Management meeting and exceeding customer expectation 8th ch10
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Organizational
Design
Chapter 10
MANAGEMENT
Meeting and Exceeding Customer Expectations
EIGHTH EDITION
Prepared by
Deborah Baker
Texas Christian University
Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved
1
learning objectives
1. Explain the meaning of organizational design
2. Describe the four objectives of organizational
design
3. Distinguish between mechanistic and organic
organizational structures
4. Discuss the influence that contingency factors
—organizational strategy, environment, size,
age, and technology—have on organizational
design
Chapter 10
5. Describe the characteristics, advantages, and
disadvantages of functional, divisional, matrix,
team, and network structural designs
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Organizational Design
11
Chapter 10
Organizational
Organizational
Design
Design
The creation of or change to
an organization’s structure
Develop the overall layout of positions
and departments
Develop the interrelationships of the
departments
Create the means to implement plans, achieve
goals, and ultimately satisfy the customer
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22
Common Elements of
Organizations
Chapter 10
They operate with authority
They have departments
They use line and staff positions
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Objectives of Organizational
Design
Respond
Respond to
to
Change
Change
Integrate
Integrate New
New
Elements
Elements
Chapter 10
Coordinate
Coordinate
Components
Components
Encourage
Encourage
Flexibility
Flexibility
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33
Organizational Structures
Mechanistic
Mechanistic
Structure
Structure
Chapter 10
Organic
Organic
Structure
Structure
A tight organizational structure
characterized by rigidly defined
tasks, formalization, many rules
and regulations, and centralized
decision making
A flexible, free-flowing
organizational structure that has
few rules and regulations and
decentralizes decision making
right down to the employees
performing the job
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Chapter 10
33
Organizational Structures
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44
Contingency Factors Affecting
Organizational Design
Strategy
Strategy
Environment
Environment
Size
Size
Chapter 10
Age
Age
Technology
Technology
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Chapter 10
44
Influence of Strategy on Structure
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Environment
44
Requirements for an Unstable Environment
1. The organization must be able to adapt
to change
2. The organization needs greater
Chapter 10
coordination between departments
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Chapter 10
44
Environment and Structure
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Environment
44
Stable Environment
Mechanistic
structure
Centralized
decision making
Wide spans of
Unstable Environment
control
Organic structure
Flexibility
Coordination
Less formal
procedures
Chapter 10
Specialization
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44
Size of the Organization
Small Organizations
Large Organizations
Organic structure
Little division of labor
Few rules and
Mechanistic structure
Greater division of
regulations
Informal procedures
labor
More rules and
regulations
More elaborate
Chapter 10
internal systems to
control
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13
Age of the Organization
44
Organizational
Organizational Life
LifeCycle
Cycle
Chapter 10
Birth
Birth
Youth
Youth
Midlife
Midlife
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Maturity
Maturity
14
Chapter 10
44
Organizational Life Cycle
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44
Technology
Small
Small Batch
Batch
Mass
Mass Production
Production
Continuous
Continuous Process
Process
Chapter 10
Flexible
Flexible Manufacturing
Manufacturing
Systems
Systems
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Chapter 10
44
Technology
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55
Structural Options
Functional
Functional
Matrix
Matrix
Divisional
Divisional
Chapter 10
Team
Team
Network
Network
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Chapter 10
55
Structural Options
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55
Functional Structure
Advantages
Disadvantages
Economies of scale
Minimizes duplication
Comfortable
Employees have little
environment for
employees
understanding of or
concern for areas
outside their own area
Barriers in
communication,
cooperation, and
coordination
Simplifies training
Chapter 10
Slow response time to
changes in the
environment
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Chapter 10
55
Functional Structure
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55
Divisional Structure
Advantages
Focuses the attention
Disadvantages
Duplication of
activities and
resources
Loss of efficiency and
economies of scale
Lack of technical
specialization,
expertise, and training
Different divisions may
feel they are
competing with one
another
on results
Flexible and
responsive to change
Responsibility and
accountability are
easier to target
Excellent vehicle for
Chapter 10
developing senior
executives
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Chapter 10
55
Divisional Structure
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Matrix Structure
55
Chapter 10
Advantages
Flexible
Increase in employee
motivation
Increase in
communication and
coordination
Sense of commitment
and satisfaction
Training in functional
and management skills
General perspective
Disadvantages
Dual chain of command
Time loss to meetings
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Pits divisional
objectives against
functional objectives
Balance of power
between functional and
divisional sides
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Chapter 10
55
Matrix Structure
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