Week 10 - Designing Organizations (Ch. 9)

Question 1

Basic departmentalization structures: Groups

Answer 1

The grouping of related activities or processes into major units
Main options:
1. Functional (organize by functions, accountants with accountants, finance with finance)
2. Product (organize by products/companies within a company)
3. Customer (separate by the customers that we sell to—government, business, personal—different needs of markets)
4. Geographic (markets in NA, EU, AS)
5. Matrix (2 or more of the above)

Question 2

Basic departmentalization structures

Functional Departmentalization

positives and negatives

Answer 2

Positive: Know everything about the function
Negative: You need to talk to other grous at some point, takes a long time to make a change coordination between function is hard.

Question 3

Basic departmentalization structures

Product Departmentalization

positives and negatives

Answer 3

Positive: Three miniature companies within my company, financial ratio for each product line.
Negative: Need more people to make each group complete, cost go up because so many employees, loose efficiency because independent groups create their own stuff and can’t standardize it, less coordination between business units.

Question 4

Basic departmentalization structures

Customer Departmentalization

positives and negatives

Answer 4

Positive: Customer needs differ, more responsive to customer needs, assess business units independently.
Negative: Same expensive cost and not a lot of communication, can’t standadize

Question 5

Basic departmentalization structures

Geographic Departmentalization

positives and negatives

Answer 5

Positive: Locate them closer to the market their serving so that they understand the customers’ needs
Negative: Replicating company in every country you’re at takes lots of money, no standardization.

Question 6

Basic departmentalization structures

Matrix Departmentalization

positives and negatives

Answer 6

Positive: Satisfying more than one area.
Negative: Creates a lot of confusion, and difficult to pull of

Question 7

Logic of Contingency Design

Mechanic vs Organic

Answer 7

There is no single best design for all companies and situations

Burns & Stalker (1961)
Must determine the degree of environmental uncertainty (how unpredictable is your industry, is it fast paced?) and adapt the organization and its subunits to that situation

1. Mechanic (very predictive industry)
2. Organic (very unpredictive/fast paced and changing)

Question 8

Logic of Contingency Design

Mechanic

Answer 8

Very Predictive
Very clear chain of command
Vertical communication
Centralized authority
Low delegation of authority
High specialization

more compression/increments

Question 9

Logic of Contingency Design

Organic

Answer 9

Very Unpredictive
Think broadly about who you report to
Lateral communication
Decentralized authority
High delegation
High generalization

more experiential/breakthrough

Question 10

Line vs staff authority

Answer 10

Line: the right to command immediate subordinates in the chain of command

Staff: the right to advise , but not command, others who are not subordinates in the chain of command

Question 11

Delegation

And how to do well

Answer 11

Assignment of direct authority to a subordinate that a manager normally does

1. Responsibility: full responsibility for the assignment, this is difficult for employers

2. Authority: authority over the budget, resources, and personnel needed to do the job

3. Accountability: subordinate has the authority and responsibility to do the job and in return is accountable for getting the job done. managers delegate their managerial authority and responsibility to subordinates in exchange for results