat organizations: fewer management layer and decision making closer to the customer.

Boundaryless Organization
Boundaryless organization which describes an organization whose design is not defined by, or limited to, the boundaries imposed by a predefined structure. 1. Removes internal (horizontal) boundaries: a. Eliminates the chain of command b. Has limitless spans of control c. Uses empowered teams rather than departments 2. Eliminates external (vertical) boundaries: a. Uses virtual, network, and modular organizational structures to get closer to stakeholders.

The Virtual Organization

An organization that

consists of a small core of full-time employees and that temporarily hires specialists to work on opportunities that arise.
A temporary network of

independent companies that use information technology to share skills, reduce costs, and provide access to one anothers markets.