1. Chapter 5 Intro to Organizational Structure
Business Management 12
Stewart

2. Defining Organizational Structure
How job tasks are divided, grouped and coordinated within an organization
Organizational Design
A process of developing or changing an organization’s structure
It is comprised of six key elements:
(i) work specialization; (ii) departmentalization; (iii) chain of command; (iv) span of control; (v) centralization and decentralization; (vi) formalization
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
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3. Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
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4. Organizational Structure
Work Specialization (division of labour)
The degree to which tasks are divided into separate jobs
Individuals specialize in doing part of a job rather than the entire job
Human diseconomies such as boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover can occur from overspecialization
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
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5. Departmentalization Functional Process Product Customer Geographical
Grouping jobs by functions performed
Product
Grouping jobs by product line
Geographical
Grouping jobs on the basis of territory or geography
Process
Grouping jobs on the basis of product or customer flow
Customer
Grouping jobs by type of customer and needs 5

6. Exhibit 5-2a Functional Departmentalization
Plant Manager
Manager,
Manager,
Manager,
Manager,
Manager,
Engineering
Accounting
Manufacturing
Human Resources
Purchasing
+ Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations
+ Coordination within functional area
+ In-depth specialization
– Poor communication across functional areas
– Limited view of organizational goals
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
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7. Exhibit 5-2b Geographical Departmentalization
Vice President
for Sales
Sales Director,
Sales Director,
Sales Director,
Sales Director,
Western Region
Prairies Region
Central Region
Eastern Region
+ More effective and efficient handling of specific regional issues that arise
+ Serve needs of unique geographic markets better
– Duplication of functions
– Can feel isolated from other organizational areas
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
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8. Exhibit 5-2c Product Departmentalization
Bombardier, Ltd.
Mass Transit Sector
Recreational and
Utility Vehicles
Sector
Rail Products
Sector
Mass Transit
Division
Bombardier–Rotax
(Vienna)
Rail and Diesel
Products Division
Recreational
Products Division
Logistic
Equipment Division
Industrial
Equipment Division
Bombardier–Rotax
(Gunskirchen)
+ Allows specialization in particular products and services
+ Managers can become experts in their industry
+ Closer to customers
– Duplication of functions
– Limited view of organizational goals
Source: Bombardier Annual Report.
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
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9. Exhibit 5-2d Process Departmentalization
Plant
Superintendent
Sawing
Department
Manager
Planing and Milling
Department Manager
Assembling
Department
Manager
Lacquering
and Sanding
Department
Manager
Finishing
Department
Manager
Inspection and
Shipping
Department
Manager
+ More efficient flow of work activities
– Can only be used with certain types of products
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 9

10. Exhibit 5-2e Customer Departmentalization
Director
of Sales
Manager,
Manager,
Manager,
Retail Accounts
Wholesale Accounts
Government Accounts
+ Customers’ needs and problems can be met by specialists
– Duplication of functions
– Limited view of organizational goals
Chapter 5, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Fundamentals of Management, Sixth Canadian Edition
Copyright © 2011 Pearson Canada Inc. 10