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Chapter 2:THE NEED FOR ORGANIZATION
Week 10th August 2009
Introduction To Management
ND/BNF/29,30
ND/SCR/06 Ms. Hjh Rozie Hj Ariff
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Lecture Outline
Definition
Organization Process
Departmentalization
Functional Organization Structure
Divisional Organization Structure
Matrix Organization Structure
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DEFINITION
It is the process of creating a structure
of relationships that enable employees
to carry out management’s plan and
meet organizational goals.
It is presented as one of the four
general managerial functions.
What is Organizing?
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Organizations’ Characteristics
1) The number of people working
in the organization
2) Their common objectives
3) The structure they develop to
help them achieve these
objectives.
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ORGANIZATION DESIGN
Refers to the formal and logical way that an organization is managed.
The foundation for efficient business operations is good organizational design.
This includes the elements of the organization function, their alignment and interrelationships with the planning, leading and control functions; and the complex trade-offs that must be considered in achieving a “fit” among these functions and other aspects of the organization.
To present organization design, many business produce organization charts.
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ORGANIZATION CHART
It is a diagram that illustrates the relation of reporting relationships, functions, departments, divisions and even individual positions within the organization.
It is a “skeleton” representation of the organization’s structure.
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ORGANIZATION PROCESS
Detailing of Work
Division of Work
Departmentalization
Coordination of
Work
Monitoring &
Reorganization
Show the range of tasks within the
organization
Unit or subunit or position in the org that
is responsible for certain specific task
Process of grouping the related tasks,
activities or units of an organization
Putting the activities to work together, not
against each other.
Organization will expand and change and
managers need to watch and reorganize
some activities
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1) Provides some insight on how the pieces of the entire organization fit together
2) Everyone presumably knows who reports to whom and where to go with a particular problem
3) Help management detect gaps in authority and duplication of activities
ADVANTAGES OF ORGANIZING
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1)Cannot show everything about an organization’s structure or much about the way things often really get done.
DISADVANTAGES OF ORGANIZING
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DEPARTMENTALIZATION
What is Departmentation?
It is the method of grouping the related tasks, activities or units of an
organization.
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It is the subdivision of work into jobs and tasks and assigns them to specialized units within an organization.
One key to effective departmentalization lies in organizing people, jobs and tasks in such a way that decisions flow easily throughout the organization.
DEPARTMENTALIZATION
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2 main methods of departmentalization:
1) By Function
2) By Division:
Product
Region/Geography
Customer
DEPARTMENTALIZATION
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Departmentation by Function
General
Manager
Sales Finance Production Personnel
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Advantages of Functional
Organization Structure:
1) The method is logical, easy to understand
and effective in practice.
2) Specialization is allowed full play and
economies of scale can be enjoyed.
3) It facilitates centralized direction and control.
4) There is littler need for internal coordination
within each department.
5) Professional expertise has a chance to build
up.
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Disadvantages of Functional
Organization Structure:
1) Inadequate communication between
departments.
2) Difficulties in co-operation among
departments.
3) Focus on departmental issues rather
than organizational goals and matters.
4) Development of managers who are
experts only in narrow fields.
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Divisional Organization Structure
Focuses primarily on the operations
of his or her division.
Still reports to central headquarters
Divisional organization structure can
be divided into three patterns:
i) Division by product
ii) Division by region / geography
iii) Division by customer
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i) Departmentation by Product
General Manager
Industrial
Products
Consumer
Products
Pharmaceutical
Products
Personal
Care
Products
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Departmentation by Product:
Advantage:
Each department can concentrate its effort
in its specialized area. The product(s) get
the full attention needed to perform well.
Disadvantage:
Limited career mobility for personnel outside
their own product lines.
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ii) Departmentation by Region/Geography
Regional Manager
(S.E.Asia
Brunei Malaysia Singapore Thailand
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Departmentation by Region/Geography:
Advantage:
Low transportation cost of raw
materials and labour to
markets.
Disadvantage:
May focus more in one than
the others.
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iii) Departmentation by Customer
CEO of Bank
Industrial
Bank
Foreign
Trade
Financing
Home
Financing
Agriculture
Financing
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Departmentation by Customer:
Advantage:
Encourage greater customer focus
and enabling understanding of
customer needs.
Disadvantage:
Customer orientated encourages
politics and conflicts of favoritism.
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Matrix Organization Structure
One of the contemporary organization
design.
Combines some features of the functional
and product organization designs to increase
the ability of managers and employees to
process information.
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Advantages and Disadvantages
Advantage:
A matrix design permits the flexible sharing of
employees across product lines.
Disadvantages:
Matrix design include the reality that the
maintenance of two management hierarchies
(functional and product) is expensive.
Trying to decide who to listen to may create
confusion and ambiguity for the employees.