Chapter 08 – Organization Structure
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Most students have held a position in some organization and thus should be able to draw the organiza-
8. Would you rather work in a functional or divisional organization? Why?
A functional organization is one in which the unit or group focuses on one activity (e.g., production,
marketing, finance, etc.), whereas, in a divisional or product organization, the group handles all the
9. If you learned that a company had a matrix structure, would you be more or less interested in
working there? Explain your answer. How would you prepare yourself to work effectively in a
matrix?
It might be appropriate to start the discussion question with another question, namely: What differ-
ence do you think working for a company with a matrix organization has from the employee’s per-
spective.
10. Brainstorm a list of methods for integrating interdependent work units. Discuss the activities
that need to be undertaken and the pros and cons of each approach.
This may be a challenging question for students to answer. Some typical responses might include:
• Clarify the vision or common goal that people share.
Chapter 08 – Organization Structure
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Chapter 08 – Organization Structure
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EXPERIENTIAL EXERCISE 8.1 – THE BUSINESS SCHOOL ORGANIZATIONAL CHART
Teaching
Tip:
Students can do the first part of this assignment (identifying the org. chart for their school) prior
to coming to class, then the second part (designing a new organization) can be assigned after you
have covered the material in the chapter.
Objectives
1. To clarify the factors that determines organizational structure.
Suggested responses
Recommended changes would include a finance division to be added to the organization structure
Board of Trustees
Vice President Admis-
sions
President
Vice President of
Business Affairs
EXPERIENTIAL EXERCISES
Chapter 08 – Organization Structure
Suggested Responses to Discussion Questions
1. Is your business school well organized? Why or why not?
Most students probably will conclude that, in a general sense, their business school is well organized.
2. Is your school’s organization organic or mechanistic? In what ways?
3. In what ways is the school’s structure designed to suit the needs of students, faculty, staff, the
administration, and the business community?
Students are apt to consider the school to be organized to suit administrative tasks and to functional-
Teaching
Tips:
The instructions call for each student to explore the organizational structure of the school and to
draw an actual and proposed organization. You might add a behavioral element to the exercise
by dividing the class into small groups and proceeding as follows:
Board of Trustees
Vice President Admis-
sions
President
Vice President of
Business Affairs
Vice President of
Finance
Chapter 08 – Organization Structure
8-23
1. Each small group of students begins by holding two brainstorming sessions—the first to iden-
2. Each group member is assigned a particular organizational feature to investigate through in-
terviews with faculty, staff, administrators, student leaders, advisory personnel, etc.
EXERCISE 8.2 – DESIGNING A STUDENT-RUN ORGANIZATION THAT PROVIDES
CONSULTING SERVICES
Overview
Designing a student-run organization is a good beginning activity, as it helps students realize that de-
sign involves far more than an organization chart and job descriptions. Students find it easy to relate
Activity Procedure
The following is the sequence of activities, the necessary time required and some tips.
Tasks 1 and 2: The activity takes little introduction, and in fact is helped if the instructor’s beginning
Teaching
Tips:
We have found that it is important to emphasize that the task involves Total Organization Design.
Some Specific Suggestions:
Chapter 08 – Organization Structure
8-24
2. Ask them to determine who will report out—the facilitator and recorder can do it as a team.
Regardless, assign responsibility ahead.
Merged Results from Several Student Groups
Designing the Total Organization
Consulting Services Provided to Nonprofit Organizations
Environment
• Scan the environment
Strategy
• Learning experience, education as an overall theme
• Students will design the organization, and will create mission statement, vision,
Transformation Process
• Based on a model of consulting – students take a course to select and modify the
consulting process
Structure
• A flat organization with little or no hierarchy
• Based on a “club” concept, emphasizing fun activities and social support
Chapter 08 – Organization Structure
8-25
People
• Recruitment of skilled personnel, resolution mechanisms needed for staffing
Rewards
• Incentives to participate: course credit, internships, senior projects
Other
• Formal linkage to the college, legal liability considerations met, long term finan-
cial viability considered
• Develop the actual start-up steps for establishment of this organization
EXERCISE 8.3 – WHEN SHOULD A COMPANY DECENTRALIZE
Objective
To explore the conditions under which a company should decentralize its structure and decision-making.
