Organizational Structure and Design

Chapter 5

BUSM 12

Ms. Stewart

Organizational Structure

How job tasks are formally divided, grouped, and coordinated within an organization

When managers develop or change the structure, they are engaged in organizational design

Purposes of Organizing

Departmentalization

This is the basis on which jobs are grouped together

Common forms: Functional Geographical Product Process Customer

Functional Departmentalization

Groups jobs by functions performed

Geographical Departmentalization

Groups jobs on the basis of territory or geography

Product Departmentalization Groups jobs by product line

Process Departmentalization

Groups jobs on the basis of product or customer flow

Customer Departmentalization

Groups jobs on the basis of customer who have common needs or problems

Traditional Organization Structure

Line and Staff Managers

Line managers are responsible for essential activities of the organization, including production and sales

Staff Managers work in supporting activities of the organizations (such as Human Resources or Accounting)

Centralization

The degree to which decision making is concentrated at a single point in the organization

Example: If the top managers make the organization's key decisions with little to no input from below

Decentralization

The degree to which lower level employees provide input or actually make decisions