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Chapter 8 of future of Business for Introduction to Canadian Busniess

Formal Organization

The Order and design of relationships within a firm; consists of two or more people working together with a common objective and clarity of purpose.

Division of Labour

The process of dividing work into separate jobs and assigning tasks to workers.


The degree to which tasks are subdivided into smaller jobs.


The process of grouping jobs together so that similar or associated tasks and activities can be coordinated.

Organization Chart

A visual representation of the structured relationships among tasks and the people given the authority to do those tasks.

Functional Departmentalization

Departmentalization that is based on the primary functions performed within an organizational unit.

Product Departmentalization

Departmentalization that is based on the goods or services produced or sold by the organizational unit.

Process Departmentalization

Departmentalization that is based on the production process used by the organizational unit.

Customer Departmentalization

Departmentalization that is based on the primary type of customer served by the organizational unit.

Geographic Departmentalization

Departmentalization that is based on the geographic segmentation of the organizational unit.

Managerial Hierarchy

The levels of management within an organization; typically, includes top, middle, and supervisory management.

Chain of Command

The line of authority that extends from one level of an organization`s hierarchy to the next, from top to bottom, and makes clear who reports to whom.


Legitimate power, granted by the organization and acknowledged by employees, that allows an individual to request action and expect compliance.

Delegation of Authority

The assignment of some degrees of authority and responsibility to persons lower in the chain of command.

Span of Command

The number of employees a manager directly supervises; also called span of Management.


The degree to which formal authority is concentrated in one area or level of an organization.


The process of pushing decision-making authority down the organizational hierarchy.

Mechanistic Organization

An organizational structure that is characterized by a relatively high degree of job specialization, rigid departmentalization, many layers of management, narrow spans of control, centralized decision-making, and a long chain of command.

Organic Organization

An organizational structure that is characterized by a relatively low degree of job specialization, loose, departmentalization, few levels of management, wide spans of control, decentralized decision-making, and a short chain of command.

Line Organization

An organizational structure with direct, clear lines of authority and communication flowing from the top managers downward.

Line-and-Staff Organization

An organizational structure that includes both line and staff positions.

Line Positions

All positions in the organization directly concerned with producing goods and services and that are directly connected from top to bottom.

Staff Positions

Positions in an organization held by individuals who provide the administrative and support services that line employees need to achieve the firm`s goals.

Committee Structure

An organizational structure in which authority and responsibility are held by a group rather than an individual.

Matrix Structure (Project Management)

An organizational structure that combines functional and product departmentalization by bringing together people from different functional areas of the organization to work on a special project.


The complete redesign of business structures and processes to improve operations.

Informal Organization

The networks of connections and channels of communication based on the informal relationships of individuals inside an organization.

Virtual Corporation

A network of independent companies linked by information technology to share skills, costs, and access to one another`s markets; allows the companies to come together quickly to exploit rapidly changing opportunities.

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