Chapter 7 – DESIGNING ORGANIZATIONAL STRUCTURE

7.1 Identify the factors that influence managers’ choice of an organizational structure.
7.2 Explain how managers group tasks into jobs that are motivating and satisfying for employees.
7.3 Describe the types of organizational structures managers can design, and explain why they choose one
structure over another
7.4 Explain why managers must coordinate jobs, functions, and divisions using the hierarchy of authority
and integrating mechanisms.
7.5 Describe how information technology (IT) helps managers build strategic alliances and network
structures to increase efficiency and effectiveness.
A. Designing Organizational Structure
* Organizing: The process by which managers establish the structure of working relationships among
employees to achieve goals
* Organizational Structure: Formal system of task and reporting relationships that coordinates and motivates
organizational members so that they work together to achieve organizational goals
* Organizational Design: The process by which managers make specific organizing choices that result in a
particular kind of organizational structure

1) The Organizational Environment

- Rapidly Changing and Uncertain Environment:
+ Greater challenges in accessing scarce resources.
+ Adoption of flexible structures and entrepreneurial cultures.
+ Decentralization of authority.
+ Empowerment of lower-level employees for key decisions.
+ Emphasis on change and innovation (organic structure).
- Stable Environment with Readily Available Resources:
+ Less need for coordination and communication.
+ Preference for stable and formal structures.
+ Emphasis on obedience and teamwork.

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+ Decision-making within a clear hierarchy.
+ Use of detailed rules and standard operating procedures (mechanistic structure).
- Current Global Marketplace:
+ Rapid changes and increasing competition.
+ Growing interest in flexible organizational structures.
+ Use of empowerment and self-managed teams to enhance efficiency and effectiveness.
2) Strategy
- Strategy Implementation: Different strategies require different organizational structures and cultures.
- Differentiation Strategy:
+ Aimed at increasing perceived value of goods/services.
+ Best in a flexible structure with a culture valuing innovation.
+ Facilitates quick development of new/innovative products.
+ Requires extensive cooperation among functions/departments.
- Low-Cost Strategy:
+ Aimed at driving down costs in all functions.
+ Best in a formal structure with conservative norms.
+ Provides greater control over departmental activities.
- Corporate Level Expansion:
+ Vertical integration or diversification requires a flexible structure.
+ Ensures sufficient coordination among different business divisions.
+ Flexible structures help managers control different businesses.
- International Expansion:
+ Operating in multiple countries requires flexible organizational structures.
+ Allows organizations to be adaptable on a global level.
+ Managers can group departments/divisions to effectively pursue international strategies.
3) Technology
- Technology: Combination of skills, knowledge, machines, and computers used to design, make, and
distribute goods and services.
- Complicated Technology:
+ Difficult to regulate or control due to unexpected events.
+ Requires a flexible structure and progressive culture.
+ Enhances managers’ ability to respond to unexpected situations.
+ Encourages freedom and innovation in problem-solving.

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- Routine Technology:
+ Easier to regulate and control.
+ Suitable for a formal structure.
+ Tasks are simple and steps are predefined.
- Factors Determining Technology Complexity (Charles Perrow):
+ Task Variety: Number of new or unexpected problems encountered.
+ Task Analyzability: Availability of programmed solutions to solve problems.
- Nonroutine/Complicated Technologies:
+ High task variety and low task analyzability.
+ Requires significant nonprogrammed decision making.
+ Examples: R&D laboratories, top management strategic planning.
- Routine Technologies:
+ Low task variety and high task analyzability.
+ Problems are easily resolved through programmed decision making.
+ Examples: Mass-production, assembly operations, fast-food service tasks.
B. Grouping Tasks into Jobs: Job Design
* Job Design: The process by which managers decide how to divide tasks into specific jobs
* Job Simplification: The process of reducing the number of tasks that each worker performs
1) Job Enlargement and Job Enrichment
* Job Enlargement: Increasing the number of different tasks in a given job by changing the division of labor
* Job Enrichment: Increasing the degree of responsibility a worker has over a job
2) The Job Characteristics Model

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C. Grouping Jobs into Functions and Divisions: Designing Organizational Structure
1) Functional Structure (căn bản nhất)
* Functional Structure: An organizational structure composed of all the departments that an organization
requires to produce its goods or services

- Advantages
• Encourages learning from others doing similar jobs
• Easy for managers to monitor and evaluate workers
- Disadvantages
• Difficult for departments to communicate with others
• Preoccupation with own department and losing sight of organizational goals
2) Divisional Structures: Product, Geographic, and Market
* Divisional Structure: An organizational structure composed of separate business units within which are the
functions that work together to produce a specific product for a specific customer
a. Product Structure: Each product line or business is handled by a self-contained division
- Advantages:
+ Allows functional managers to specialize in one product area.
+ Division managers become experts in their area.
+ Corporate managers do not need direct supervision of the division.
+ Divisional management improves the use of resources.
b. Geographic Structure: Each region of a country or area of the world is served by a self-contained division.
b.1 Global Geographic Structure
• Managers locate different divisions in each of the world
regions where the organization operates.
• This structure used when managers are pursuing a multi-
domestic strategy.
b.2 Global Product Structure: Each product division, not
the country or regional managers, takes responsibility for
deciding where to manufacture its products and how to
market them in foreign countries.

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a) Market Structure
• Each kind of customer served by a self-contained division
• Also called customer structure

3)

Matrix Design Structure

* Matrix Structure: An organizational structure that simultaneously groups people and resources by function
and product  1ng nhân viên bị giám sát bởi 2 bosses  nhân viên vất vả hơn
* Product Team Structure: Employees are permanently assigned to a cross-functional team and report only
to the product team manager or to one of his direct subordinates
* Cross-Functional Team: Group of managers brought together from different departments to perform
organizational tasks 
D. Coordinating Functions and Divisions
1) Allocating Authority
* Authority: The power to hold people accountable for their actions and to make decisions concerning the
use of organizational resources
* Hierarchy of Authority: An organization’s chain of command, specifying the relative authority of each
manager
* Span of Control: The number of subordinates who report directly to a manager
* Line Manager: Someone in the direct line or chain of command who has formal authority over people and
resources
* Staff Manager: Someone responsible for managing a specialist function, such as finance or marketing

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a. Tall and Flat Organizations
* Tall Organization: Many levels of authority relative to
company size  thông tin đi chậm ra quyết định chấm, dễ dàng
quản lý
* Flat Organization: Fewer levels of authority relative to
company size  manager vất vả, thông tin nhanh
b. Centralization and Decentralization of Authority
* Decentralizing Authority: Giving lower-level managers and
nonmanagerial employees the right to make important decisions
about how to use organizational resources
* Centralization Authority: refers to the concentration of
decision-making power and control at the top levels of an
organization. In a centralized structure, key decisions are made
by senior management, and lower-level managers and
employees have limited autonomy. This approach ensures
uniformity and consistency in decision-making, but it can also
slow down the decision-making process and reduce flexibility
at lower levels.
(Pros&Cons)
2) Integrating and Coordinating Mechanisms
* Integrating Mechanisms: Organizing tools that managers can use to increase communication and
coordination among functions and divisions

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E. Strategic Alliances, B2B Network Structures, and IT
* Strategic Alliance: A formal agreement that commits two or more companies to exchange or share their
resources in order to produce and market a product
* B2B Network Structure: A series of strategic alliances that an organization creates with suppliers,
manufacturers, and distributors to produce and market a product
* Outsource: To use outside suppliers and manufacturers to produce goods and services
* Boundaryless Organization: An organization whose members are linked by computers, email, computer-
aided design systems, videoconferencing and cloud - based software, and who, rarely, if ever, see one
another face-to-face
* Knowledge Management System: A company-specific virtual information system that systematizes the
knowledge of its employees and facilitates the sharing and integration of their expertise
1 essay trong sách
1 essay combine sách với thực tế
+ Đưa ra tình huống  Làm sao giải quyết vấn đề?
+ VD: Trong cấu trúc dài, nhân viên khó giao tiếp với sếp thì bây giờ sẽ làm sao?
 Communicating online
+ Phong cách lãnh đạo, khi nhân viên làm sai thì sẽ xử lí sao (C9)
+ Phúc lợi nhân viên ở các CTY thể hiện CTY đang đi theo định hướng nào

Chapter 7