1. © Copyright McGraw-Hill. All rights reserved.9–19–1 Chapter Outline Designing Organizational StructureDesigning Organizational Structure  The Organizational Environment  Strategy  Technology  Human Resources Grouping Tasks into Jobs: Job DesignGrouping Tasks into Jobs: Job Design  Job Enlargement and Job Enrichment  The Job Characteristics Model Grouping Jobs into Functions and DivisionsGrouping Jobs into Functions and Divisions  Functional Structure

2. © Copyright McGraw-Hill. All rights reserved.9–29–2 Chapter Outline (cont’d) Grouping Jobs into Functions and Divisions (cont’d)Grouping Jobs into Functions and Divisions (cont’d)  Functional Structure  Divisional Structure: Product, Market, Geographic  Matrix and Product Team Designs  Hybrid Structure Coordinating Functions and DivisionsCoordinating Functions and Divisions  Allocating Authority  Types of Integrating Mechanisms  Strategic Alliances, B2B Network Structures, and IT

3. © Copyright McGraw-Hill. All rights reserved.9–39–3 Designing Organizational Structure OrganizingOrganizing  The process by which managers establish working relationships among employees to achieve goals. Organizational StructureOrganizational Structure  Formal system of task and reporting relationships showing how workers use resources. Organizational designOrganizational design  The process by which managers make specific choices that result in a particular kind of organizational structure.

4. © Copyright McGraw-Hill. All rights reserved.9–49–4 Factors Affecting Organizational Structure Figure 9.1

5. © Copyright McGraw-Hill. All rights reserved.9–59–5 Job Design Job DesignJob Design  The process by which managers decide how to divide tasks into specific jobs.  The appropriate division of labor results in an effective and efficient workforce. Job SimplificationJob Simplification  The process of reducing the tasks each worker performs. Too much simplification and boredom results.Too much simplification and boredom results.

6. © Copyright McGraw-Hill. All rights reserved.9–69–6 Job Design Job EnlargementJob Enlargement  Increasing the number of tasks for a given job to reduce boredom. Job EnrichmentJob Enrichment  Increasing the degree of responsibility a worker has over a job.  can lead to increased worker involvement.

7. © Copyright McGraw-Hill. All rights reserved.9–79–7 The Job Characteristics Model Figure 9.2 Source: Adapted from J. R. Hackman and G. R. Oldham, Work Redesign (Reading, MA: Addison-Wesley, 1980).

8. © Copyright McGraw-Hill. All rights reserved.9–89–8 Grouping Jobs into Functions Functional StructureFunctional Structure  An organizational structure composed of all the departments that an organization requires to produce its goods or services.  Advantages Encourages learning from others doing similar jobs.Encourages learning from others doing similar jobs. Easy for managers to monitor and evaluate workers.Easy for managers to monitor and evaluate workers.  Disadvantages Difficult for departments to communicate with others.Difficult for departments to communicate with others. Preoccupation with own department and losing sight of organizational goals.Preoccupation with own department and losing sight of organizational goals.

9. © Copyright McGraw-Hill. All rights reserved.9–99–9 Divisional Structures Divisional StructureDivisional Structure  An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer Divisions create smaller, manageable parts of a firm.Divisions create smaller, manageable parts of a firm. Divisions develop a business-level strategy to compete.Divisions develop a business-level strategy to compete. Divisions have marketing, finance, and other functions.Divisions have marketing, finance, and other functions. Functional managers report to divisional managers who then report to corporate management.Functional managers report to divisional managers who then report to corporate management.

