7.4 Organizational Structures

Matrix Organizations

Some organizations use a matrix or product management design to customize their structures. The matrix structure links employees from different parts of the organization to work together on specific projects.

Product departmentalization

This approach organizes work units based on the goods and services a company offers

decentralization

decision makeup based at lower levels of the organization.

chain of command

set of relationships that indicates who directs which activities and who reports to whom

organization

structured group of people working together to achieve common goals.

line organization

the oldest and simplest organization structure, establishes a direct flow of authority from the chief executive to employees, and defines a simple, clear chain of command Note: In a small organization such as a local hair salon or a dentist's office, a line organization is probably the most efficient way to run the business.

Customer departmentalization

A company that offers a variety of goods and services targeted at different types of customers might structure itself based on customer departmentalization

What is the purpose of an organization chart?

An organization chart is a visual representation of a company's structure that illustrates job positions and functions.

What are the five major forms of departmentalization?

Product departmentalization organizes units by the different goods and services a company offers. Geographical departmentalization organizes units by geographical regions. Customer departmentalization organizes units by different types of customers. Functional departmentalization organizes units by business activities such as finance, marketing, human resources, and production. Process departmentalization organizes units by the steps or work processes it takes to complete production or provide a service.

Functional departmentalization

Some companies organize work units according to business functions such as finance, marketing, human resources, and production

Process departmentalization

Some goods and services require multiple work processes to complete their production

What does span of management mean?

The span of management, or span of control, is the number of employees a manager supervises.

Geographical departmentalization

This form organizes units by geographical regions within a country or, for a multinational company, by region throughout the world

Three key elements of organization

a.) human interaction b.) goal-directed activities c.) structure

Four basic types of organization structures

a.) line b.) line-and-staff c.) committee d.) matrix

line-and-staff organization

combines the direct flow of authority of a line organization with staff departments that support the line departments. Line departments participate directly in decisions that affect the core operations of the organization. Note: The line-and-staff organization is common in midsize and large organizations. It is an effective structure because it combines the line organization's capabilities for rapid decision making and direct communication with the expert knowledge of staff specialists.

centralization

decision making based at the top of the management hierarchy.

delegation

managerial process of assigning work to employees.

span of management

number of subordinates a manager can supervise effectively.

committee organization

organizational structure that places authority and responsibility jointly in the hands of a group of individuals rather than a single manager. Note: A new-product committee may include managers from such areas as accounting, engineering, finance, manufacturing, marketing, and technical research.

departmentalization

process of dividing work activities into units within the organization.

organization chart

visual representation of a firm's structure that illustrates job positions and functions.