Week 6 - Organizational Structure

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Week 6 - Organizational Structure Design
Principles of Management

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Definitions

• Organizational Structure
• The formal arrangement of jobs within an
  organization
• Work specialization
• The degree to which tasks are divided into
  separate jobs (division of labor)
• Departmenalization
• The basis by which jobs are grouped together
• Geographical, functional, product, process,
  customer
• Cross-functional teams

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Definitions

• Chain of command
• The continuous line of authority
• Span of control
• Number of employees a manager can effectively
  manage
• Centralization
• The degree to which decision making is
  concentrated at a single point in the org
• Decentralization - the degree to which
  lower-level employees provide input or actually
  make decisions
• Formalization
• The degree to which jobs are standardized
• The degree to which employee behavior is guided
  by rules and procedures

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Mechanistic vs. Organic Org

• Organic Org
• Low work specialization (use of cross-functional
  teams)
• Low departmentalization Short chain of command
• Wide spans of control
• Decentralization
• Low formalization

• Mechanistic Org
• High work specialization
• Rigid departmentalization
• Long chain of command
• Narrow spans of control
• Centralization
• High formalization

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When to use the 2 structures

• Strategy
• Cost strategy mechanistic
• Differentiation strategy organic
• Size
• Large org mechanistic
• Small org organic
• Environmental uncertainty
• Certain mechanistic
• Uncertain organic

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Other contemporary structures

• Team structures
• The entire org is made of work groups
• Matrix structure
• Specialists from different functions to form
  teams to work on projects
• Project structure
• Employees continuously work on projects
• But no formal departments

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Other contemporary structures

• Boundaryless org
• No predefined structures
• Virtual org
• Consists of a small core of employees and hires
  temporary outside specialists to work on
  opportunities that arise
• Network org
• A small core org that outsources major business
  functions