ORGANIZATION
ORGANIZATION
• A social group that has a well-
coordinated process and activities
for the purpose of achieving its
objectives and is connected to the
environment where it exists.
ORGANIZING
• As a management function, that
entails the structuring and
grouping of jobs and ensuring that
these are performed by qualified
and competent personnel
STEPS IN
ORGANIZING
STEPS IN ORGANIZING
1. Identification of Activities
2. Departmentalization
3. Definition of Authority
4. Integration of Authority and
Responsibility
ORGANIZATION
AL DESIGN &
STRUCTURE
ORGANIZATIONAL DESIGN
• identifies the essential tasks and
operations of the company, establishes
effective work relationships, and
divides the company into departments
that will contribute toward achieving
its goals and objectives
ORGANIZATIONAL STRUCTURE
• is the framework that
shows how each
component of the company
relates to each other
CENTRALIZATION
VS.
DECENTRALIZATION
• Centralization – when major
decisions are made by the top
mgmt. and the decisions and
actions of lower management
and employees must have
approval from the top
•Decentralization–
when lower mgmt.
is allowed to make
important decisions
1. Simple
• the most basic and is
applicable to small businesses
where majority of the power
and decision-making rests on
the owner
• allows for quick decision-
making and hands-on
interaction with the day-
to-day activities of the
firm
Advantage:
• businesses are easily
maintained
• accountability is easily
determined
Disadvantage:
• heavily reliant on the business owner
• if the owner is not around to oversee
operations, the organization cannot
address opportunities and challenges
effectively
• may limit the activities and growth of the
business
2. Functional
• enables a company to establish
clear professional identities
among its employees, since they
are given positions and ranks in
line with their areas of expertise or
specialization
Advantage:
• it groups employees who
have similar skills under the
same department or units to
easily fulfill specific tasks to
meet its functional goals
Disadvantage:
• organization cannot respond quickly to
environmental changes
• the highly rigid and segregated structure of
the organization can also lead to poor
coordination among departments
• innovation is unlikely to develop due to
narrower view of organizational goals
3. Divisional
• organizes a company into
divisions that correspond
to certain
products/services
• each division is autonomous
and has its own departments,
resources, and units that
oversee the regular
operations of the company
Advantage:
• divisions are free to manage
their own activities
• enables each division to adapt
to the changes and threats they
encounter
• the failure of one division will
not automatically result in the
failure of the whole company
• they can also focus more
closely on their specific
products and services
Disadvantage:
• integration and standardization
across product lines is difficult
• the divisional design is also prone to
competition among divisions which
may lead one division to undermine
another
4. Matrix
• often used in larger
companies and is set up as a
grid where employees have
dual reporting relationships
Advantage:
• employees from different
departments can be selected
• select the best combo of talents
• beneficial to the personal and
professional growth of employees
Disadvantage:
• conflict of interest among
project and functional managers
in the allocation of resources
• conflict of loyalty
• the number of managers
involved entails high
administrative costs for the
company
• employees have heavier
workload
5. Team-based
• is a horizontal design structure
that organizes employees into
teams whose members
perform varied functions
• employees work together in
accomplishing various tasks,
seeking solutions to
problems, and identifying
and engaging in business
opportunities
Advantage:
• productivity is increased since
the entire group is working for
a common goal, and the
talents and skills of each
employee is maximized
Disadvantage:
• time-consuming since
coordinating the teams
requires constant
communication and frequent
meetings
• employees may also lack
motivation since team
performance is valued
rather than individual
contributions
6. Network
• good for small companies since
they hire only few employees,
which amounts to lesser costs
for salaries and benefits
Advantage:
• a company enjoys more
flexibility and can be more
responsive to change since all
the functions are outsourced
Disadvantage:
• independent firms may be hard
to monitor
• managers do not have hands-on
control over the separate
companies and their employees
• requires a lot of time to build
and cultivate relationships
among the workforce since face-
to-face communication is limited
• there is no corporate culture and
employee loyalty is questionable
OTHER TYPES of
Organizational
Structure
1. Entrepreneurial organization
• The power is focused on the chief
executive.
• Usually, the staff is small and
informal, with a loose division of
labor and little management
hierarchy.
2. Machine organization
• Decision-making is
centralized and there is a
distinction between line
and staff.
• Tasks are routine and highly
specialized, and these are
grouped based on functions.
• Communication within the
3. Diversified organization
• The central administration is
called headquarters and there is a
set of semi-autonomous units or
divisions under a central
administrative structure.
4. Professional organization
• has standardized products
and services and
employees usually do
routine work.
• This is commonly found in
hospitals, universities, and
public agencies.
• It depends on the skills and
knowledge of its professional
staff.
5. Innovative organization
• considered as a modern
organization which is flexible
and does not utilize planning
and control systems.
• Multidisciplined teams are
formed and the firm hires
experts who are trained,
experienced, and are not
restricted by traditional
specializations
6.Missionary
organization
• the mission is the main
focus of this type of
organization.
• The employees are able to
identify with the firm’s
purpose and are motivated to
enthusiastically work to
achieve the company’s
mission.
