CHAPTER 6:

ORGANIZATIONAL
SYSTEM
ORGANIZATIONAL
STRUCTURE
Organizational structure refers to the system or
mode by which a group of individuals is able to
achieve its desired goals. The organizational
structure of an organization/company is subject to
many factors like technological breakthroughs by
competitors, changes in customer lifestyles, and
those that are environmental in nature.
TYPES OF ORGANIZATIONAL STRUCTURES
FUNCTIONAL ORGANIZATIONAL
STRUCTURES

Organizations adopt a specific structural

arrangement for a reason. Structuring an
organization effectively requires that the
management should know the goals of
the organization, the skills of its people,
the needs and goals of its subordinates,
the available resources, and the time,
cost, and environmental constraints that
are existing.
 TYPES OF ORGANIZATIONAL STRUCTURES

TERRITORIAL
ORGANIZATIONAL
STRUCTURE
As an organization begins to serve its
customers who are spread over a
growing geographical area, a territorial
structure becomes a viable design. In
this system, the target market is divided
into geographical units according to
certain criteria.
TYPES OF ORGANIZATIONAL STRUCTURES
PRODUCT
ORGANIZATIONAL
STRUCTURE
Traditionally, organizational divisions
follow a product structure. In some
companies, the sub-businesses are
assigned to product group managers, each
of them given key operating and staff
functions. As long as the product, markets,
and customers are diverse and mutually
exclusive, there is no limit to the number of
product management systems used.
 TYPES OF ORGANIZATIONAL STRUCTURES

MARKET-CENTERED
ORGANIZATIONAL STRUCTURE
Companies can structure their businesses to fit
their markets. A market-centered organizational
structure describes the wide range of structural
forms that center on a group of customer needs
rather than a region, product line, or function. A
market-centered organization is decentralized
by market. A market center is a profit center.
TYPES OF ORGANIZATIONAL STRUCTURES
SBU (SMALL BUSINESS
UNIT) ORGANIZATIONAL
STRUCTURE
This division structure raises the issue of
whether any marketing functions should
be performed at the corporate staff level.
Some companies maintain a minimum
marketing services structure at the
corporate level.
 TYPES OF ORGANIZATIONAL STRUCTURES
MATRIX ORGANIZATIONAL
STRUCTURE
The matrix structure is efficient for establishing
specialist resources but is best for integrating
functions.
A matrix is any organization that employs a
multiple "boss" arrangement. For example, a
person can have two bosses, one for functional
and the other for product. Matrix structures have
been adopted in manufacturing, service,
professional, and non-profit organizations.
CHOICE OF AN 01 Size of the Firm

ORGANIZATIONAL
The size of the firm will indicate the complexity of its
organization

STRUCTURE 02 The Products.

The nature of the product or products to be sold is
another factor that influences the choice of an
organizational structure

03 The Market.
Characteristics of the market like geographic
dispersion, income class, and buyer behavior need to
be considered in organizing the marketing unit.

04 Competition.
A firm may find it necessary to organize its marketing
efforts following the requirements of competition.

05 Philosophy of Management
A final factor that affects the structure of an organization
is the management philosophy prevailing in the company.
EVALUATION OF AN
ORGANIZATIONAL
STRUCTURE
01 Facilitating Control
Control in an organization involves a comparison
of actual performance with pre-established
standards or plans. If the organization structure
enables a manager to identify problem situations
and take necessary corrective actions, then the
firm may be said to have a control mechanism.

02 Coordination 03 Providing Information

The coordination of individual actions is often Because markets are dynamic and subject to
called team effort. A firm employing several change, it is essential for managers to gather
specialists and line officers at different levels information in order to anticipate changes and
may still produce ineffective results if efforts make decisions accordingly.
are not properly coordinated.
EVALUATION OF AN
ORGANIZATIONAL
STRUCTURE
04 Cost of the System
A firm can choose from the simplest to the most
complex type of organization. However, it has to
strike a balance among three important factors -
the organizational information it desires, the
organizational control it wishes to employ, and
the costs of organizing its personnel.

02 Flexibility
To be able to cope with the dynamic and
changing environment, the firm should have an
organization that can adjust to changes.
Flexibility is necessary to attain good
performance.
ORGANIZATIONAL
COMPONENTS
An organization is an entity composed of people that is
structured and managed in such a way that it is able to
achieve its set goals and objectives. An organization
generally consists of elements that act and work
together through coordinated activities. The
organizational components are the management,
employees, facilities and equipment, financial
resources, and organizational policies.
MANAGEMENT
refers to the administrative supervision of an organization. It includes
leadership, the organization's vision-mission, goals, and objectives to
attain organizational success.

Leadership

A good leader, regardless of whether he owns or works for the

organization, is someone who inspires his employees and
stretches them to their optimum productivity.

Tasks of a Leader

planning where he sets the objectives to be attained and the means

to achieve them; organizing where he identifies, divides, groups, and
coordinates various activities to achieve set goals; staffing where he
recruits, selects, hires, and develops human resources

Roles of a Leader
an information man who understands critical facts, issues, problems,
and other concerns about the industry and the business
environments; a conceptualizer who concretizes the vision,
EMPLOYEES
Employee Satisfaction
It is an emotional state where the
employee experiences a feeling of
content in the workplace.

Employee Involvement
Aside from the management, employees constitute a significant Satisfied with his work conditions,
part of the organizational milieu. They are the very people who an employee may graduate to a
higher level of organizational
work, support, and earn profits for the organization. They are
relationship called employee
found in all levels, performing tasks ranging from the involvement.
sophisticated to the difficult, practical, and odd ones. They work
in the different functional areas of marketing, finance, and
production whether formally or informally structured.
FACILITIES AND EQUIPMENT
1. Management of buildings
and site maintenance
needs to be appropriate for the
type of business the organization
is engaged in. Physical structures
have to be maintained properly,
secured for safety, and optimized
when it comes to layouts.
Another important component of the organizational
environment is the facilities and equipment. These facilities and
2. Management of machinery
equipment may be simple and crude as long as they are means making sure that the right
functioning and producing the desired output. On the other types of equipment or machinery
hand, organizations with sufficient capitalization, use the most are in place and including the right
sophisticated and the latest machinery and technology. quantities as needed by the
organization.
FACILITIES AND EQUIPMENT
3. Management of facilities
means that amenities such as washrooms
and canteens need to be in good and healthy
working conditions as these are important to
the workforce.

Another important component of the organizational 4. Application of technology

environment is the facilities and equipment. These has become the unifying force in facilities and
facilities and equipment may be simple and crude as equipment management. Technology asset
long as they are functioning and producing the desired management refers to the business processes
output. On the other hand, organizations with sufficient and enabling information systems that support
the management of both physical and non-
capitalization, use the most sophisticated and the latest
physical assets of the organization.
machinery and technology.
 FINANCIAL RESOURCES
In addition to facilities and equipment, organizations need
sufficient financial resources. The financial resources of the
organization determine the direction the organization will
take and affect its capability to realize its set business goals
and objectives. These business goals and objectives include
spending on other promotional strategies, upgrading or
purchasing new facilities and equipment, experimenting and
developing new products, hiring additional manpower,
increasing salaries and wages, training employees, and most
significantly, ensuring continued existence of the
organization.
ORGANIZATIONAL
POLICIES
The organizational milieu includes company policies,
which are the lifeblood of an organization. They put
organizational structure and system in place. They
ensure order, hierarchy of authority, clear
delineation of functions, efficiency, productivity, and
good interpersonal relationships. They make
possible the smooth actualization of operations and
functions and facilitate the attainment of set goals
and objectives, whether measurable or otherwise.
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