1. Organizational Design
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2. Organizations
Common Elements
Operate with authority
Have departments
Use line and staff positions
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3. Organizational Design Objectives
Integrate
Respond to
new
change
elements
Coordinate Encourage
the flexibility
components
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4. Mechanistic Structure is
Characterized By
 Rigidly defined tasks
 Formalization
 Rules and regulations
 Centralized decision making
 Emphasis on control from top levels down
 Vertical communication
MultiMedia by 2002 South-

5. Mechanistic versus Organic Structures
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6. Organic Structure
1. Free flowing.
2. Has few rules and regulations.
3. Decentralizes decision making.
4. Referred to as the horizontal structure.
5. Allows changes to be made rapidly as the needs require.
6. Frequently redefines tasks to fit employee and environmental needs.
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7. Contingency Factors
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8. Influence of Strategy on Structure
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9. Uncertain Environment Calls For
— Organic structure that emphasizes:
• flexibility
• coordination
• less formal procedures
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10. Small Organizations
Little division Few rules and
of labor regulations
Informal performance Informal budget
appraisals development
procedures
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11. Large Organizations
Greater division
Greater division
Mechanistic
Mechanistic of labor
of labor
More rules and
More rules and More elaborate
More elaborate
regulations
regulations internal systems
internal systems
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12. Organizational Life Cycle and Structural Characteristics
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13. Producing Goods in Small Quantities
Small batch technology
Unit production technology
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14. Large Volume of Standardized
Products Technology
 Large batch technology
 Mass production technology
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15. MultiMedia by 2002 South-

16. Functional Structure
• Groups positions into departments based on similar skills,
expertise, and resources.
Advantages
– Economics of scale
– Minimizes duplication of personnel and equipment
– Simplifies training
Disadvantages
– Employees may have little understanding of and concern for
the specialty areas outside their own functional area
– Barriers in communication, cooperation, and coordination
– Functional structure response time to changes may be slow
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17. Divisional Structure
 Groups departments based on organizational outputs.
 Self-contained strategic business units.
 Creates a set of autonomous mini-companies.
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18. Divisional Structure
Advantages
– Focuses the attention of employees and managers on
results for the product, the customer, or the
geographical area.
– Flexible and responsive to change.
– Singleness of purpose.
– Responsibility and accountability for performance
are easier to target.
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19. Divisional Structure
Disadvantages
– Duplication of activities and resources.
– Loses efficiency and economies of scale.
– Lack of technical specialization, expertise, and
training can result.
– Coordination may suffer.
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20. Matrix Structure
Combines the advantages of functional specialization
with the focus and accountability of the divisional
structure.
Employs dual lines of authority.
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21. Matrix Design Used in One of
Two Situations
 First, it is used when a firm offers a diverse set of
products, has a complex environment, and requires
functional expertise.
 Second, it is used when managers want to
maximize economies of scale and shared resources.
MultiMedia by 2002 South-

22. Team Structure
Advantages
—Breaks down barriers across departments.
—Speeds up decision making and response time.
—Employees are strongly motivated.
—Improvement over the matrix structure.
Disadvantages
— Depends on employees who learn and train for
success.
— A large amount of time may be required for team
meetings.
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23. Network Structure Known as
“Dynamic Network”
• A small central organization relies on other organizations
to perform critical functions on a contract basis.
Advantages
– Provides flexibility.
– Overhead remains low.
Disadvantages
– Lack of control.
MultiMedia by 2002 South-