Chapter 15: Organizational Structure

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Organizational Structure

Formally dictates how jobs and tasks are divided and coordinated between individuals and groups within the company.

Organizational Chart

Is a drawing that represents every job in the organization and the formal reporting relationships between those jobs.

Work Specialization

Is the way in which tasks in an organization are divided into separate jobs.
-Also known as division of labor.
-Assembly line worker.

Chain of Command

within an organization essentially answers the question "Who reports to whom?"
-Specific flow of authority down through the levels of an organization's structure.

Span of Control

Represents how many employees the manager is responsible for in the organization.
-Narrow spans of control allow managers to be much more hands-on with employees.

Centralization

Reflects where decisions are formally made in organizations.

Formalization

A company is high in ________________ when there are many specific rules and procedures used to standardize behaviors and decisions.
-Necessary coordination mechanism that organizations rely on to get a standardized product or deliver a standardized service.

Mechanistic Organizations

Are efficient, rigid, predictable, and standardized organizations that thrive in stable environments.
-Rigid and hierarchical chain of command, high degrees of work specialization, centralization of decision making, and narrow spans of control.

Organic Organizations

Are flexible, adaptive, outward-focused organizations that thrive in dynamic environments.
-Low levels of formalization, weak or multiple chains of command, low levels of work specialization, and wide spans of control.

Organizational Design

Is the process of creating, selecting, or changing the structure of an organization.

Business Environment

Consists of its customers, competitors, suppliers, distributors, and other factors external to the firm, all of which have an impact on organizational design.
-Stable environment
-Dynamic environment

Company Strategy

Describes an organization's objectives and goals and how it tries to capitalize on its assets to make money.
-Low-cost product strategy
-Differentiation strategy

Technology

Is the method by which it transforms inputs into outputs.

Company Size

Refers to the total number of employees, and structure.

Simple Structure

Are perhaps the most common form of organizational design, primarily because there are more small organizations than large ones.

Bureaucratic Structure

Is an organizational form that exhibits many of the facets of the mechanistic organization.

Functional Structure

is an organizational form in which employees are grouped by the functions they perform for the organization.

Multi-divisional Structures

Are bureaucratic organizational forms in which employees are grouped into divisions around products, geographic regions, or clients.

Product Structures

Group business units around different products that the company produces.

Geographic Structures

Are generally based around the different locations where the company does business.

Client Structure

Is an organizational form in which employees are organized around serving customers.

Matrix Structures

Are a more complex form of organizational design that tries to take advantage of two types of structures at the same time.
-The matrix represents a combination of a functional structure and a product structure.

Restructuring

The process of changing an organization's structure.
-Has a small negative effect on task performance.
-Has a more significant negative effect on organizational commitment.

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