The Structure and Culture of a Business Organization Chapter Eight The Structure and Culture of a Business Organization © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Introduction to Business

Learning Objectives Discuss why organizational structure and culture are important determinants of a company’s ability to pursue a profitable business model. Identify the relationship between organizational design, structure, culture and the environment. Identify the main types of organizational structure companies can choose from to group their activities, employees and resources.

Learning Objectives Explain why the need to coordinate functions and divisions is an important element in organizational design and list the main methods companies use to coordinate their activities. Identify the nature and sources of organizational culture and understand the way it influences and shapes employee behavior and attitudes.

Structure, Culture, and the Organization’s Business Model Organizational structure Organizational culture Organizational design

Structure, Culture, and the Organization’s Business Model The Business Model and Organizational Design Contingency Approach to Organizational Design

Functional Structures Advantages of a Functional Structure Coordination advantages Motivational advantages Disadvantages of a Functional Structure

Divisional Structures: Product, Market, and Geographic a structure that groups employees by function but allows them to focus their activities on a particular product line or type of customer

Divisional Structures: Product, Market, and Geographic Product structure Market structure Geographic structure Matrix Structure Coordination advantages Motivational advantages Disadvantages of a matrix structure

Divisional Structures: Product, Market, and Geographic Advantages of a Divisional Structure Coordination advantages Motivational advantages Disadvantages of a Divisional Structure

Coordinating Functions and Divisions Allocating authority Specifying work rules Using formal integrating mechanisms

Allocating Authority Tall and flat hierarchies Minimum chain of command Centralization and decentralization of authority

Work Rules and Standard Operating Procedures Management by exception Integrating Mechanisms

Integrating Mechanisms Direct contact Liaison roles Task forces Cross-functional teams

Values and Norms Company values Company norms

Sources of a Company’s Culture Values of the founder Organizational socialization Ceremonies and rites Stories and language

Characteristics of a Strong Culture Cohesive sets of values and norms that work together to motivate employees Companies communicate with employees their desire to invest in them Rewards are directly linked to an employee’s performance and to the performance of the company as a whole