10. © Copyright McGraw-Hill. All rights reserved.9–10 Types of Divisional Structures Product StructureProduct Structure  Customers are served by self-contained divisions that handle a specific type of product or service. Allows functional managers to specialize in one product areaAllows functional managers to specialize in one product area Division managers become experts in their areaDivision managers become experts in their area Removes need for direct supervision of division by corporate managersRemoves need for direct supervision of division by corporate managers Divisional management improves the use of resourcesDivisional management improves the use of resources

11. © Copyright McGraw-Hill. All rights reserved.9–11 Types of Divisional Structures (cont’d) Geographic StructureGeographic Structure  Each regional or a country or area with customers with differing needs is served by a local self- contained division producing products that best meet those needs.  Global geographic structure Different divisions serve each world region when managers find different problems or demands across the globe.Different divisions serve each world region when managers find different problems or demands across the globe. Generally, occurs when managers are pursuing a multidomestic strategyGenerally, occurs when managers are pursuing a multidomestic strategy

12. © Copyright McGraw-Hill. All rights reserved.9–12 Types of Divisional Structures (cont’d) Market (Customer) StructureMarket (Customer) Structure  Each kind of customer is served by a self-contained division  Global market (customer) structure Customers in different regions buy similar products so firms can locate manufacturing facilities and product distribution networks where they decide is best.Customers in different regions buy similar products so firms can locate manufacturing facilities and product distribution networks where they decide is best. Firms pursuing a global strategy will use this type of structure.Firms pursuing a global strategy will use this type of structure.

13. © Copyright McGraw-Hill. All rights reserved.9–13 Matrix Structure Figure 9.7

14. © Copyright McGraw-Hill. All rights reserved.9–14 Product Team Structure Figure 9.7

15. © Copyright McGraw-Hill. All rights reserved.9–15 Hybrid Structures Hybrid StructureHybrid Structure  The structure of a large organization that has many divisions an simultaneously uses many different organizational structures Managers can select the best structure for a particular division—one division may use a functional structure, another division may have a geographic structure.Managers can select the best structure for a particular division—one division may use a functional structure, another division may have a geographic structure. The ability to break a large organization into smaller units makes it easier to manage.The ability to break a large organization into smaller units makes it easier to manage.

16. © Copyright McGraw-Hill. All rights reserved.9–16 Coordinating Functions: Allocating Authority AuthorityAuthority  The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. Hierarchy of AuthorityHierarchy of Authority  An organization’s chain of command, specifying the relative authority of each manager. Span of Control: refers to the number of workers a manager manages.Span of Control: refers to the number of workers a manager manages.

17. © Copyright McGraw-Hill. All rights reserved.9–17 Allocating Authority (cont’d) Span of ControlSpan of Control  The number of subordinates that report directly to a manager Line ManagerLine Manager  Managers in the direct chain of command who have authority over people and resources lower down.  Primarily responsible for the production of goods or services. Staff ManagerStaff Manager  Managers who are functional-area specialists that give advice to line managers.

18. © Copyright McGraw-Hill. All rights reserved.9–18 Flat Organizations Figure 9.10a

19. © Copyright McGraw-Hill. All rights reserved.9–19 Tall Organizations Figure 9.10b

20. © Copyright McGraw-Hill. All rights reserved.9–20 Integrating Mechanisms Figure 9.11

21. © Copyright McGraw-Hill. All rights reserved.9–21 Forms of Integrating Mechanisms Figure 9.12 Source:

22. © Copyright McGraw-Hill. All rights reserved.9–22 Strategic Alliances Strategic AllianceStrategic Alliance  An agreement in which managers pool or share firm’s resources and know-how with a foreign company and the two firms share in the rewards and risks of starting a new venture. Network Structure:Network Structure:  A series of strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product.  Network structures allow firms to bring resources together in a boundary-less organization.

23. © Copyright McGraw-Hill. All rights reserved.9–23 B2B Network Structures and IT Boundaryless OrganizationBoundaryless Organization  An organization whose members are linked by computers, faxes, computer-aided design systems, and video-conferencing and who, rarely, if ever, see one another face-to-face. Knowledge Management SystemKnowledge Management System  A company-specific virtual information system that allows workers to share their knowledge and expertise and find others to help solve problems. Source:

24. © Copyright McGraw-Hill. All rights reserved.9–24 B2B Network Structures and IT (cont’d) Business to Business (B2B ) networkBusiness to Business (B2B ) network  A group of organizations that join together and use IT to link themselves to potential global suppliers to increase efficiency and effectiveness. Source: