Organizational Structure
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Designing Organizational Structure
• Organizing
– The process by which managers establish
working relationships among employees to
achieve goals.
10-2
Departmentalization by Type
• Functional
• Product
– Grouping jobs by
functions performed
– Grouping jobs by
product line
• Geographical
• Customer
– Grouping jobs on the
basis of territory or
geography
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– Grouping jobs by type
of customer and needs
10–3
Grouping Jobs into Functions
• Function
– Groups of people, working together, who
possess similar skills or use the same kind
of knowledge, tools, or techniques to
perform their jobs
10-4
Functional Departmentalization
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10–5
Functional Departmentalization
• Advantages
• Efficiencies from putting together people with common
skills and knowledge,
• Good coordination within functional area
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10–6
Functional Departmentalization
• Advantages
• Efficiencies from putting together people with common
skills and knowledge,
• Good coordination within functional area
• Disadvantages
• Poor communication across functional areas
• Less focus on organizational goals
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10–7
Geographical Departmentalization
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10–8
Geographical Departmentalization
• Advantages
• More effective handling of specific regional
issues that arise
• Serve needs of unique geographic markets better
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10–9
Geographical Departmentalization
• Advantages
• More effective handling of specific regional
issues that arise
• Serve needs of unique geographic markets better
• Disadvantages
• Duplication of functions
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10–10
Ex. Of Organization by
Geography
Hewlett-Packard’s Headquarters
Worldwide
Hewlett Packard
Americas
Houston, Texas
Europe, Middle East, Africa
Geneva, Switzerland
Asia Pacific
Hong Kong
Product Departmentalization
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10–12
Product Departmentalization
+ Allows specialization in particular products and services
+ Managers can become experts in their industry
+ Closer to customers
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10–13
Product Departmentalization
+ Allows specialization in particular products and services
+ Managers can become experts in their industry
+ Closer to customers
– Duplication of functions
– Limited view of organizational goals
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10–14
An Example of Organization by
Product
Hewlett Packard
Imaging and
Printing Group
Personal
Systems Group
Enterprise
Systems Group
HP Services
HP Financial
Services
Customer Departmentalization
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10–16
Customer Departmentalization
+ Customers’ needs and problems can be met by specialists
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10–17
Customer Departmentalization
+ Customers’ needs and problems can be met by specialists
- Duplication of functions
- Limited view of organizational goals
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10–18
Removing External Boundaries
• 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.
• Network Organization
– A small core organization that outsources some of its
major business functions (e.g., manufacturing) in order to
concentrate what it does best.
• Modular Organization
– A manufacturing organization that uses outside suppliers
to provide product components for its final assembly
operations.
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rights reserved.
10–19
Example of Network Structure
Interviewing
Company
Coding & Data
Tabulation Firm
Marketing Research
Consultants
Printing Company
10-20