chapter 6

• Organizational Structure


  Specification of the jobs to be done within an organization and the ways in which they relate to one another
• Every organization has a unique structure
• Organization Chart


  Diagram depicting a company's structure and showing employees where they fit into its operations
• Chain of Command


  Reporting relationships within a company
• Determinants of Organizational Structure

  • Mission
  • Strategy
  • Size
  • Internal environment
  • External environment
• Building Blocks of Organizational Structure

  • Specialization
  • Departmentalization
  • Establishment of a decision making hierarchy
• Job Specialization


  The process of identifying the specific jobs that need to be done and designating the people who will perform them
• Departmentalization


  Process of grouping jobs into logical units
• Profit Center


  Separate company unit responsible for its own costs and profits
• Functional Departmentalization


  Dividing an organization according to groups' functions or activities
• Product Departmentalization


  Dividing an organization according to specific products or services being created
• Process Departmentalization


  Dividing an organization according to production processes used to create a good or service
• Customer Departmentalization


  Dividing an organization to offer products and meet needs for identifiable customer groups
• Geographic Departmentalization


  Dividing an organization according to the areas of the country or the world served by a business
• Decision-Making Hierarchy

  Deciding who will be empowered to make which decisions and who will have authority over others
• Centralized Organization


  Organization in which most decision-making authority is held by upper-level management
• Decentralized Organization


  Organization in which a great deal of decision-making authority is delegated to levels of management at points below the top
• Flat Organizational Structure


  Characteristic of decentralized companies with relatively few layers of management
• Span of Control


  Number of people supervised by one manager
• Tall Organizational Structure


  Characteristic of centralized companies with multiple layers of management
• Delegation

  Process through which a manager allocates work to subordinates
• Elements of Delegation


  • Assigning responsibility
  • Granting authority
  • Creating accountability
• Line Authority


  Organizational structure in which authority flows in a direct chain of command from the top of the company to the bottom
• Staff Authority


  Authority based on expertise that usually involves counseling and advising line managers
• Staff Members


  Advisers and counselors who help line departments in making decisions but who do not have the authority to make final decisions
• Committee and Team Authority


  Authority granted to committees or teams involved in a firm's daily operations
• Work Team


  Group of operating employees who are empowered to plan and organize their own work and to perform that work with a minimum of supervision
• Functional Structure


  Organization structure in which authority is determined by the relationships between group functions and activities
• Divisional Structure


  Organizational structure in which corporate divisions operate as autonomous businesses under the larger corporate umbrella
• Matrix Structure


  Organizational structure created by superimposing one form of structure onto another
• In some companies, the matrix organization is a temporary measure installed to complete a specific project and affecting only one part of the firm
• International Organizational Structures


  Approaches to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets