Lecture 13
Chapter
7
Organizing The
Business Enterprise
Chapter Outline
What is Organizational Structure?
The Building Blocks of Organizational
Structure
Establishing The Decision-Making
Hierarchy
Basic Forms of Organizational
Structure
Informal Organization
Organizational Structure Influenced By:
• Jobs To Be Done
• How Jobs Relate To One Another
Determinants Of Organization
• Purpose
• Mission
• Strategy (e.g a rapid growing firm VS a
stable firm
• Size, technology and changes in
environment also affect structure
Organization Chart
•Use charts to clarify structure
and to show where employee
fit
•Solid lines defines the chain of
command or reporting
relationships
•Large organizations more
complex organizational charts
Organization Chart
Chain Of Command
CEO
Division V.P.
Store
Manager
Department
Supervisor
Frontline
Employee
Building Blocks
Of Structure
• First step in developing structure involves
two activities
– Specialization- Specific Jobs To Specific
People
– Departmentalization
• Group Jobs In Logical Units
• Profit Center
Building Blocks
Of Structure
• First step in developing structure involves
two activities
– Specialization- Specific Jobs To Specific
People
– Identifying jobs that needs to be done and
identifying people who will do them
– Small VS big organizations
Building Blocks
Of Structure
–Departmentalization
• Group Jobs In Logical Units
• Profit Center
Types Of Departmentalization
• Customer
• Product
• Process
• Geographic
• Functional
Customer Departmentalization
Big Box
Retail
Men’s
Department
Women’s
Department
Luggage
Department
Product Departmentalization
Lucent
Technology
Wireless
Communication
Optical
Networking
Process Departmentalization
Geographic Departmentalization
Levi
Strauss
U.S.
Europe
Asia
Pacific
Functional Departmentalization
Small
Business
Production
Marketing
&
Sales
Human
Resources
Accounting
&
Finance
Multiple Forms Of Departmentalization
Hierarchy For Decisions
• Goal is to figure out how to structure and
stabilize the firm so that every one works
together
• Assign Tasks
– Responsibility
– Authority
• Perform Tasks
– Delegation
– Accountability
• Distribute Authority
Small Business Delegation Fear
o Employee Can’t Do As Well
o Something Will Go Wrong
o No Long-Range Plan because you do
everyday fire fighting
o Not Up-To-Date On Industry Trends &
Competitive Products
o Solution: do not run show independently
Big Business
Delegation Fear
o Subordinate Doesn’t Know Job
o Subordinate “Show Manager Up”
o Desire To Retain Control
o Inability To Effectively Delegate
o Solution:
o Cannot do everything themselves
o Train subordinates if they cant perform
o Subordinate performs well it will reflect favorably
Hierarchy For Decisions
• Goal is to figure out how to structure and
stabilize the firm so that every one works
together
• Assign Tasks
– Responsibility
– Authority
• Perform Tasks
– Delegation
– Accountability
• Distribute Authority