Business Management Organizational Design Test

Division of Labor

Separating a big job into several smaller tasks, also known as job specialization

Unity of command

States that no employee should have to report to more than one manager or supervisor

Principles of organizational design

The importance of company objectives, the concept of authority, division of labor, unity of command, the scalar principle, and span of control

The divisional organizational structure

The organization is broken down into units; however, these units are different from the types you would find in a functional structure

Organizational Design

The process of structuring a business's people, information, and technology to enable the business to achieve its goals and to be successful

The importance of company objectives

There are many different ways to structure a business. What works for one company may not work for another. That's why it's important for a business to know its mission and objectives before choosing an organizational design

Advantages of a functional organizational structure

Employees become more skilled in their areas of expertise and it reduces the duplication of certain activities

Clear lines of authority

Every employee has at least one authority that he/she must answer to, it's important for everyone in an organization to know who his or her supervisor is, a strong organizational design makes it plain.

Lateral relations

Refers to the amount of teamwork included in any type of organizational design

The concept of authority

Authority is the formally-granted influence of a position to make decisions, pursue goals, and obtain the resources necessary to support those decisions and goals. Proper authority is given to those who have it

4 ways a divisional structure could be set up

By product, process, territory and customer type

Five benefits of implementing a well-planned organizational design

Clear lines of authority, improved communication, encouraged innovation, increased productivity, and better ability to compete

The matrix organizational structure

Combines the functional structure and the divisional structure

Disadvantages of a divisional structure

Competition can come up between divisions and some efforts may be duplicated

The scalar principle

Creating authority that flows in a clear, continuous line

The functional organizational structure

Each unit or department within the organization has its own set of responsibilities and activities.

Improved communication

Good organizational design has helped communication to flow smoothly within the business

Better ability to compete

Increased innovation and productivity make a business more competitive, an innovative organization comes up with new products and ideas before competitors do

Disadvantages of the matrix structure

It can be costly and decision making can be slow

Disadvantages of a functional organizational structure

It can create narrow perspectives among managers and employees and the functional structure suffers from an overall lack of flexibility

Advantages of the matrix structure

It encourages flexibility, teamwork, and communication by breaking down barriers between traditional departments and it provides employees with increased opportunities for personal and professional development.

Span of control

Refers to how many workers are managed by one supervisor

Advantages of a divisional structure

Its more flexible and it encourages creativity

Importance of lateral relations

No matter what structure an organization's leaders choose to implement, they should strive to include as much teamwork and cooperation between employees as possible

Encouraged innovation

When a business's employees enjoy an excellent flow of communication, they are more likely to share ideas and help each other solve problems

Increased productivity

When employees know what their jobs are, who they report to, have good communication, and work in an innovative environment, it's natural that they will be productive.