1.  Chapter No. 10
 Basic Organizational Design
Topic 10.1
Designing Organizational Structure
Purposes of organizing
 Divides work to be done into specific jobs and departments.
 Assigns tasks and responsibilities associated with individual jobs.
 Coordinates diverse organizational tasks.
 Clusters jobs into units.
 Establishes relationship among individuals, groups and departments.
 Establishes formal lines of authority.
 Allocates and deploys organizational resources.
Organizing
Arranging and structuring work to accomplish the organization’s goals.
Organizational structure
The formal arrangement of jobs within and organization.
Organizational chart
The visual representation of an organization’s structure.
Organizational design
Creating or changing an organization’s structure.
Work specialization
Dividing work activities into separate job tasks.
Departmentalization
The basis by which jobs are grouped together is called departmentalization. E.g. a College has
many departments in it like financial aid department or department of student services.

2.  The five commons forms of departmentalization
1. Functional departmentalization
 Groups jobs according to function. e. g. Plant manager
2. Geographical departmentalization
 Groups jobs according to geographical region. e.g. Vice president for sales
3. Product departmentalization
 Groups jobs by product line. e. g. Bombardier, Ltd.
4. Process departmentalization
 Groups’ jobs on the basis of product and customer flow. e. g. plant
superintendent
5. Customer departmentalization
 Groups jobs on the basis of specific and unique customer we have common
needs. e. g. director of sales
Cross-functional team
 A work team composed of individuals from various functional specialties.
Chain of commands
 The line of authority extending from upper organizational levels to the lowest levels, which
clarifies who reports the whom.
Authority
 The rights inherent in a managerial position to tell people what to do and to expect them to do
it.
Acceptance theory of authority
 The view that authority comes from the willingness of subordinates to accept it.
Line authority
 Authority that entities a manager to direct the work of an employee.
Staff authority
Position with some authority that have been created to support, assist and advise those holding
line authority.

3. Responsibility
The obligation or expectation to perform any assigned duties.
Unity of command
The management principle that each person should report to only one manager.
Span of control
The number of employees a manager can efficiently and effectively manage.
Topic no 10.2
Contrast mechanistic and organic structures
Mechanistic versus organic organization
Mechanistic
High specialization
Rigid departmentalization
Clear chain of command
Narrow spans of control
Centralization
High formalization
Organic
Cross-functional teams
Cross-hierarchical teams
Free flow of information
Wide spans of control
Decentralization
Low formalization
Centralization
 The degree to which decision making is concentrated at upper level of the organization.

4. Decentralization
 The degree to which lower-level employees provide input or actually make decisions.
Employee empowerment
 Giving employees more authority (power) to make decisions.
Formalization
 How standardized an organization’s jobs are and the extent to which employee behavior is
guided by rules and procedures.
Topic 10.3
Contingency factors affecting structural choice
Mechanistic organization
 An organizational design that’s rigid and tightly controlled
Organic organization
 An organizational design that’s highly adaptive and flexible
Topic 10.4
Traditional organizational designs
Unit production
 The production of items in units or small batches.
Mass production
 The production of items in large batches
Process production
 The production of items in continuous processes
Simple structure
 An organizational design with low departmentalization, wide spans of control, centralized
authority, and little formalization.

5. Functional structure
 An organizational design that groups together similar or related occupational specialties.
Divisional structure
 An organizational structure made up of separate , semiautonomous units or divisions
Simple structure
Strengths: fast; flexible; inexpensive to maintain; clear accountability.
Weaknesses: not appropriate as organization grows; reliance on one person is risky.
Functional structure
Strengths: cost-saving advantages from specialization (economies of scale, minimal
duplication of people and equipment); employees are grouped with others who have similar
tasks.
Weaknesses: pursuit of functional goals can cause managers to lose sight of what’s best for
the overcall organization; functional specialists become insulated and have little understanding
of what other units are doing.
Divisional structure
Strengths: focuses on result-division managers are responsible for what happens to their
products and services.
Weaknesses: duplication of activities and resources increase costs and reduces efficiency.