Summary
Summary BDO 222
- Course
- BDO 222
- Institution
- University Of Pretoria (UP)
Summary of 19 pages for the course BDO 222 at UP (Summary BDO 222)
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STUDY UNIT 6 – CHAPTER 15 (FOUNDATIONS OFORGANISATIONAL STRUCTURE)
Study Objectives:
1. Identify the six elements of an organisation’s structure.
2. Identify the characteristics of a bureaucracy.
3. Describe a matrix organisation.
4. Identify the characteristics of a virtual organisation.
5. Show why managers want to create boundary less organisations.
6. Demonstrate how organisational structures differ and contrast mechanistic and organic structural
models.
7. Analyse the behavioural implications of different organisational designs.
8. Show how globalization affects organisational structure
What is Organisational Structure?
The way in which job tasks are formally divided, grouped and coordinated.
Six key elements should be addressed when designing organisational structure:
Work specialization
Departmentalisation
Chain of Command
Span of Control
Centralisation & Decentralisation
Formalisation
Key Design Questions:
The Key Question The Answer is provided by
1. To what extent are activities sub divided into separate jobs? Work Specialisation
2. On what basis will jobs be grouped together? Departmentalisation
3. To whom do individuals and groups report? Chain of Command
4. How many individuals can a manager efficiently and Span of Control
effectively direct?
5. Where does decision making authority lie? Centralisation and Decentralisation
6. To what degree will there be rules and regulations to direct Formalisation
employees & managers
Work specialisation:
The degree to which tasks in an organisation are subdivided into separate jobs
One Job is divided into a number of steps
Each step is performed by a different individual
Employee becomes an Expert in a step
Ford produced a car every 10 sec using work specialization
Also known as Division of Labour
Diseconomies of specialisation 1960’s:
Human diseconomies:
o Boredom,
o fatigue,
o stress,
o low productivity,
o poor quality,
, o increased absenteeism and
o high turnover
Managers started giving people variety of tasks as a result
Departmentalisation:
The basis by which jobs are grouped so that common tasks can be coordinated
Jobs can be grouped by:
Departmentalisation Production Department
by Function Finance Department
Marketing Department
Human Resource Department
The most popular way to group activities
Benefit Efficiency is gained from putting like specialists together
Departmentalisation Two wheeler Department
by Product Three wheeler Department
Four wheeler Department
Heavy Motors Department
Jobs are grouped by product line. Each manager is responsible for an area
within the organisation depending on his/her specialisation
Benefit Accountability for performance lies with the product owner
Departmentalisation North zone Department
by Geography South zone Department
East zone Department
West zone Department
Jobs are grouped on the basis of territory or geography.
Benefit When customers are scattered over a large geographic area and
have similar needs
Departmentalisation Department to handle Foreign customers
by Customer Department to handle Domestic customers
Department to handle Wholesale customers
Department to handle Retail customers
Jobs are grouped by the type of customer the organisations would like to
reach
Benefit Customers in each department have a common set of problems
and needs best met by having a specialist for each
Departmentalisation Spinning Department
by Process Weaving Department
Dyeing Department
Printing Department
Works for processing products as well as customers
Think renewing of license
Benefit Increased Efficiency
Process
Function
Customer
Product
Geography
Chain of Command
, The unbroken line of authority that extends from the top of the organisation to the lowest level and
clarifies who reports to whom
Far less important today, unless you are in a “life-death” industry
Two important concepts inherent to Chain of Command:
o Authority is the rights inherent in a managerial position to give orders and expect them to be
obeyed.
o Unity of Command is the idea that a subordinate should have only one superior to whom he or she
is directly responsible.
Span of Control
The number of subordinates a manager can efficiently and effectively direct
Wider span
o The wider or larger the span, the more efficient the
organisation
o Reduce costs, cut overheads, speedy decision making,
increase flexibility, get closer to customers and
empower employees
Narrow span
o Expensive – adds levels of management
o Slows down decision making & isolates upper
management
o Tight supervision leads to reduced employee autonomy
Centralisation and Decentralisation
The degree to which decision making is concentrated at a single point in an organisation
Decision making is pushed down to managers or work groups closer to the action
Centralisation
o Top management make all the decisions
o Better for avoiding commission errors (bad choices)
Decentralisation
o Allows for quick problem solving
o More people are involved in decision making
o Better for avoiding omission errors (lost opportunities)
Formalisation
The degree to which jobs within an organisation are standardised
Highly formalised jobs
o Discretion over tasks is minimal (what, when & how)
o Same input in exactly the same way
o Consistent and uniform output
o Explicit jobs descriptions, lots of rules, clear procedures
Where formalisation is low
o Job behaviours relatively unprogrammed
o Freedom and discretion is exercised
Organisational Designs:
Common Designs
Simple o Low degree of departmentalisation
Structure o Wide spans of control
o Little formalization
o Authority centralised in a single person and mostly a flat organisation
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