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Organizational Structure and Design
Chapter 5
BUSM 12
Ms. Stewart
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Organizational Structure
How job tasks are formally divided, grouped, and coordinated within an organization
When managers develop or change the structure, they are engaged in organizational design
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Purposes of Organizing
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Departmentalization
This is the basis on which jobs are grouped together
Common forms: Functional Geographical Product Process Customer
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Functional Departmentalization
Groups jobs by functions performed
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Geographical Departmentalization
Groups jobs on the basis of territory or geography
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Product Departmentalization Groups jobs by product line
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Process Departmentalization
Groups jobs on the basis of product or customer flow
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Customer Departmentalization
Groups jobs on the basis of customer who have common needs or problems
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Traditional Organization Structure
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Line and Staff Managers
Line managers are responsible for essential activities of the organization, including production and sales
Staff Managers work in supporting activities of the organizations (such as Human Resources or Accounting)
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Centralization
The degree to which decision making is concentrated at a single point in the organization
Example: If the top managers make the organization's key decisions with little to no input from below
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Decentralization
The degree to which lower level employees provide input or actually make decisions