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Management meeting and exceeding customer expectation 8th ch10

Organizational
Design

Chapter 10

MANAGEMENT
Meeting and Exceeding Customer Expectations
EIGHTH EDITION
Prepared by
Deborah Baker
Texas Christian University
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

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learning objectives
1. Explain the meaning of organizational design
2. Describe the four objectives of organizational
design


3. Distinguish between mechanistic and organic
organizational structures

4. Discuss the influence that contingency factors
—organizational strategy, environment, size,
age, and technology—have on organizational
design

Chapter 10

5. Describe the characteristics, advantages, and

disadvantages of functional, divisional, matrix,
team, and network structural designs

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

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Organizational Design

11

Chapter 10

Organizational
Organizational
Design
Design

The creation of or change to
an organization’s structure



Develop the overall layout of positions
and departments




Develop the interrelationships of the
departments



Create the means to implement plans, achieve
goals, and ultimately satisfy the customer

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Common Elements of
Organizations

Chapter 10

 They operate with authority
 They have departments
 They use line and staff positions

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Objectives of Organizational
Design
Respond
Respond to
to
Change
Change
Integrate
Integrate New
New
Elements
Elements

Chapter 10

Coordinate
Coordinate
Components
Components
Encourage
Encourage
Flexibility
Flexibility
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33

Organizational Structures
Mechanistic
Mechanistic
Structure
Structure

Chapter 10

Organic
Organic
Structure
Structure

A tight organizational structure
characterized by rigidly defined
tasks, formalization, many rules
and regulations, and centralized
decision making

A flexible, free-flowing
organizational structure that has
few rules and regulations and
decentralizes decision making
right down to the employees
performing the job

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Chapter 10

33

Organizational Structures

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44

Contingency Factors Affecting
Organizational Design
Strategy
Strategy
Environment
Environment
Size
Size

Chapter 10

Age
Age
Technology
Technology
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Chapter 10

44

Influence of Strategy on Structure

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Environment

44

Requirements for an Unstable Environment

1. The organization must be able to adapt
to change

2. The organization needs greater

Chapter 10

coordination between departments

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Chapter 10

44

Environment and Structure

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Environment

44

Stable Environment

 Mechanistic
structure

 Centralized
decision making

 Wide spans of

Unstable Environment






control

Organic structure
Flexibility
Coordination
Less formal
procedures

Chapter 10

 Specialization

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

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44

Size of the Organization
Small Organizations

Large Organizations

 Organic structure
 Little division of labor
 Few rules and

 Mechanistic structure
 Greater division of

regulations

 Informal procedures

labor

 More rules and
regulations

 More elaborate

Chapter 10

internal systems to
control

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13


Age of the Organization

44

Organizational
Organizational Life
LifeCycle
Cycle

Chapter 10

Birth
Birth

Youth
Youth

Midlife
Midlife

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Maturity
Maturity

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Chapter 10

44

Organizational Life Cycle

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44

Technology
Small
Small Batch
Batch
Mass
Mass Production
Production
Continuous
Continuous Process
Process

Chapter 10

Flexible
Flexible Manufacturing
Manufacturing
Systems
Systems

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Chapter 10

44

Technology

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55

Structural Options

Functional
Functional

Matrix
Matrix

Divisional
Divisional

Chapter 10

Team
Team

Network
Network

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Chapter 10

55

Structural Options

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55

Functional Structure
Advantages

Disadvantages

 Economies of scale
 Minimizes duplication
 Comfortable

 Employees have little

environment for
employees

understanding of or
concern for areas
outside their own area

 Barriers in
communication,
cooperation, and
coordination

 Simplifies training

Chapter 10

 Slow response time to
changes in the
environment

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Chapter 10

55

Functional Structure

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55

Divisional Structure
Advantages

 Focuses the attention

Disadvantages



Duplication of
activities and
resources



Loss of efficiency and
economies of scale



Lack of technical
specialization,
expertise, and training



Different divisions may
feel they are
competing with one
another

on results

 Flexible and
responsive to change

 Responsibility and
accountability are
easier to target

 Excellent vehicle for
Chapter 10

developing senior
executives

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Chapter 10

55

Divisional Structure

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Matrix Structure

55

Chapter 10

Advantages



Flexible



Increase in employee
motivation

Increase in
communication and
coordination



Sense of commitment
and satisfaction



Training in functional
and management skills



General perspective

Disadvantages



Dual chain of command




Time loss to meetings

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved

Pits divisional
objectives against
functional objectives
Balance of power
between functional and
divisional sides

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Chapter 10

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Matrix Structure

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