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After studying the chapter, you should be able to:Identify the factors that influence managers’ choice of an organizational structure.Explain how managers group tasks into jobs that are motivating and satisfying for employees.Describe the types of organizational structures managers can design, and explain why they choose one structure over another.Explain why there is a need to both centralized and decentralized authority.
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hapter
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hapter
10Managing Organizational
Structure
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Learning Objectives
After studying the chapter you should be able to! "dentify the factors that influence managers#
choice of an organizational structure$
%&plain how managers group tasks into jobsthat are 'otivating and satisfying for e'ployees$ (escribe the types of organizational structures
'anagers can design and e&plain )hy they
choose one structure over another$ %&plain )hy there is a need to both centralized
and decentralized authority$
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Learning Objectives
%&plain why managers must coordinate
and integratebet)een jobs functions and
divisions as an organization gro)s$
%&plain )hy 'anagers )ho see+ ne) )ays
to increase efficiency and effectiveness
are using strategic alliances and net)or+
structures$
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Organizational Structure
Organizational Architecture he organizational structure
control syste's culture and
hu'an resource 'anage'ent
syste's that together
deter'ine ho) efficiently and
effectively organizationalresources are used$
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(esigning Organizational Structure
Organizing he process by )hich 'anagers establish )or+ing
relationships a'ong e'ployees to achieve goals$
Organizational Structure /or'al syste' of tas+ and reporting relationships
sho)ing ho) )or+ers use resources$
Organizational design he process by )hich 'anagers 'a+e specific
choices that result in a particular +ind oforganizational structure$
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/actors Affecting Organizational
Structure
Figure 101
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he Organizational %nviron'ent
he Organizational !nvironment he uic+er the environ'ent changes the
'ore proble's face 'anagers$
Structure 'ust be 'ore fle&ible 3i$e$
decentralized authority4 )hen
environ'ental change is rapid$
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he Organizational %nviron'ent
"trategy (ifferent strategies reuire the use of
different structures$A differentiation strategy needs a fle&ible
structure lo) cost 'ay need a 'ore for'al
structure$
"ncreased vertical integration or diversificationalso reuires a 'ore fle&ible structure$
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he Organizational %nviron'ent
#echnology he co'bination of s+ills +no)ledge tools
euip'ent co'puters and 'achines used
in the organization$
More co'ple& technology 'a+es it harder
for 'anagers to regulate the organization$
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he Organizational %nviron'ent
echnology echnology can be 'easured by!
as+ variety! the nu'ber of ne) proble's a 'anagerencounters$
as+ analyzability! the availability of progra''edsolutions to a 'anager to solve proble's$
7igh tas+ variety and lo) analyzability present'any uniue proble's to 'anagers$/le&ible structure )or+s best in these conditions$
Lo) tas+ variety and high analyzability allo)'anagers to rely on established procedures$
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ypes of echnology
S'all 8atch echnology S'all uantities of one-of-a-+ind products are
produced by the s+ills of the )or+ers )ho )or+
together in s'all groups$Appropriate structure is decentralized and fle&ible$
Mass 9roduction echnology Auto'ated 'achines that are progra''ed to
'a+e high volu'es of standard products$/or'al structure is the best choice for )or+ers )ho 'ust
perfor' repetitive tas+s$
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ypes of echnology
:ontinuous 9rocess echnology otally 'echanized syste's of auto'atic
'achines$
A fle&ible structure is necessary to allo) )or+ers to reactuic+ly to une&pected proble's$
"nfor'ation echnology 3"4 ;no)ledge 'anage'ent
he sharing and integrating of e&pertise )ithin andbet)een functions and divisions through realti'einterconnected " that allo)s for ne) +inds of tas+s and
job reporting relationships$
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he Organizational %nviron'ent
$uman %esources 7ighly s+illed )or+ers )hose jobs reuire
)or+ing in tea's usually need a 'ore
fle&ible structure$
7igher s+illed )or+ers 3e$g$ :9A#s and
doctors4 often have internalized
professional nor's$
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he Organizational %nviron'ent
$uman %esources Managers 'ust ta+e into account all four
factors 3environ'ent
strategy technology
and hu'an resources4
)hen designing the
structure of theorganization$
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he $ =$ Oldha'
Work Redesign3=eading MA! Addison-?esley 16504$
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>rouping
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Figure10*
#he Functional "tructure of +ier 1 ,mports
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(ivisional Structures
'ivisional "tructure An organizational structure is co'posed of
separate business units )ithin )hich are the
functions that )or+ together to produce a specificproduct for a specific custo'er(ivisions create s'aller 'anageable parts of a fir'$
(ivisions develop a business-level strategy to co'pete$
(ivisions have 'ar+eting finance and other functions$/unctional 'anagers report to divisional 'anagers )ho
then report to corporate 'anage'ent$
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ypes of (ivisional Structures
9roduct Structure :usto'ers are served by self-contained divisions
that handle a specific type of product or service$
Allo)s functional 'anagers to specialize in one productarea
(ivision 'anagers beco'e e&perts in their area
=e'oves need for direct supervision of division by
corporate 'anagers
(ivisional 'anage'ent i'proves the use of resources
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Figure 10-
+roduct. /arket. and eographic "tructures
