OSD

Session 8
D a te d : O cto b e r 2 7 ,
2008

Prepared By

Aashirbad
RayChaudhury
Class Representative, FMG XVII
Sec-B
 What is Organization
Structure?
Specification of jobs to be done within an


organization and the ways in which they relate to

one another. This allows the organization to
achieve goals. At some organization the structure
is rigid, other it is more flexible.
 Components of
Organization Structure
Designates formal reporting relationships
including number of levels of hierarchy, span of
control of manager and supervisor.
Suggests that Organization structure identifies
grouping together of individuals into
departments and departments into total
organization.
Organization structure design of system to
ensure effective communication, coordination
and integration of efforts across departments.
 Formal Organization
It is expressed through an:


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
 Key Elements of
Organization Structure
Work specialization
Chain of command
Span of control
Authority and responsibility
Centralization and decentralization
Departmentalization
 Specialization and
Growth
In a small organization, the owner may perform
every job. As the firm grows, however, so does
the need to specialize jobs so that others can
perform them.
Adam Smith (1976) discovered if each of 10
workers did all the steps of making pins, each
could make 200 a day. By specialization the
group could make 48000 a day.
 Departmentalization
Methods
Customer Departmentalization
 Departmentalization according to types of customer
likely to buy a given product
Product Departmentalization
 Departmentalization according to specific products
being created
Process Departmentalization
 Departmentalization according production process
used to create goods and services
Geographic Departmentalization
 Departmentalization according to areas served by
business
Functional Departmentalization
 Illustration of
Departmentalization
Presiden
t
Functional Departmentalization

Vice Vice Vice

President, President, President,
Marketing Production Finance
Geographical Departmentalization

Plant Plant Plant

Manager Manager Manager

Product Departmentalization

Consumer Industria Consumer Industria Consumer Industria

Product l Product product l Product Product l Product
Centralized Organization
O Highest
R 12 1 1
G 34 4 8
56
A 78 16 64
NI 64 512
256 4096
Z
AT 1024
4096
IO
N Span of 4 Span of 8
LE
V
EL
 Centralized Organization
contd…
Strength
 Flexible and rapid response
to changed customer needs
 Directs attention of everyone
towards production and
delivery of vale to
customer
 Each employee has a broader
view of organization goals
 Promote a focus on teamwork
and collaboration
 Important uplift for employee
by offering them
opportunity to share
responsibilities, making
decision and be
Weakness
D e te rm in in g co re p ro ce sse s to
o rg a n ize a ro u n d is d ifficu lt
a n d tim e co n su m in g
R e q u ire ch a n g e in cu ltu re , jo b
d e sig n , m a n a g e m e n t
p h ilo so p h y a n d in fo rm a tio n
tra n sa ctio n
Tra d itio n a lm a n a g e r m a y b a ck
w h e n th e y h a ve to g ive u p
pow er
R e q u ire sig n ifica n t tra in in g o f
e m p lo ye e to w o rk e ffe ctive ly
in a n o rg a n iza tio n te a m
e n viro n m e n t
C a n lim it in d e p th skill
d e ve lo p m e n t
 Functional
Departmentalization
Form of business organization in which authority is

determining the relationship between group
function and activities.
Strength
A llo w s e co n o m y o f sca le
E n a b le s in d e p th kn o w le d g e
a n d skilld e ve lo p m e n t
E n a b le s o rg a n iza tio n to
a ch ie ve g o a ls
Its b e st in co m p a n ie s
h a vin g o n ly o n e o r fe w
p ro d u cts
Weakness
S lo w re sp o n se tim e in
e n viro n m e n t ch a n g e
M a y ca u se d e cisio n to p ile
o n to p h ie ra rch y o ve rlo a d ,
co o rd in a tio n a m o n g
d e p a rtm e n ts
Le ss in n o va tive
R e stricte d vie w o f
o rg a n iza tio n a lg ro w th
 Divisional Organization
Structure
Organization structure in which corporate division


operate as autonomous business under the larger

corporate umbrella.

Strength
S u ite d to fa st ch a n g e in
u n sta b le e n viro n m e n t
Le a d s to clie n t sa tisfa ctio n
H ig h co o rd in a tio n
A llo w s o rg a n iza tio n to
a d a p t to d iffe re n ce s
B e st in la rg e r o rg a n iza tio n
D e ce n tra lize s d e cisio n
m a kin g
Weakness
E lim in a te s e co n o m ie s o f
sca le in fu n ctio n a l
d e p a rtm e n ta liza tio n
Po o r co o rd in a tio n a cro ss
p ro d u ct lin e
E lim in a te s in d e p th
co m p e te n ce a n d
te ch n o lo g ica lsp e cia liza tio n
In te g ra tio n a n d
sta n d a rd iza tio n ve ry d ifficu lt
 Matrix Organization
 Organization structure in which teams are
formed and team members report to two or
more managers.
Highly flexible form that is readily adaptable
to changed circumstances
Rely heavily on committee and team authority
Same companies use the matrix organization
as a temporary measure to complete a
specific project. The end of project usually
means the end of matrix.
 Matrix Organization:
Conditions for Existence
Pressure exists on organization in market to
share resources along various product lines
Environmental pressure exists for functional as
well as product division
Environment domain of organization is complex
and uncertain
High level of coordination is required for
functioning
 Matrix Organization
contd…
Strength Weakness
 Achieve coordination C a u se s p a rticip a n ts to
necessary to meet dual exp e rie n ce d u a la u th o rity ,
demands from customer w h ich ca n b e fru stra tin g a n d
 Flexible sharing of human co n fu sin g
resources across product It is tim e co n su m in g sin ce it
 Suited to complex decisions in vo lve s fre q u e n t m e e tin g s
and frequent changes in w ith co n flict re so lu tio n
unstable environment d e cisio n s
 Provides opportunity for both
R e q u ire g re a te r e ffo rts to
function and product skill m a in ta in p o w e r b a la n ce
development
 Best in medium sized Pa rticip a n ts n e e d g o o d
organization with multiple in te rp e rso n a lskills a n d
products exte n sive tra in in g
W illn o t w o rk u n le ss p a rticip a n ts