Organizational Structure

Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Designing Organizational Structure

Organizing
The process by which managers establish
working relationships among employees to
achieve goals.

10-2

Departmentalization by Type
Functional

Product

Grouping jobs by
functions performed

Grouping jobs by
product line

Geographical

Customer

Grouping jobs on the

basis of territory or
geography

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Grouping jobs by type

of customer and needs

103

Grouping Jobs into Functions

Function
Groups of people, working together, who
possess similar skills or use the same kind
of knowledge, tools, or techniques to
perform their jobs

10-4

Functional Departmentalization

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105

Functional Departmentalization

Advantages
Efficiencies from putting together people with common
skills and knowledge,
Good coordination within functional area

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106

Functional Departmentalization

Advantages
Efficiencies from putting together people with common
skills and knowledge,
Good coordination within functional area
Disadvantages
Poor communication across functional areas
Less focus on organizational goals

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rights reserved.

107

Geographical Departmentalization

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108

Geographical Departmentalization

Advantages
More effective handling of specific regional
issues that arise
Serve needs of unique geographic markets better

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109

Geographical Departmentalization

Advantages
More effective handling of specific regional
issues that arise
Serve needs of unique geographic markets better
Disadvantages
Duplication of functions

2007 Prentice Hall, Inc. All

rights reserved.

1010

Ex. Of Organization by
Geography
Hewlett-Packards Headquarters
Worldwide
Hewlett Packard

Americas
Houston, Texas

Europe, Middle East, Africa

Geneva, Switzerland

Asia Pacific
Hong Kong

Product Departmentalization

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1012

Product Departmentalization

+ Allows specialization in particular products and services

+ Managers can become experts in their industry
+ Closer to customers

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1013

Product Departmentalization

+ Allows specialization in particular products and services

+ Managers can become experts in their industry
+ Closer to customers
Duplication of functions
Limited view of organizational goals
2007 Prentice Hall, Inc. All
rights reserved.

1014

An Example of Organization by
Product

Hewlett Packard

Imaging and
Printing Group

Personal
Systems Group

Enterprise
Systems Group

HP Services

HP Financial
Services

Customer Departmentalization

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1016

Customer Departmentalization

+ Customers needs and problems can be met by specialists

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1017

Customer Departmentalization

+ Customers needs and problems can be met by specialists

- Duplication of functions
- Limited view of organizational goals

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1018

Removing External Boundaries

Virtual Organization
An organization that consists of a small core of full-time
employees and that temporarily hires specialists to work
on opportunities that arise.

Network Organization
A small core organization that outsources some of its
major business functions (e.g., manufacturing) in order to
concentrate what it does best.

Modular Organization
A manufacturing organization that uses outside suppliers
to provide product components for its final assembly
operations.
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rights reserved.

1019

Example of Network Structure

Interviewing
Company

Coding & Data

Tabulation Firm

Marketing Research
Consultants

Printing Company

10-20