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ypes of (ivisional Structures
eographic "tructure %ach region or a country or area )ith
custo'ers )ith differing needs is served by
a local self-contained division producingproducts that best 'eet those needs$
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ypes of (ivisional Structures
lobal geographic structure(ifferent divisions serve each )orld region )hen
'anagers find different proble's or de'ands
across the globe$>enerally occurs
)hen 'anagers are
pursuing a
'ulti-do'esticstrategy
> >
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>lobal >eographic and
>lobal 9roduct Structures
Figure 10
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ypes of (ivisional Structures
/arket 2Customer3 "tructure %ach +ind of custo'er is served by a self-
contained division
>lobal 'ar+et 3custo'er4 structure:usto'ers in different regions buy si'ilar
products so fir's can locate 'anufacturingfacilities and product distribution net)or+s )here
they decide is best$/ir's pursuing a global strategy )ill use this
type of structure$
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Matri& (esign Structure
Matri& Structure An organizational structure that si'ultaneously
groups people and resources by function and
product$=esults in a co'ple& net)or+ of superior-subordinate
reporting relationships$
he structure is very fle&ible and can respond rapidly to
the need for change$
%ach e'ployee has t)o bosses 3functional 'anager and
product 'anager4 and possibly cannot satisfy both$
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Matri& Structure
Figure 104
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9roduct ea' (esign Structure
+roduct #eam "tructure he 'e'bers are per'anently assigned to the
tea' and e'po)ered to bring a product to 'ar+et$
Avoids proble's of t)o-)ay co''unication andthe conflicting de'ands of functional and product
tea' bosses$
:ross-functional tea' is co'posed of a group of
'anagers fro' different depart'ents )or+ingtogether to perfor' organizational tas+s$
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9roduct ea' Structure
Figure 104
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7ybrid Structures
$ybrid "tructure he structure of a large organization that has
'any divisions and si'ultaneously uses
'any different organizational structuresManagers can select the best structure for a
particular division@one division 'ay use a
functional structure another division 'ay have ageographic structure$
he ability to brea+ a large organization into
s'aller units 'a+es it easier to 'anage$
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arget#s 7ybrid Structure
Figure 105
:oordinating /unctions!
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:oordinating /unctions!
Allocating Authority
Authority he po)er to hold people accountable for their
actions and to 'a+e decisions concerning the use
of organizational resources$
$ierarchy of Authority An organization#s chain of co''and specifying
the relative authority of each 'anager$Span of :ontrol! refers to the nu'ber of )or+ers a
'anager 'anages$
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Allocating Authority
"pan of Control he nu'ber of subordinates that report directly to a
'anager
6ine /anager
Managers in the direct chain of co''and )ho have
authority over people and resources lo)er do)n$
9ri'arily responsible for the production of goods or
services$
"taff /anager
Managers )ho are functional-area specialists that give
advice to line 'anagers$
#he $ierarchy of Authority and "pan of Control at
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Figure 107
#he $ierarchy of Authority and "pan of Control at
/c'onald8s Corporation
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all and /lat Organizations
all structures have 'any levels of authority andnarro) spans of control$ As hierarchy levels increase co''unication gets
difficult creating delays in the ti'e being ta+en to
i'ple'ent decisions$ :o''unications can also beco'e garbled as it is
repeated through the fir'$
/lat structures have fe)er levels and )ide spans
of control$ Structure results in uic+ co''unications but can lead
to over)or+ed 'anagers$
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/lat Organizations
Figure 1010
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all Organizations
Figure 1010
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Organizational Structure
Managers should carefully evaluate! (o the organization have the right nu'ber of
'iddle 'anagers
:an the structure be altered to reduce levels:entralized and (ecentralized of Authority
(ecentralization puts 'ore authority at lo)er levels
and leads to flatter organizations$?or+s best in dyna'ic highly co'petitive environ'ent$
Stable environ'ent favor centralization of authority$
" i M h i
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"ntegrating Mechanis's
Figure 1011
/ f " t ti M h i
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/or's of "ntegrating Mechanis's
Figure 101(
St t i Alli
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Strategic Alliances
"trategic Alliance An agree'ent in )hich 'anagers pool or share fir'#s
resources and +no)-ho) )ith a foreign co'pany andthe t)o fir's share in the re)ards and ris+s of
starting a ne) venture$9etwork "tructure!
A series of strategic alliances that an organizationcreates )ith suppliers 'anufacturers and
distributors to produce and 'ar+et a product$ Bet)or+ structures allo) fir's to bring resources
together in a boundary-less organization$
828 B t + St t d "
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828 Bet)or+ Structures and "
:oundaryless Organization An organization )hose 'e'bers are lin+ed by
co'puters fa&es co'puter-aided design syste's
and video-conferencing and )ho rarely if ever
see one another face-to-face$
;nowledge /anagement "ystem A co'pany-specific virtual infor'ation syste' that
allo)s )or+ers to share their +no)ledge ande&pertise and find others to help solve proble's$
Source!
828 B t + St t d "
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828 Bet)or+ Structures and "
:usiness to :usiness 2:(: 3 networkA group of organizations that join together
and use " to lin+ the'selves to potential
global suppliers to increase efficiency andeffectiveness$
Source!
M i % l A ll 1*
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Movie %&a'ple! Apollo 1*
?hat organizationalstructure does
BASA use
to handle a 'oonlaunch