DISCUSSION MAN2021

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CHAPTER 7 Designing Organizational Structure

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Learning Objectives 1

1. Identify the factors that influence managers’ choice of an organizational structure.

2. Explain how managers group tasks into jobs that are motivating and satisfying for employees.

3. Describe the types of organizational structures managers can design and explain why they choose one structure over another.

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Learning Objectives 2

4. Explain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority and integrating mechanisms.

5. Describe how technology continues to help managers build strategic alliances and network structures to increase efficiency and effectiveness.

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Designing Organizational Structure 1

Organizing:

• The process by which managers establish the structure of working relationships among employees to achieve goals.

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Designing Organizational Structure 2

Organizational Structure:

• Formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals.

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Designing Organizational Structure 3

Organizational Design

• The process by which managers make specific organizing choices that result in a particular kind of organizational structure

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Factors Affecting Organizational Structure

Figure 7.1

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Topics for Discussion 1

Would a flexible or a more formal structure be appropriate for these organizations: (a) a large department store, (b) a Big Four accountancy firm, or (c) a biotechnology company? Explain your reasoning. [LO 7-1, 7-2]

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Job Design 1

Job Design:

• The process by which managers decide how to divide tasks into specific jobs.

Job Simplification:

• The process of reducing the number of tasks that each worker performs.

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Job Design 2

Job Enlargement:

• Increasing the number of different tasks in a given job by changing the division of labor.

Job Enrichment:

• Increasing the degree of responsibility a worker has over a job.

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Job Characteristics Model

Job Characteristic Description

Skill variety. Employee uses a wide range of skills.

Task identity. Worker is involved in all tasks of the job from the beginning to end of the production process.

Task significance. Worker feels the task is meaningful to organization.

Autonomy. Employee has freedom to schedule tasks and carry them out.

Feedback. Worker gets direct information about how well the job is done.

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Topics for Discussion 2

Using the job characteristics model as a guide, discuss how a manager can enrich or enlarge subordinates’ jobs. [LO 7-2]

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Grouping Jobs into Functions 1

Functional Structure:

• An organizational structure composed of all the departments that an organization requires to produce its goods or services.

Copyright Tim Boyle/Getty Images

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The Functional Structure of Pier 1 Imports

Figure 7.2

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Grouping Jobs into Functions 2

Advantages:

• Encourages learning from others doing similar jobs.

• Easy for managers to monitor and evaluate workers.

Disadvantages:

• Difficult for departments to communicate with others.

• Preoccupation with own department and losing sight of organizational goals.

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Divisional Structures

An organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer.

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Types of Divisional Structures

Product Structure:

• Each product line or business is handled by a self-contained division.

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Product Structure

Advantages:

• Allows functional managers to specialize in one product area.

• Division managers become experts in their area.

• Corporate managers do not need direct supervision of the division.

• Divisional management improves the use of resources.

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Product, Market, and Geographic Structures

Figure 7.3

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Types of Divisional Structures 1

Geographic Structure:

• Each region of a country or area of the world is served by a self- contained division.

Global Geographic Structure:

• Managers locate different divisions in each of the world regions where the organization operates.

• This structure used when managers are pursuing a multi- domestic strategy.

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Types of Divisional Structures 2

Global Product Structure

• Each product division, not the country or regional managers, takes responsibility for deciding where to manufacture its products and how to market them in foreign countries.

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Global Geographic and Global Product Structures

Figure 7.4

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Types of Divisional Structures 3

Market Structure:

• Each kind of customer served by a self-contained division.

• Also called customer structure.

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Topics for Discussion 3

When and under what conditions might managers change from a functional to (a) a product, (b) a geographic, or (c) a market structure? [LO 7-1, 7-3]

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Matrix Design Structure

Matrix Structure:

• An organizational structure that simultaneously groups people and resources by function and product.

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Matrix and Product Team Structures

Figure 7.5

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Product Team Structure

Product Team Structure:

• Employees are permanently assigned to a cross-functional team and report only to the product team manager or to one of his direct subordinates.

Cross-Functional Team:

• Group of managers brought together from different departments to perform organizational tasks.

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Topics for Discussion 4

How do matrix structures and product team structures differ? Why is the product team structure more widely used? [LO 7-1, 7-3, 7-4]

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Coordinating Functions and Divisions

Authority:

• The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.

Hierarchy of Authority:

• An organization’s chain of command, specifying the relative authority of each manager.

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Allocating Authority

Span of Control:

• The number of subordinates who report directly to a manager.

Line Manager:

• Someone in the direct line or chain of command who has formal authority over people and resources.

Staff Manager:

• Someone responsible for managing a specialist function, such as finance or marketing.

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The Hierarchy of Authority and Span of Control at McDonald’s Corporation

Figure 7.6

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Tall and Flat Organizations 1

Tall Organization:

• Many levels of authority relative to company size.

Flat Organization:

• Fewer levels of authority relative to company size.

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Tall and Flat Organizations 2

Figure 7.7

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Tall and Flat Organizations 3

Figure 7.7

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Centralization and Decentralization of Authority

Decentralizing Authority:

• Giving lower-level managers and nonmanagerial employees the right to make important decisions about how to use organizational resources.

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Integrating and Coordinating Mechanisms

Integrating Mechanisms:

• Organizing tools that managers can use to increase communication and coordination among functions and divisions.

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Types and Examples of Integrating Mechanisms

Figure 7.8

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Strategic Alliances 1

Formal agreements that commit two or more companies to exchange or share their resources in order to produce and market a product.

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Strategic Alliances 2

B2B Network Structure:

• A series of strategic alliances that an organization creates with suppliers, manufacturers, and distributors to produce and market a product.

Outsource:

• To use outside suppliers and manufacturers to produce goods and services.

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Strategic Alliances 3

Boundaryless Organization:

• An organization whose members are linked by computers, email, computer-aided design systems, video-conferencing and cloud-based software, and who, rarely, if ever, see one another face-to-face.

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Topics for Discussion 5

As high-powered, low-cost wireless technologies continue to grow, many managers soon may not need to come to an office to do their jobs but may work at home. What are the pros and cons of such an arrangement? [LO 7-5]

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BE THE MANAGER

Discuss ways in which you can improve how the current functional structure operates so that it speeds website development.

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© 2021 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.

No reproduction or further distribution permitted without the prior written consent of McGraw Hill.