The Basic Management Functions:

Organizing
Lesson 5.2: Organizing Business Activities
• One of the functions of management
•The necessity of organizing increases as organizations
grow in size and complexity
•Bigger organizations should have a way of grouping many
related tasks together and coordinating them for a more
systematic and efficient operation.
 Learning Outcomes
• Reasons for Organizing
• The Organizational Structure and its determinants
o Illustrate the organizing process.
• Basic elements of organizational structure
o Understand the different principles that govern the
structures of formal organizations.
Motivation Question

How should organizational activities be organized?

Organizing as a Management Function
• is the process of the deployment of organizational
resources to achieve strategic goals
• defines the process of how strategies are put into
action.
Formal Organizational Structures
Organizational Structure – the framework in which
the organization defines how tasks are divided,
resources are deployed and departments are
coordinated.
Organizational Chart – the visual representation of an
organization’s structure.
Advantages of Formal Organizational Structures
1. Specialization of functions leads to efficiency
2. Delineation of functions and clarity of job definition
results to order
3. Reduced overlaps in the conduct of activities.
The Organization Hierarchies
the layers created in terms of authority relationship creates
the hierarchy in the organization.
Important Features of Vertical Structure
Work Specialization – is also known as division of labor. It
refers to the degree to which organizational tasks are
subdivided into individual jobs
Chain of Command – an unbroken line of authority that
links all individuals in the organization and specifies who
reports to whom.
Span of Control – refers to the number of subordinates a
manager supervises.
 Types of Organizational Structure
1. Vertical Functional Structure
2. Divisional structure
3. Functional Structure
 1. Vertical Functional Structure

is the grouping of
positions into
departments based on
similar skills,
expertise, work
activities and resource
use.
Advantages of Vertical Functional Structure:
• Specialization of skills
• Efficiency
• Transparent and predictable
• Training and development of employees within a unit to be
proficient
Disadvantages of Vertical Functional Structure:
• Develops poor interpersonal communication skills
• Narrow view of the organization
• Require considerable effort to maintain power and balance
• Hinders coordination and timely communication
The 7-Eleven Vertical Functional Chart
b. Divisional structure
-occurs when
departments are
grouped together
based on
organizational
outputs.
Advantages of Divisional Structure in Organizations are:
• specialization and efficiency.
• Control of resources
• Higher morale and better knowledge of their portfolio
Example: Functional divisions keep your marketing, IT,
R & D, HR, and other teams in departments of their
own. The drawback is that departments can silo and be
unwilling to cooperate with the other divisions.
Disadvantages of Divisional Structure are:
• office politics instead of sound strategic thinking,
competition and compartmentalization.
Example, Microsoft's business-software division developed
the Social Connector in Microsoft Office Outlook 2010. They
were unable to integrate Microsoft SharePoint and Windows
Live until months after Social Connector could interface with
LinkedIn. Some experts suggested that Microsoft's divisional
structure contributed to a situation where its own products
were incompatible across internal business units.
3. Functional Structure
-is the most common type
of organizational structure
that businesses use.
Grouping is done by
employees by specialty, skill
or related roles. It is based
on levels of hierarchy that
include different
departments, under the
direction of designated
leaders.
Advantages of a Functional Structure
• Specialization - departments focus on one area of work.
• Productivity - specialism means that staff are skilled in
the tasks they do.
• Accountability - there are clear lines of management.
• Clarity - employees understand their own and others'
roles.
Disadvantages of a Functional Structure:
•Poor communication and coordination across
functional units.
•Lack of understanding across departments.
•Too much focus on their own goals and neglect of
the overall company objectives.
•Communication in organizations can be rigid.
Disadvantages of a Functional Structure:
•Slow reaction in response to environmental changes.
•Stifles innovation when the problem occurs or
environment changes.
•Autonomy within units might increase when the
company grows, which cause difficulties in
management.
•Narrow viewpoint and lack of overall perspective.
 4. Matrix Structure
Matrix approach combines
aspects of both functional
and divisional structures
simultaneously in the
same part of the
organization.
Advantages
•It has a clear objective.
•Can be dissolved once its mission is complete.
•Better communicate better and sharing of
more innovative concepts
Disadvantages
•Matrix structures are more complex.
•Conflicting directives
•Managers for matrix projects need to have
tolerance for conflict and be able to handle
difficult situations.
Example of Matrix Chart
5. Team-Based Structure
Team-based structure is a structure in which the entire organization is
made up of horizontal teams that coordinate their activities and work
directly with customers to accomplish the organization’s goals.
Advantages:
•Teams Resolve Problems Quicker
•Flexible and Empowered Workforce
Disadvantages:
•Potential for Conflict
•Some People are not Team Players
•Under-performing Employees Hide Behind the
Team
6. Virtual Network
Network structure is an organizational structure that disaggregates
major functions to separate companies that are brokered by small
headquarters organization.
Advantages and Disadvantages of Virtual
Structure
Lower Overhead Costs. Virtual organizations enjoy significant
decrease in operating costs.
Improved Employee Satisfaction. Employees are simply happier
when they are able to work from home.
Improved Employee Efficiency. Remote employees get more work
done without the transactions of the office.
Improved Scalability and Growth Potential. Without the overhead,
companies can free up capital to improve their scalability and growth
potential.
Advantages and Disadvantages of Virtual
Structure
Larger Talent Pool. Startups who hire workers remotely are able to
access a larger pool of talent. You can hire talent from anywhere in
the world without limiting yourself to one specific geographic
location.
Improved Employee Retention. Employees that are happier in their
work are more likely to stick around.
Access to New Markets. Hiring remotely allows tapping new
markets.
Formal Relationships in Organizations
Authority – the formal legitimate right of managers to decide,
give orders and use resources to achieve organizational goals.
Responsibility – the duty to perform the task or activity an
employee has been assigned.
Accountability – means that people with authority and
responsibility are answerable to their superiors for all outcomes
of their decisions.
Delegation – the process of transferring authority and
responsibility to people in lower positions in the hierarchy.
There are 3 types of relationships that may exist
between units in an organization
Line authority – a form of authority in which individuals in the
management positions have the formal power to direct and control
immediate subordinates.
Staff authority – a form of authority granted to staff specialists in
their area of expertise. Staff authority includes the right to advise,
recommend, and counsel in the staff specialists’ area of expertise.
Functional Authority – is a form of limited authority exercized by a
staff unit in the organization over another unit to achieve uniformity
and consistency especially in recurring practices
Thank you!!!