Introduction of Management : Review

CHAPTER 8 : ORGANIZATION STRUCTURE

 

Fundamentals of Organizing

        We often begin to describe a firm’s structure by looking at its organization chart . The organization chart depicts the positions in the firm and the way they are arranged or the reporting structure and division of labor in an organization. Although the organization chart presents some important structural features,other design issues related to structure-while not so obvious-are no less significant. Two fundamental concepts around which organizations structured are differentiation and integration. Differentiation means that the organization is composed of many different units that work on different kinds of tasks, using different skills and work methods. Integration means that these differentiated units are put back together so that work is coordinated into all overall product.

The Vertical Structure

§  Authority in Organizations

Authority is the legitimate right to make decision and to tell other people what to do.

§  Hierarchical Levels

           Hierarchy is the authority levels of the organizational pyramid. Corporate governance is the role of a corporation’s executive staff and board of directors in ensuring that the firm’s activities meet the goals of the firm’s stakeholders.

§  Span of Control

          The number of subordinates who report directly to an executive or supervisor is called the Span of Control.

§  Delegation

          Delegation is the assignment of authority and responsibility to a subordinate at lower level.

§  Decentralization

          Decentralized organization is an organization in which lower-level managers make important decision.

The Horizontal Structure

       Line departments isunis that deal directly with the organization’s primary goods and services. Staff departments is units that support line departments. Departmentalization is subdiving an organization into smaller subunits.

§  The Functional Organization

            In a functional organization,jobs are specialized and grouped according to business function and the skills they require : production, marketing, human resources, research and development, finance, accounting, and so forth.

§  The Division Organization

     The discussion of a functional structure’s weakness leads us to the divisional organization. Divisional organization is departmentalization that groups units around products, customers,or geographic regions.

§  The Matrix Organization

     A matrix organization is a hybrid form of organization in which functional and divisional forms overlap. Managers and staff personnel report two bosses-a functional manager and a divisional manager.

§  The Network Organization

     The network organization is a collection of independent, mostly single-function firms that collaborate to produce a good or service. A very flexible version of the network organization is the dinamic network-also called the modular or virtual corporation. It is composed of temporary arrangements among members that can be assembled and reassembled to meet a changing competitive environment.

Organizational Integration

     A variety of approaches are available to managers to help them make certain that interdependent units and individuals will work together to achieve a common purpose.

§  Coordination by Standarization

Standarization contrains actions and intergrates various units by regulating what people to do. To improve coordination, organizations may also rely on formalization-the presence of rules and regulations governing how people in the organization interact .

§  Coordination by Plan

Coordination by plan does not require the same high degree of stability and routinization required for coordination for standarization. Interdependent units are free to modify and adapt their actions as long as they meet the deadlines and targets required for working with others.

§  Coordination by Mutual Adjustment

Coordination by mutual adjustment involves feedback and discussion to joinly figure out how to approach problems and devise solutions that are agreeable to everyone.

§  Coordination and Communication

    To cope with high uncertainty and heavy information demands, managers can use two general strategie:

Option 1 : Reducing the Need for Information

    Managers can use the need information in two ways (a) creating slack resources and (b) creating self-contained tasks.

Option 2 : Increasing Information-Processing Capability

    Instead of reducing the need for information, an organization may take approach of increasing its information-processing capability.