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Questions and Answers
What is one of the key indicators of organization design related to the tasks necessary for the company?
What is one of the key indicators of organization design related to the tasks necessary for the company?
What does the chain of command illustrate in an organization?
What does the chain of command illustrate in an organization?
Which factor influences how employees collaborate and identify with one another in an organization?
Which factor influences how employees collaborate and identify with one another in an organization?
Why are new departments or divisions created as organizations grow?
Why are new departments or divisions created as organizations grow?
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What does departmental grouping affect regarding employees in an organization?
What does departmental grouping affect regarding employees in an organization?
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What purpose do plans serve in an organization?
What purpose do plans serve in an organization?
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Which of the following describes a liaison role?
Which of the following describes a liaison role?
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What is the function of a full-time integrator in an organization?
What is the function of a full-time integrator in an organization?
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Which option characterizes horizontal linkages within an organization?
Which option characterizes horizontal linkages within an organization?
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What is a key benefit of vertical information systems?
What is a key benefit of vertical information systems?
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What is a major characteristic of a divisional structure?
What is a major characteristic of a divisional structure?
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Which of the following is a strength of a divisional structure?
Which of the following is a strength of a divisional structure?
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What is a potential weakness of the divisional structure?
What is a potential weakness of the divisional structure?
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Which aspect does NOT typically apply to a geographic structure?
Which aspect does NOT typically apply to a geographic structure?
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Why do organizations tend to shift from functional to divisional structures?
Why do organizations tend to shift from functional to divisional structures?
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Study Notes
Chapter 4: Fundamentals of Organization Structure
- Vertical aspect of organizing:
- Formal reporting relationships, including the number of levels and span of control.
- Grouping of individuals into departments and departments into the total organization.
- Horizontal aspect of organizing:
- Design of systems to ensure effective communication, coordination, and integration of efforts.
A Sample Organization Chart
- The chart shows a hierarchical structure, with the CEO at the top, followed by vice presidents, directors, and other administrators.
- Reporting relationships dictate who answers to whom within the organization.
Information-Sharing Perspective on Structure
- Centralization: Decision authority located near the top of the organization.
- Decentralization: Decision authority pushed down to lower levels.
- Centralized vs. decentralized decision-making:
- Centralized authority focuses on top-level decision-making.
- Decentralized authority focuses on shared tasks and decisions.
- Traditional vs. learning organizations:
- Traditional organizations emphasize vertical communication and control.
- Learning organizations emphasize communication and collaboration.
Efficiency versus Learning Outcomes
- Vertical Organization (designed for efficiency):
- Vertical structure is dominant.
- Specialized tasks.
- Strict hierarchy, many rules.
- Vertical communication and reporting systems.
- Few teams, task forces, or integrators.
- Centralized decision-making.
- Horizontal Organization (designed for learning):
- Horizontal structure is dominant.
- Shared tasks, empowerment.
- Relaxed hierarchy, few rules.
- Horizontal communication, face-to-face interaction.
- Many teams and task forces.
- Decentralized decision-making.
Vertical Information Linkages
- Vertical linkages coordinate activities between top and bottom of the organization, primarily for control.
- Hierarchical referral: Vertical lines of the organization chart that identify the chain of command (hierarchy or chain of command).
- Rules and plans: Rules enabling employees to be coordinated without direct communication. Plans provide standing information for employees.
- Vertical information systems: Strategies for increasing vertical information capacity, including reports, computer-based communication, and written information.
Horizontal Information Linkages
- Horizontal linkage coordinates activities across departments.
- Information systems: Enable information exchange throughout the organization.
- Direct contact (e.g., Liaison role): A person in one department responsible for communicating and coordinating with another department.
- Task force: A temporary committee composed of representatives from various departments involved.
- Full-time integrator: A full-time position (e.g., product manager, project manager) solely for coordination.
- Teams: The strongest horizontal linkage; permanent task forces of managers from different functional areas.
Project Manager Location in the Structure
- Shows the project manager's role within a department structure.
- The project manager interacts and coordinates with multiple departments to achieve project tasks.
Ladder of Mechanisms for Horizontal Linkages
- A visual representation of different mechanisms for horizontal coordination, from least to most complex and costly.
- Information systems: Least costly.
- Direct contact (e.g., liaisons).
- Task forces.
- Full-time integrators.
- Teams: Most costly.
The Design of Organization Structure
- Three key indicators of organization design:
- Required work activities: Departments created to perform tasks, leading to new positions and departments as organizations grow.
- Reporting relationships (Chain of command): Vertical lines on organization charts showing reporting structure, from higher to lower levels.
- Departmental grouping options: Various options, including functional, divisional, multifocused (matrix), virtual network, and holacracy team groupings, based on organizational needs.
Departmental Grouping Options
- Functional grouping: Grouping based on common functions (e.g. marketing, engineering).
- Divisional grouping: Grouping based on products, services, or geographic regions.
- Multifocused (Matrix) grouping: Combining functional and divisional structures.
- Virtual network grouping: Utilizing external partners for specialized functions.
- Holacracy team grouping: A flat, self-organizing structure without traditional managers.
Functional Structure
- Activities grouped by common function from bottom to top of the organization.
- Consolidates specific skills and knowledge, increasing knowledge depth.
- A prevalent approach, but few companies can function without horizontal linkages.
Functional Structure: Strengths & Weaknesses
- Strengths: Economies of scale, in-depth skills, accomplishment of functional goals, best for a few products.
- Weaknesses: Slow response time to environmental changes, decisions piling on top-level management, poor horizontal coordination, restricted view of organizational goals.
Divisional Structure
- Decentralized form, separate divisions responsible for individual products, programs, or businesses.
- Grouping based on organizational outputs.
- Suitable as organizations become more complex.
Divisional Structure: Strengths & Weaknesses
- Strengths: Adaptability to change, customer satisfaction, high coordination, good for large organizations with diverse products.
- Weaknesses: Economies of scale lost, poor coordination across product lines, limited in-depth competence.
Other Structures (Geographic, Matrix, Virtual Networks, Holacracy)
- Details about each of these structures are found in the preceding pages, including their characteristics, advantages, and disadvantages.
Adapting to Environmental Uncertainty
- Addressing the impact of a changing environment on organizational structure.
- Adding positions and departments: Increased complexity leads to more positions and departments.
- Building relationships (e.g. Buffering roles, boundary spanning): Coordinating with key external elements.
- Differentiation and integration: Differences and interaction within the organization.
- Organic versus mechanistic management processes: Adaptability vs. structure, formal vs. decentralized.
- Planning, Forecasting, and Responsiveness: Critical for dealing with change.
- Organizational departments differentiating to meet needs of sub-environments: Understanding and adapting to specific external pressures
Additional Topics
- Summaries of the remaining chapters (5, 6) are detailed in this document, including topics like the external environment, interorganizational relationships, population ecology, and institutionalism.
- Covered are the concepts of resources dependence, controlling external resources, and different organizational responses to uncertainty.
- Frameworks for organizational responses: presented with specific examples
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Description
Explore the key concepts of organizational structure in this quiz based on Chapter 4. Understand the vertical and horizontal aspects of organizing, including reporting relationships and the balance between centralization and decentralization. Test your knowledge through various scenarios and questions related to effective organizational design.
