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Copyright 2005 Pearson Education Canada Inc. Copyright 2005 Pearson Education Canada Inc.
Chapter 14 / Slide 1
Chapter
Learning Objectives
1. Define organizational structure and explain how it corresponds to division of labour. 2. Discuss the relative merits of various forms of departmentation. 3. Review the more basic and more elaborate means of achieving organizational coordination.
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Copyright 2005 Pearson Education Canada Inc. Copyright 2005 Pearson Education Canada Inc.
Chapter 14 / Slide 2
Chapter
Learning Objectives
4. Discuss the nature and consequences of traditional structural characteristics. 5. Explain the distinction between organic and mechanistic structures. 6. Discuss the emergence of network, virtual, modular, and boundaryless organizations.
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Copyright 2005 Pearson Education Canada Inc. Copyright 2005 Pearson Education Canada Inc.
Chapter 14 / Slide 3
Chapter
Learning Objectives
7. Review important considerations concerning downsizing. 8. Identify symptoms of structural problems in organizations.
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Copyright 2005 Pearson Education Canada Inc. Copyright 2005 Pearson Education Canada Inc.
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Departmentation
The assignment of jobs to departments is called departmentation, and it represents one of the core aspects of the horizontal division of labour. Methods of departmentation include: Functional, product, matrix, geographic, customer, and hybrid.
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Functional Departmentation
Employees with closely related skills and responsibilities are assigned to the same department. Advantages: Efficiency. Enhanced communication. Enhanced career ladders and training opportunities. Easier to measure and evaluate performance.
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Product Departmentation
Departments are formed on the basis of a particular product, product line, or service. Advantages: Better coordination and communication among functional specialists who work on a particular product line. Flexibility. Departments can be evaluated as profit centres. Timely response to customers.
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Matrix Departmentation
Employees remain members of a functional department while also reporting to a product or project manager. Advantages: Balance. Flexibility. Better communication.
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Geographic Departmentation
Relatively self-contained units deliver an organizations products or services in a specific geographic territory. Advantages: Shortens communication channels. Caters to regional tastes. Some local control to clients and customers.
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Customer Departmentation
Relatively self-contained units deliver an organizations products or services to specific customer groups. Advantages: Better service to customers. The disadvantages of geographic and customer departmentation parallel those for production departmentation.
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Hybrid Departmentation
A structure based on some mixture of functional, product, geographic, or customer departmentation. Hybrids attempt to capitalize on the strengths of various structures while avoiding the weaknesses of others.
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Liaison Role
A person is assigned to help achieve coordination between his or her department and another department. One person serves as a part-time link between two departments.
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Task Forces
Temporary groups set up to solve coordination problems across several departments. Self-managed and cross-functional teams are also an effective means of achieving coordination.
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Integrators
Organizational members permanently assigned to facilitate coordination between departments. They are especially useful for dealing with conflict between highly interdependent departments with diverse goals in an ambiguous environment.
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Span of Control
The number of subordinates supervised by a manager. The larger the span, the less potential there is for coordination by direct supervision. Spans at the upper levels of an organization tend to be smaller.
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Formalization
The extent to which work roles are highly defined by an organization. A very formalized organization tolerates little variability in the way members perform their tasks. Very complex tasks dictate high formalization.
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Centralization
The extent to which decision-making power is localized in a particular part of an organization. In most centralized organizations, the power for all key decisions rests in a single individual, such as the president.
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Centralization (continued)
In a decentralized organization, decisionmaking power is dispersed down through the hierarchy and across departments. The proper degree of centralization should put decision-making power where the best knowledge is located.
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Complexity
The extent to which an organization divides labour vertically, horizontally, and geographically. A very complex organization will be tall, will have have a large number of job titles and departments, and might be spread around the world. The essential characteristic of complexity is variety.
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Network Organization
Various functions are coordinated as much by market mechanisms as by managers and formal lines of authority. In stable networks, core firms contract out some functions to favoured partners so that they can concentrate on the things that they do best.
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Virtual Organization
A network of continually evolving independent organizations that share skills, costs, and access to one anothers markets. Each partner contributes only in its area of core competencies. A key advantage is its flexibility and adaptability. Network and virtual organizations face some unique problems.
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Modular Organization
An organization that performs a few core functions and outsources noncore activities to specialists and suppliers. The modular organization maintains complete strategic control. By outsourcing noncore activities, modular organizations can keep unit costs low and develop new products more rapidly.
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Boundaryless Organization
An organization structure that removes vertical, horizontal, and external barriers. It is made up of self-managing and crossfunctional teams that are organized around core business processes. The teams include employees from different functional areas as well as customers and suppliers.
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Downsizing
The intentional reduction in workforce size with the goal of improving organizational efficiency or effectiveness. Downsizing is often accompanied by reducing horizontal or vertical complexity. Self-managed teams can act as substitutes for a level of management. Horizontally, functions can be combined or removed by contracting them out.
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