Lecture 5 - Organizational structure

Question 1

Organizational structure

Answer 1

The way tasks are formally divided, grouped and coordinated

Question 2

Work specialization

Answer 2

Describes the degree to which tasks in an organiation are subdivided into separate jobs completed by different individuals

Question 3

Departmentalization

Answer 3

The basis by which jobs are grouped together
- Function
- Product
- Geographic
- Process
- Customer

Question 4

Chain of command

Answer 4

An unbroken line of formal authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom

Question 5

Span of control

Answer 5

The number of subordinates a supervisor oversees
- How wide the organization is
- Flat organization: one person is responsible for more people

Question 6

Centralization and decentralization

Answer 6

The degree to which decision making is concentrated at a single point in the organiation

• When decisions need to be made, is it by one person or multiple?

Question 7

Formalization

Answer 7

How many rules are there?
High formalization:
- Detailed job descriptions
- Low autonomy
- McDonald’s

Low formalization
- Non-programmed job behaviors
- High autonomy
- Any startup

Question 8

Typology of 6 common structures

Answer 8

Work specialization
Departmentalization
Chain of command
Span of control
(De)centralization
Formalization

Question 9

Simple structure

Answer 9

• Low departmentalization: everyone might help with various things
• Low specialization: employees do a mix of tasks
• Short chain of command: CEO is in charge of all employees
• Centralized authority: CEO makes most of the decisions
• Low formalization: minimal rules

Question 10

Functional structure

Answer 10

• Wide span of control: CEO manages several department heads
• High specialization: IT department, one person focuses on coding, while another handles tech support
• Short chain of command: a graphic designer reports directly to the marketing manager
• Wide span of control: one manager oversees 15 customer service departments

Question 11

Divisional structure

Answer 11

• High departmentalization: different departments for each subject
• Medium-high specialization: professors in biology department specialize in different areas
• Low formalization: fewer stricter rules in designing own traching methods

Question 12

Matrix structure

Answer 12

1. Functional structure: team where everyone does a specific job, some do marketing, others do finance. This helps share resources, but it doesn’t always make it clear who is responsible for what
2. Divisional structure: having clear job roles for everyone and no confusion about who does what. It can cost more because each team might repeat some tasks

Question 13

You report to two managers - matric strcuture

Answer 13

1. Functional manager (head of marketing)
2. Product manager (person in charge of product X, Y, Z)

Question 14

Advantages of matrix structure

Answer 14

• Combines expertise and focus
• Saves costs
• Fast innovation

Question 15

Disadvantages of matrix structure

Answer 15

• You as an individual have to deal with multiple forms of power
• Stress resilient
• Management has to communicate really good with each other
• Complex to work with

Question 16

Team/project structure

Answer 16

The organization is designed around specific projects rather than permanet departments

Creates temporary teams that work together on a specific project and then move on to the next one

Question 17

Network structure

Answer 17

Different independent companies or organizations working together to creare a product or a service

Each company in the network focuses on what it does best and they all rely on each other to complete the final product

Question 18

Disadvantages - network structure

Answer 18

• Hard to manage: each company is independent
• Dependence on others: companies depend on other companies in the network

Question 19

Environment drives structure

Answer 19

Simple & Stable: clear rules, few departments, and centralized decision making
- Low formalization: fewer rules
- Low centralization: more decision-making at lower levels

Unstable environments: if things change quickly organizations need to be more flexible, with more departments and less central control
- High formalization: lots of rules
- High centralization: decisions are made at the top

Question 20

When organizations grow…

Answer 20

More management layers are needed
More departmentalization is needed
More formalization is needed
More specialization is needed

Question 21

Organization environment, size and strategy

Answer 21

1. Simple Environment:
   * Size: Small
   * Strategy: Stable, single product; optimize and maintain quality.
2. Stable Medium Environment:
   * Size: Medium
   * Strategy: Efficiency and quality control; routine operations, tech interdependence within functions.
3. Stable but Complex Environment:
   * Size: Medium
   * Strategy: Specialization and innovation; tech interdependence between functions.
4. Adaptive, Complex Environment”
   * Size: Large
   * Strategy: Dual focus—customer demands + technical specialization; handles instability and complexity.
5. Highly Adaptive Environment:
   * Size: Medium to large
   * Strategy: Self-directed teams, innovation, rapid decisions, specialized in temporary teams.
6. Very Unstable/Highly Complex:
   * Size: Very large, global
   * Strategy: Disrupt markets, outsourcing, and leveraging novel technology

Question 22

Top-down culture change

Answer 22

Leaders decide which parts of the organization need cultural change and how it will happen (top-down, bottom-up, or both).