Ch3 Organizational Purpose And Structural Design

Question 1

What are the three main components of organizational structure?

Answer 1

1. Designate formal reporting relationships (number of levels in the hierarchy, span of control ect.)
2. Create departments that make up the company
3. Design systems for communication and coordination across departments.

Question 2

Name 5 departmental grouping options

Answer 2

• functional grouping - places together employees who perform similar jobs, skills and work processes. Allows economies of scale but is slow for decision making.
• divisional grouping - organized based on what the organization produces. Also known as product structure or strategic business units is good for fast paced environment but does not provide economies of scale.
• multifocused grouping - or matrix good for coordination bad for dual authority
• horizontal grouping - organized around core work processes whereby all members working on a particular process work as a group good for flexibility and rapid response to customer needs, bad for determining core processes and is time consuming.
• virtual network grouping - departments are separate organizations that are electronically connected to share information. Good for even small organizations to obtain talent anywhere, bad for control.

Question 3

What is structural deficiency?

Answer 3

• decision making is delayed or lacking quality
• the organization does not respond innovatingly to a change in environment
• employee performance declines and goals are not being met
• too much conflict is evident

Question 4

Functional structure

Answer 4

Activities are grouped together by common function from the bottom to the top of the organization.
Strengths:
- economies of scale
- exchange of knowledge and skill

Weakness:

• slow response to environment changes
• decisions pile up
• poor horizontal coordination

Question 5

Divisional structure

Answer 5

Divisional structure (or product structure or strategic business units) are organized based on organizational outputs such as: individual products, services, product groups, divisions, or profit centres.

Strength:

• response to fast changing environment
• customer satisfaction
• high coordination across functions

Weakness

• eliminates economies of scale
• poor coordination across product lines
• weak technical specialization

Question 6

Multifocused structure

Answer 6

multifocused strategy (or matrix strategy) combines horizontal and vertical structures simultaneously when two factors are important for achieving organizational goals.

Question 7

Horizontal structure

Answer 7

horizontal structure - organizes employees around core processes.

Strengths:

• Promotes flexibility and rapid response to customer needs
• employee focus on value to customer
• employee had broad view of organization goals

Weaknesses:

• core process is difficult and time consuming
• change in culture, job design ect…

Question 8

Virtual network structure

Answer 8

virtual network structure - (or modular structure) uses outsourcing and technology and coordinates activities from a small headquarters.

Question 9

Hybrid structures

Answer 9

Many structures in the al world do not exist in their pure form. They have combined characteristics of the structures discussed.