Three different levels of organization structure are Strategic, Tactical and

Operational.

Strategic level represents decision making level, i.e., the corporate or

the top level of an organization.

Tactical or business level is the middle management level, where

strategic decisions are transformed into strategy to achieve the
strategic intents.

Operational level represents the actual implementation level, where

first level employees and workers, execute the strategy, adopting the
actions plans.
Features of organization-

Organization is a group of people who are organized to achieve a

common purpose.

It is an entity, a unit or an establishment, which utilises resources to

achieve some common purpose.

It shows a structure of relationship in an enterprise.

It is a process, which facilitates to relate tasks and facilities of

people working in an enterprise, to achieve intended goals.
 Organizations are viewed from systems perspectives, as systems is a
collection of parts (or sub-systems), which is integrated to accomplish
the goals and objectives of the organization.

Systems have inputs, processes, outputs and outcomes, with ongoing

feedback among these various parts.

If one part of the system is removed, the nature of the system is

changed.

Organization is viewed as a system, as organization is a unitary whole.

It consists of arrangement of activities to achieve its objectives.
 Inputs Process
Raw Materials Planning
Money Organizing
Technology Motivating
People Controlling

Outputs
Product
Services

Outcomes
Productivity
Enhanced Quality of Life
 The structure of an organization illustrates its form, and is evident from the way
divisions, departments, functions and people are linked together and interact.
Traditionally, an organizational structure shows vertical operational responsibilities with
horizontal linkages, and is represented by an organization chart.
However, today, in a complex business environment, we find more modern forms of
organizational structure, such as organic(low levels of formalization and specialization,
and high levels of decentralization), matrix, networked and even virtual.
The changing business environment not only emphasizes the change in reporting
relationships and corresponding changes in the structure of an organization, but also
necessitates periodic organizational restructuring, manpower downsizing and job
compositional shift, making reporting to the boss redundant.
Thus, organizational structure refers to a pattern or system of grouping people and jobs
in an organization. An organizational structure defines how activities such as task
allocation, coordination and supervision are directed toward the achievement
of organizational aims. It can also be considered as the viewing glass or perspective
through which individuals see their organization and its environment.
 Organizational structures provide basic frameworks to help operations
proceed smoothly and functionally.
Span of control refers to the number of subordinates a supervisor has; it
is used as a means of ensuring proper coordination and a sense of
accountability among employees.
Departmentalization is the basis by which an organization groups tasks
together. There are five common approaches: functional,
divisional, matrix, team, and network.
Centralization occurs when decision-making authority is located in the
upper organizational levels. Centralization increases consistency in the
processes and procedures that employees use in performing tasks.
Decentralization occurs when decision-making authority is located in the
lower organizational levels. With decentralized authority, important
decisions are made by middle-level and supervisory-level managers,
thereby increasing adaptability.
 Organizational Structure outlines the authority relationships among
members of an org. and thus influences the behaviour of individuals,
groups and divisions within the organization.
Here are a few of the most common structures
in modern businesses:

Functional Structure
Divisional
Matrix

Each structural form indicates different pattern of behaviour of the

organization
Functional structure is set up so that each portion of the organization is
grouped according to its purpose.
In this type of organization, for example, there may be a marketing
department, a sales department and a production department.
The functional structure works very well for small businesses in which
each department can rely on the talent and knowledge of its workers and
support itself.
However, one of the drawbacks to a functional structure is that the
coordination and communication between departments can be restricted
by the organizational boundaries of having the various departments
working separately.
It is particularly effective in the following situations:
Large volume of standardized product or service sales

Reduced level of change within the industry

Large fixed asset base

Minimal amount of entirely new product line introductions

Minimal changes due to fashion or other changes in taste or technology

Competition is primarily based on cost

 Efficiencies. When employees are allowed to focus on one specific functional area to
the exclusion of all else, they can achieve significant efficiencies in terms of process
flow and management methods.
Chain of command. There is a very clear chain of command in this structure, so
everyone knows which decisions they are allowed to make, and which ones to hand
off to their supervisors.
Promotions. It is easier to set up career paths for employees and monitor their
progress toward the goals outlined for their functional areas.
Specialization. A company can use this approach to cultivate a group of extraordinary
specialists who can strongly impact the functions of the company.
Training. It is easier to monitor and update the training of employees when they are
focused on narrow functional areas.
 The divisional organizational structure organizes the activities of a business around
geographical, market, or product and service groups.
This approach is useful when decision-making should be clustered at the division level
to react more quickly to local conditions.
The divisional structure is especially useful when a company has many regions,
markets, and/or products. However, it can cause higher total costs, and can result in a
number of small, quarreling fiefdoms within a company that do not necessarily work
together for the good of the entire entity.
Advantages of the Divisional Organization Structure
The key points in favor of the divisional structure involve placing decision making as
close to the customer as possible. The advantages are:
Accountability. This approach makes it much easier to assign responsibility for actions
and results. In particular, a division is run by its own management group, which looks
out for the best interests of the division.
Competition. The divisional structure works well in markets where there is a great deal
of competition, where local managers can quickly shift the direction of their businesses
to respond to changes in local conditions.
 Culture. You can use this structure to create a culture at the divisional level that most
closely meets the needs of the local market. For example, a retail division could have
a culture specifically designed to increase the level of service to customers.
Local decisions. The divisional structure allows decision-making to be shifted
downward in the organization, which may improve the company's ability to respond to
local market conditions.
Multiple offerings. When a company has a large number of product offerings, or
different markets that it services, and they are not similar, it makes more sense to
adopt the divisional structure.
Speed. This approach tends to yield faster responses to local market conditions.
A matrix organization structure is usually defined as one where there are multiple reporting
lines that is, people have more than one formal boss.
At this level, the definition of a matrix organization structure is quite simple but there are
many different types of complex structure.

