Organizing
 Process

a course of action, a route, a progression
 Structure

an arrangement, a configuration, a
construction
Organizing
The process of deploying resources to
achieve strategic goals
The process of organizing takes place within a
structure reflected by the way in which the
organization
 Divides its labor into departments and jobs
 Establishes formal lines of authority
 Establishes mechanisms for coordinating
diverse tasks
Organizing process leads to creation of
an Organizational Structure
 Formal tasks assigned
 Formal reporting relationships
 Systems design for coordination across
departments
Features of Organizational Structure
President
Vice President
Vice President
Vice President
Work Specialization
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Also called division of Labor
Specialists get good at a specific task
Efficiency increases
Employees are selected based on specific
skills
 Training is geared toward increased
efficiency.
 Based on a mechanistic organization
Chain of Command
 An unbroken line of authority
 Unity of Command-Everyone has only one
supervisor
 Scalar Principle-Everyone has at least one
boss. Everyone is included
Authority
 The formal rights of a
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manager to manage
Vested in the organizational
position, not the person.
Provides the manager with
positional power
Authority is accepted by the
subordinates
Authority flow from the top,
down.
Responsibility
 The duty to perform the task the employee has been
assigned.
 Responsibility and Authority are delegated together
and make the employee accountable to superiors
Span of Management (Control)
 The number of employees reporting to a
supervisor.
 Size varies with the
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type of organization,
skill of the subordinates,
Geographic dispersion
Managerial skill and preference
Factors Affecting Span of Control
 Job Complexity

More complex jobs = more manager
 Job Similarity
 Similar jobs = more employees per manager
 Geographic Proximity of Employees
 Dispersed locations = more supervision
 Amount of Coordination to Complete Task
 High coordination = more supervision
Factors Affecting Span of Control
 Employee Abilities

Knowledgeable, trained staff = less supervision
 Employee Empowerment
 Employees who are trusted and empowered to make decisions need
less supervision
 Ability of Management
 Dispersed locations = more supervision
 Hierarchy
 Tall hierarchy = low span of control
Centralization
 Decision making is done high in the
organization
 Tendency toward decentralization
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Greater use of employee skills
Less mechanistic
Relieve burden on manager to do everything
Decisions made closer to the action
Decisions are make quicker
Factors influencing Decentralization
 Amount of change and uncertainty in the environment
 Corporate strategy and culture
 Size and dispersion of the organization
 The risk of failure
 The greater the risk, the higher up the decisions are
made.
Advantages and disadvantages of
centralization and decentralization
Centralization
Adv.:
•Tight control
•Strong leadership
•Improved communication
Disadv.:
•Less participation
•incomplete decisions
Decentralization
Adv.:
•Better motivate
•Reducin senior managers’ burden
•Benefiting the middle managers
Disadv.:
•Risk of losing control
•Hard to make
decisions as a whole
© PhotoDisc
Matrix Organization
 Two sets of bosses-functional and divisional.
 Violates the chain of command, e.g. two bosses, not clear line of
authority.
 Attempts to lower the risks of functional and divisional structures
 Requires employee to manage two sets of bosses.
Network or Value Chain Management
 Do what you do well, sub-contract everything else to those who do
better than you.
 Look for the best industry practices
 Management the value chain rather than the organization
 Advantages
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Increased competitiveness
Flexibility
Reduced costs
 Disadvantages
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Requires a different kind of management
Need to sell the concept
Less control
Different forms of business
structure
 The entrepreneurship structure:
A
structure in which decisions are made centrally by one or two
people
 The bureaucratic or pyramid structure:
A structure where decisions are shared throughout the
organization and employees are each given a role.
 The matrix structure:
A structure combining
people with different skills into project groups or task groups.
 The independence structure:A structure
emphasizing the individuals in decisions, also called ‘nonorganization’
© PhotoDisc
Departmentalization
 Departmentalization: process of
dividing work activities into units
within the organization
 Major forms of departmentalization
subdivide work by:
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Product
Geographic Area
Customer
Function
Process
© PhotoDisc
Departmentalization
Product
 Product
departmentalization:
Organizes work units
based on the goods
and services offered
Departmentalization
Product
Geographic
 Geographic
departmentalization:
units organized by
geographic region
within a country
 For a multinational
firm, units organized
by regions throughout
the world
Departmentalization
Product
Geographic
Customer
 Customer
departmentalization:
organization that
offers a variety of
goods and services
targeted to different
types of customers
might structure itself
based on customers
served
Departmentalization
Product
Geographic
Customer
Functional
 Functional
departmentalization:
work units organized
according to business
functions such as
finance, marketing,
human resources, and
production
Departmentalization
Product
Geographic
Customer
Functional
Process
 Process
departmentalization:
units organized by
work processes
required to complete
production of goods
Delegating Work Assignments
 Delegation: act of assigning
activities to subordinates
 Span of management (span of
control): number of subordinates a
manager can supervise effectively
© PhotoDisc
Delegating Work Assignments
 Centralization: retains decision-
making at the top of the
management hierarchy
 Decentralization: locates
decision-making at lower levels
© PhotoDisc
Types of Organization Structures
 Line organization: establishes a
direct flow of authority from the chief
executive to subordinates
© PhotoDisc
Types of Organization Structures
 Line-and-staff organization:
combines the direct flow of authority
of a line organization with staff
departments that serve, advise, and
support the line departments
© PhotoDisc
Types of Organization Structures
 Line manager: interacts directly with the
functions of production, finance, or marketing
– the functions needed to produce and market
goods and services
 Staff manager: provides information, advice,
or technical assistance to aid line managers
© PhotoDisc
Types of Organization Structures
 Committee organization: structure
that places authority and responsibility
jointly in the hands of a group of
individuals rather than a single
manager
 Matrix, or project management,
structure: links employees from
different parts of the organization to
work together on specific projects
© PhotoDisc
Figure 8.13 The Matrix Organization