Foundations of Organization Structure

Group of People have to Present

    Roll No                        Name       01                             Ajit P. Paudel       13                             Dhara P. Sardhara       17                             Disha Patel       21                             Jaimin Parmar       25                             Jeet Trivedi       

1. What is Organization Structure ?

An Organization Structure defines how job tasks or works are formally divided, grouped and coordinated. 

An Organization can be structured in many different ways, depending on its objectives.

Managers need to address 6 key elements when they design their organization's structure. 

The 6 elements of Organization Structure

1. Work Specialization : 

Work should be divided into specialization of the workers. Employees are specialized in different areas as their skills. It creates efficiency and productivity and entire job is not done by one

individual.  

2. Departmentalization :

Once jobs have been divided through work specialization, they must be grouped so common tasks can be coordinated. The basis by which jobs are grouped is called “Departmentalization”.

There are many department in every organization like – Functional Departmentalization, Product Departmentalization, Process Departmentalization, Customer Departmentalization.

3. Chain of Command :   The unbroken line of authority that extends from the top of the organization to the lowest and clarifies who report to whom.

Authority: Refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it.

Responsibility: The obligation to perform any assigned duties.

Unity of command: The management principle that each person should report to only one manager.

4. Span of Control : The number of subordinates a manager can efficiency and effectively direct. Number of subordinates are working under one same manager. The wider or larger span, the more efficient the organization. There is also some kind of drawbacks which are – it is a complex and expensive, only vertical communications, tight supervision and discourage employee autonomy.

5. Centralization and Decentralization :

Centralization: It refers to the degree to which decision making is concentrated at a single point in organization. In centralization, top managers make all the decisions and lower level management only carry out their directives.

Decentralization: It refers to the degree to which most decisions are made by mid-level or lower-level managers, rather than being made centrally by the head of the company.

It is completely opposite of centralization.

6. Formalization : It refers to the degree to which jobs within the organization are standardized.

The extent to which work roles are structured in an organization, and the activities of the employees are governed by rules and procedures.

2. Common Organizational Design

We now turn to three of the more common organizational design which are –

1. The Simple Structure:2. The Bureaucracy: 3. The Matrix Structure:

1. The Simple Structure: It has only direct and vertical relationship

between different level in firm. Simple structures are perhaps the most common form of organization design, primarily because there are more small organizations than large.

C.E.O

Production

Manager

Foreman

Workers

Foreman

Workers

Marketing Manager

Sale Officer

Sales Person

Sale Officer

Sales Person

Advantages :

Tends to simplify and clarify authority, responsibility and accountability relationship

Promotes to fast decision making

Simple to understand

Disadvantages :

Neglects specialist in planning

Overload key persons.

As the firm grows larger, line organization becomes more ineffective .

2. Bureaucratic Structure : It is an organizational from that exhibits many of the facets of the mechanistic organization.

Designed for efficiency and rely on high levels of work specialization, formalization, centralization of authority, rigid and well-defined chains of command, and relatively narrow span of control.

C.E.O

Marketing

Foreman

Foreman

Foreman

Foreman

Finance

Foreman

Foreman

Foreman

Foreman

Production

Foreman

Foreman

Foreman

Foreman

H.R

Foreman

Foreman

Foreman

Foreman

Advantages : High Specialization

Rigid Departmentalization

Clear chain of command

Narrow span of control

Centralization

High formalization

3. The Matrix Structure: Matrix is a structure that creates dual lines of authority and combines functional and product departmentalization.

Head R&D

Head Productio

n

Head Marketin

g

Head Finance

General Manager

Venture Manager 1

Venture Manager 1

Venture Manager 1

Venture Manager 1

R&DSpecialis

tsR&D

Specialists

R&DSpecialis

tsR&D

Specialists

Production

Specialists

Marketing

Specialists

FinanceSpecialis

tsProductio

n Specialist

s

Production

Specialists

Production

Specialists

Marketing

SpecialistsMarketing

SpecialistsMarketing

Specialists

FinanceSpecialis

tsFinanceSpecialis

tsFinanceSpecialis

ts

Strengths :1. Facilitates Coordination2. Complex and independent

activity 3. Better communication4. More Flexibility5. Efficient allocation of specialists6. Economies of scale

Weakness :

1. Confusion created2. Stress placed on workers3. Increased ambiguity4. Unclear reporting relationships5. Power struggles6. Role conflicts7. Unclear expectations

3.New design options in organizational structure

VIRTUAL ORGANISATIONS MEANING

not physically existing as such but made and connected by software.

‘virtual organization’ also known as digital organization, network

organization or modular organization.

A virtual organization is a “business without walls”

FEATURES VIRTUAL ORGANISATIONS

One is the choice of team members with the appropriate

skills and knowledge for the task

second is the effective linking of team members,

including communication channels, interactions, and

relationships

Advantages & Disadvantages

+ - Increased productivity

Less paperwork

Can be quickly reshaped

Money saved

Abilities to work at home

Difficult to control

Technologies can be easily

revealed.

Boundary less Organization

Seek to remove vertical, horizontal, and external barriers so that employees, managers, customers, and suppliers can work together, share ideas , and identify the best course for the organization.

Types of Boundary less organization

Vertical Boundaries Horizontal Boundaries Geographic Boundaries

VERTICAL BOUNDARIES :-It divide management from employees & divide layers of management from each other.

HORIZONTAL BOUNDARIES :- It divide divisions & departments within a corporation from each other.

Geographic Boundaries :-the boundary less organization also breaks down geographic barriers. Coca-Cola and McDonald’s, do as much business overseas as in the United States . the goal is to break down cultural barriers.

The Leaner Organization: Downsizing

Leaner organizational structure :- 

is a structure that is designed to create more customer value using fewer resources than a traditional organizational structure. The goal for all members of an organization that utilizes a lean structure is to constantly find ways to improve the processes of the organization and to make the organization more efficient.

Diff between traditional org & lean org

What is Downsizing?

A downsizing strategy reduces the scale (size) and scope of a business to improve its financial performance.

4. Why Do Structure Differ ?

Models :

The Organic Model1. Cross-functional team2. Cross-hierarchical teams3. Free flow of information4. Wide span of control5. Decentralization6. Low Formalization

The Mechanistic Model

1. High Specialization2. Rigid Departmentalization3. Clear chain of command4. Narrow span of control5. Centralization6. High formalization

Reasons :

Organizational Strategy

Organizational Size

Technology

Environment

1. Organizational Strategy : Structure To achieve objectives Desire from organizational overall strategy Structure – Strategy

Types of Strategy : Innovation Cost Minimization Imitation

1. Innovation :A strategy that emphasizes the introduction of

major new product and services.

2. Cost Minimization : A strategy that emphasizes high cost

controls, avoidance of unnecessary innovation or marketing expenses and price cutting.

3. Imitation : A strategy that seeks to move into new product or new market

only after their viability has already been proven.

The Strategy – Structure Relationship

StrategyStructure Option

Innovation Organic : A loose structure; low

specialization, low formalization,

decentralized

Cost MinimizationMechanistic : Tight control; extensive work

specialization, high formalization, high

centralization

ImitationMechanistic and organic : Mix of loose

with tight properties; tight controls over

current activities and looser controls for new

undertakings

2. Organizational Size

2000

Specialization

Departmentalization

Vertical Levels

Rules and Regulations

2000+

500 =

Mechanistic

300+

500 =

More Mechanistic

3. Technology The way in which an organization transfers its in puts into outputs.

4. Environment Institutions or forces outside an organization that potentially affect the

organization’s performance.