 Highly skilled and capable resources can be shared between the functional
units and projects, allowing more open communication lines which help in
sharing the valuable knowledge within the organization.
The matrix structure is more dynamic than the functional structure because
it allows employees to communicate more readily across the boundaries,
creating a good working and cooperative environment which helps in
integrating the organization.
Employees can learn and widen their skills and knowledge areas by
participating in different kind of projects. The matrix structure provides a
good environment for professionals to learn and grow their career.
In functional departments employees are very skilled, and project teams
can get these highly skilled employees whenever their services are needed.
Since there is a sense of job security, employees tend to be loyal to the
organization and perform well, and hence the efficiency of a matrix
organization is higher.
 Traditionally organization is viewed as a closed system. Closed systems
perspectives consider everything as deterministic.
Open system approach to organization is considered more relevant.
According to Boone and Kurtz, in an open systems organization, a
cycle of events is a process by which it receives inputs from the
environment and transform them to generate output.
Businesses depend on employees, suppliers, customers and even the
competition for research, development and profit. Because the business
doesnt have control of all the environmental forces, it relies on predictions
and contingencies to cope with unexpected input.
 Features/Principles of Open Systems:
Negative entropy represents the ability of the organization to
autonomously repair itself, and survive and grow by importing resources
from its environment and transforming them to outputs.
Organizations maintain equilibrium over a period of time through steady
or dynamic homeostasis and develop structures and specialized
functions through differentiation .

The equifinality principle of open systems organizations enables them to

achieve their objectives through several different courses of action.
(Equifinality is the principle that in open systems a given end state can
be reached by many potential means). Equifinality (More Than One
Way to Accomplish the Same Result)
Politico-legal Socio-Cultural

Economic Technological

Commercial Personnel

Controller Technical
 Herbst pioneered the concept of socio-technical systems thinking,
based on studies done on coal mining workers in the 1950s, in the UK.
The major landmark in study was recognizing that with small self-
regulating work-teams, organizations can get better results.
According to this theory, the quality and quantity of output in any work
organization depends on two distinguishable aspects the
technological system and the social structure of the work system.
The social structure of the work system in an organization is partly
influenced by the technological systems.
Therefore, any organization can optimize its performance through
suitable modification of technical and social systems This concept is
also known as social ecology of industry.
Social System Technical System

Structure Technology

MIS

Tasks
People
 Business Process Re-engineering

Reengineering is the fundamental

rethinking and radical redesign of business
processes to achieve dramatic improvements
in critical contemporary measures of
performance such as cost, quality, service
and speed.
Process is a structured, measured set of
activities designed to produce a specified
output for a particular customer or market. It
implies a strong emphasis on how work is
done within an organization.
 Business processes are characterized by
three elements:
the inputs, (data such customer inquiries or

materials)
the processing of the data or materials

(which usually go through several stages

and may necessary stops that turns out to
be time and money consuming)
the outcome (the delivery of the expected

result).
 BPR is described as a radical redesign of strategic, value-added,
business processes to achieve breakthrough performance
improvements.
BPR is a large-scale overhaul of basic business processes and involves
replacing old structures and practices with something new.
BPR is a comprehensive, one-step turnaround that takes more time and
effort and often needs considerable support from systems analysis and
information technology.
Michael Hammer and James Champy defined reengineering as the
fundamental rethinking and radical redesign of business processes to
achieve dramatic improvement in critical, contemporary measures of
performance such as cost, quality, service and speed.
BPR only eliminates unwanted work. It does not aim at getting rid of
people.
 Customer focus. Customer service oriented processes aiming to
eliminate customer complaints
Speed. Dramatic compression of the time it takes to complete a task for
key business processes. For instance, if process before BPR had an average
cycle time 5 hours, after BPR the average cycle time should be cut down to
half an hour.
Flexibility. Adaptive processes and structures to changing conditions and
competition. Being closer to the customer the company can develop the
awareness mechanisms to rapidly spot the weak points and adapt to new
requirements of the market.
Quality. Obsession with the superior service and value to the customers.
The level of quality is always the same controlled and monitored by the
processes, and does not depend mainly on the person, who servicing the
customer.
Innovation. Leadership through imaginative change providing to
organization competitive advantage.
Productivity. Improve drastically effectiveness and efficiency.
 BPR is primarily meant for:
1. Total customer satisfaction today customers are well informed, they
have knowledge, they are demanding more, they know their needs and
they give written and precise specifications of the product required.
2. Meeting keen competition competition is not local and gentle but
global and intense cut-throat competition.
3. Introducing planned change change is unsteady. What was
unthinkable yesterday is routine or usual toady.

Achieving best-in-
class
Competitive Focus

Process
Improvement Break Point
Cost Reduction Rewriting the
Focus Rules

BPR