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Strategy and Organisation Chapter 12 Summary: Foundations of Organization Structure
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A detailed summary of chapter 12 of the book: Strategy and Organisation of Utrecht University
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Chapter 12: Foundations of Organization StructureWhat is Organizational Structure?
An organizational structure defines how job tasks are formally divided,
grouped, and coordinated. There are six key elements that managers
need to address when they design their organization's structure: work
specialization, departmentalization, chain of command, span of control,
centralization and decentralization, and formalization.
Work Specialization
Work specialization, also known as division of labour, describes the degree
to which activities in the organization are divided into separate jobs. The
essence of work specialization is to divide a job into a number of steps,
each completed by a separate individual. In essence, individuals specialize
in doing part of an activity rather than the entirety. Most managers today
recognize the economies specialization provides in certain jobs and the
problems when it's carried too far.
Departmentalization
Jobs must be grouped so common tasks can be coordinated. The basis by
which jobs are grouped is called departmentalization. One of the most
popular ways to group activities is by functions performed. Jobs can also
be departmentalized by the type of product or service the organization
produces. A firm can be departmentalized on the basis of geography or on
the different processes in the business. A final category of
departmentalization uses the particular type of customer the organization
seeks to reach.
Chain of Command
The chain of command is an unbroken line of authority that extends from
the top of the organization to the lowest level and clarifies who reports to
whom. When discussing the chain of command we need to take into
account authority and unity of command. Authority refers to the rights
inherent in a managerial position to give orders and expect them to be
obeyed. Everyone in the chain of demand is given a degree of authority in
order to meet his or her responsibilities. The principle of unity of
command helps to preserve the concept of an unbroken line of authority.
It says a person should have one and only one superior to whom he or she
is directly responsible.
Span of Control
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