LOGO

THE ORGANIZATION
CHAMARA DE ZOYSA
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Contents
The Introduction to organization
Organizational Structure
Organizational Functions
Organizational Strategy
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2
4
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Designing Organizational Structure
Organizing
The process by which managers establish
working relationships among employees to
achieve goals.
Organizational Structure
Formal arrangement of jobs within an
organization.
Organizational design
The process by which managers make specific
choices that result in a particular kind of
organizational structure.

11-3
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Purposes of Organizing
Divides work to be done into specific jobs and
departments.
Assigns tasks and responsibilities associated with
individual jobs.
Coordinates diverse organizational tasks.
Clusters jobs into units.
Establishes relationships among individuals,
groups, and departments.
Establishes formal lines of authority.
Allocates and deploys organizational resources.
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Defining Organizational Structure
Organizational Structure
The formal arrangement of jobs within an
organization.
Organizational Design
A process involving decisions about six key
elements:
Work specialization
Departmentalization
Chain of command
Span of control
Centralization and decentralization
Formalization
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Organizational Structure
Work Specialization
The degree to which tasks in the organisation
are divided into separate jobs with each step
completed by a different person.
Over specialization can result in human
diseconomies from boredom, fatigue, stress,
poor quality, increased absenteeism, and
higher turnover.
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Departmentalization by Type
Functional
Grouping jobs by
functions performed
Product
Grouping jobs by
product line
Geographical
Grouping jobs on the
basis of territory or
geography
Process
Grouping jobs on the
basis of product or
customer flow
Customer
Grouping jobs by type
of customer and needs

An organizational structure composed of separate
business units within which are the functions that work
together to produce a specific product for a specific
customer.
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Functional Structure
An organizational structure composed of all
the departments that an organization
requires to produce its goods or services.
Advantages
Encourages learning from others doing
similar jobs.
Easy for managers to monitor and
evaluate workers.
Possible Disadvantages
Difficult for departments to communicate
with others.
Preoccupation with own department and
losing sight of organizational goals.

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FIGURE 11.5
Functional Structure
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Product Structure
11-10
Divisions by the product group or category
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Chain of Command

Chain of Command
The continuous line of authority that
extends from upper levels of an
organization to the lowest levels of the
organization and clarifies who reports to
who.

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Authority
The rights inherent in a managerial
position to tell people what to do and to
expect them to do it.
Responsibility
The obligation or expectation to
perform.
Unity of Command
The concept that a person should have
one boss and should report only to that
person.
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Organisation Structure (contd)
Span of Control
The number of employees who can be effectively
and efficiently supervised by a manager.
Width of span is affected by:
Skills and abilities of the manager
Employee characteristics
Characteristics of the work being done
Similarity of tasks
Complexity of tasks
Physical proximity of subordinates
Standardization of tasks
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Flat structures
Few organizational levels
Wide spans of control
Tall structures
Many organizational levels
Narrow spans of control

11-14
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Organisation Structure
Centralization
The degree to which decision-making is
concentrated at a single point in the
organizations.
Decentralization
Organizations in which decision-making
is pushed down to the managers who
are closest to the action.
Employee Empowerment
Increasing the decision-making authority
(power) of employees.
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The degree to which jobs within the
organization are standardized and the extent
to which employee behavior is guided by rules
and procedures.

High: formalization: Formal rules and procedures
used to standardize operations (Do it by the
book)
Usually associated with centralized authority
Low : formalization: Coordination by mutual
adjustment rather than formal rules & procedures
Usually associated with decentralized
authority

Formalization

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Organizational Strategy
Johnson and Scholes (Exploring
Corporate Strategy) define strategy as
follows:

"Strategy is the direction and scope
of an organization over the long-term:
which achieves advantage for the
organization through its configuration
of resources within a challenging
environment, to meet the needs of
markets and to fulfill stakeholder
expectations".

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In other words, strategy is about:
Where is the business trying to get to
in the long-term (direction)
Which markets should a business
compete in and what kind of activities
are involved in such markets?
(markets; scope)
How can the business perform better
than the competition in those
markets? (advantage)?
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What resources (skills, assets,
finance, relationships, technical
competence, facilities) are required in
order to be able to compete?
(resources)?
What external, environmental factors
affect the businesses' ability to
compete? (environment)?
What are the values and expectations
of those who have power in and
around the business? (stakeholders)


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Strategy at Different Levels of a Business
Strategies exist at several levels in any organization -
ranging from the overall business (or group of businesses)
through to individuals working in it.
Corporate Strategy - is concerned with the
overall purpose and scope of the business to
meet stakeholder expectations. This is a crucial
level since it is heavily influenced by investors in
the business and acts to guide strategic
decision-making throughout the business.
Corporate strategy is often stated explicitly in a
"mission statement".
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Business Unit Strategy - is
concerned more with how a business
competes successfully in a particular
market. It concerns strategic
decisions about choice of products,
meeting needs of customers, gaining
advantage over competitors,
exploiting or creating new
opportunities etc.

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Operational Strategy - is concerned
with how each part of the business is
organized to deliver the corporate
and business-unit level strategic
direction. Operational strategy
therefore focuses on issues of
resources, processes, people etc.

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How is Strategy Managed?
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Strategic Analysis
PEST Analysis - a technique for
understanding the "environment" in
which a business operates
Scenario Planning - a technique that
builds various plausible views of
possible futures for a business
Five Forces Analysis - a technique for
identifying the forces which affect the
level of competition in an industry
Market Segmentation - a technique
which seeks to identify similarities and
differences between groups of
customers or users
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Competitor Analysis - a wide range of
techniques and analysis that seeks to
summaries a businesses' overall
competitive position
Critical Success Factor Analysis - a
technique to identify those areas in
which a business must outperform the
competition in order to succeed
SWOT Analysis - a useful summary
technique for summarizing the key
issues arising from an assessment of a
businesses "internal" position and
"external" environmental influences.

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Strategic Choice
This process involves understanding the
nature of stakeholder expectations (the
"ground rules"), identifying strategic
options, and then evaluating and
selecting strategic options.
Strategy Implementation
Often the hardest part. When a strategy
has been analyzed and selected, the
task is then to translate it into
organizational action.

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