Review chapter 8

Organization Structure

Fundamentals of Organizing

                Two fundamental concepts around which organizations are structured are differentation and integration.

Ø  Differenitation: An aspect of the organization’s internal environment  created by job specialization and the division of labor. Differentiation means that the organization is composed of many different units that work on different kinds of tasks,using different skill and work methods.

Ø  Integration: The degree to which differentiated work units work together and coordinate their efforts.

The Vertical Stucture

                To understand issues such as reporting relationships,authority,responsibility,and the like, we need to begin with the vertical dimension of a firm’s structure.

o   Authority in Organizations

At the most fundamental level, the functioning of every ortganization depends on the use of authority: the legitimate right to make decisions and to tell other people what to do.

o   Hierarcinal levels

Hierarchy: the authority levels of the organizational pyramid. The key responsisbilities at this top level include corporate governance-a term describing the oversight of the firm by its executive staff and board of directors.

o   Span of Control

Span of control: The number of subordinates who report directly to an executive or supervisor. The implications of differences in the span of control for the shape of an organization are straightforward.

o   Delegation

The assignment of new or additional responsibilities to subordinate. Delegation is perhaps the most fundamental feature of management because it entails getting work done through others.

o   Decentralization

The delegation of responsibility and authority decentralizes decision making. In a centralized organization, important decisions usually are made at the top. In decentralized organizations, more decisions are made at lower  levels.

The Horizontal Structure

                The organization inevitably must be subdivided-that is, departmentalized into smaller units or departments: line departments,staff departments and departmentalization.

1.       The Functional Organization: in a functional organization,jobs(and departments) are specialized and grouped according to business functions and the skills the require; production,marketing,human resources,researc and development,finance,accounting and so forth.

2.       The Divisional Organization: As organizations grow and become increasingly diversified, they find that functional departments have difficulty managing a wide variety of products, customers and geographic regions.

3.       The Matrix Organization: An organization composed of dual reporting relationships in which some employees report to two superiors-a functional manager and a divisional manager.

4.       The Network Organization: In contrast, the network organization is a collection of independent, mostly single function firms that collaborate to produce a good or service. The role of managers shifts in a network from that of commad and control to more like that of a broker. Broker serve several important boundry roles that aid network integration and coordination: designer role, process engineering role and nurturing role.

Organizational Integration

·         Coordination by Standardization

Standardization constrains actions and integrates various units by regulating what people do. People often know how to act and how to interact because standard operating procedures spell out what they should do. Establishing common routines and procedures that apply uniformly to everyone.

·         Coordination by Plan

Coordination by plan does not require the same high degree of stability and ruotinization required for coordination by standardization. Interpendent units are required to meet deadlines and objectives that contribute to a common goal.

·         Coordination by Mutual Adjustment

Coordination by Mutual Adjustment involves feedback and discussions to jointly figure out how to approach problems and devise solutions that are agreeable to everyone. Units interact with one another to make accomondations to achieve flexsible coordination.

·         Coordination and Communication

Huge amounts of information flow from the external environment to the organization and back to the environment. To cope organizations must acquire,process, and respond to that information. To function effectively, organizations need to develop structurres for processing information. To cope with high uncertainty and heavy information demands, managers can use two general strategies.