Instructions
The following scenarios describe situations faced by hypothetical companies that currently have a cen-
tralized organizational structure. As you review each of the scenarios, provide your opinion as to whether
the company should move to a more decentralized organizational structure.
1. Company X produces one specialized product line for heart surgeons in the United States.
_____________________________________________________________________________________
_____________________________________________________________________________________
Chapter 08 – Organization Structure
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2. Company Y makes over 100 electronic products and has to respond rapidly to the moves of its com-
petitors.
_____________________________________________________________________________________
_____________________________________________________________________________________
3. Company Z’s managers are becoming increasingly comfortable with delegating tasks and responsibili-
ties to subordinates in order to develop their decision making skills.
☐ Maintain current centralized organizational structure
or
Chapter 08 – Organization Structure
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Stanley Lynch Investment Group
Case Summary:
The Stanley Lynch Investment Group is a large investment firm headquartered in New York. It has
12 major investment funds, each with analysts in a separate department. Part of their strategic ad-
Chapter Topics Related to the Case:
• Discuss the concept of organizing people and information
• Identify how the concepts of decentralization and collaboration may affect individuals such as the
IT associates of Stanley Lynch
Case Discussion Questions:
1. Discuss the topic of decentralization and when it commonly occurs in organizations?
Suggested Response:
Various organizational charts are to be expected in the individual student response to this question.
2. What are the benefits of decentralization?
Suggested Response:
While decentralization reduces direct control by strategic leaders over employees’ daily work, it does
CONCLUDING CASE
Chapter 08 – Organization Structure
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3. What are shortcomings of decentralization?
Suggested Response:
Decentralization tends to limit the communication between departments and units in a company. It
Chapter 08 – Organization Structure
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Example 8.1 – Integration: The KSS Design Group is an architectural and design practice that
was founded in 1991. Their core competency is integration – their home page boasts that “Our
range of services includes master planning, architecture, interior design, graphics and branding,
Example 8.2 – Board of directors: Real Estate Investment Trusts (REITs) provide their inves-
tors with income based on owning and operating real estate, including apartments, shopping cen-
ters, homes, and other properties. Like many other types of organizations, their boards of direc-
tors have seen changes related to the Sarbanes-Oxley Act. One REIT, the Mills Corporation, was
Example 8.3 – Span of control: The Friendly Ice Cream Corporation manufactures and serves
ice cream, along with operating 530 company and franchised restaurants throughout the North-
east. In 2005 Friendly’s restructured their management team, and 1) reduced spans of control for
Example 8.4 – Delegation: Students may not realize it, but one of the most important things a
first level fire officer does when first arriving on the scene of a fire is to delegate responsibilities.
The way firefighters approach a fire depends on the officer’s ability to:
EXAMPLES
Chapter 08 – Organization Structure
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According to a 2007 article in “Firehouse”5, these actions are equivalent to “calling a play” in
football. If the fire officer calls the right play, all of the responding firefighters will know exactly
what they are to do, and chances of injury will be minimized.
Example 8.5 – Functional and divisional organization: The Allstate Insurance Company com-
bines functional and divisional organization structures by separating the company into three divi-
Example 8.6 – Matrix structure: Phillips, a large Dutch electrical company, has had a matrix
structure from the end of World War II, organized on both national lines and product divisions.
Example 8.7 – Network organization: Jay Galbraith has coined the term “The Front-Back Or-
ganization” to refer to companies which are structured one way near customers, and another way
Example 8.8 – Standardization: The International Organization for Standardization (ISO) is “the
world’s largest developer of voluntary International Standards.” Since its founding in 1947, ISO
has published thousands of standards for all aspects of business, including food safety and
Chapter 08 – Organization Structure
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Please see the following additional materials in Connect.
• New Belgium Brewery
By utilizing ingredients that are not common in most beer breweries New Belgium Brewery
founder, Jeff Lebesch, was able to create a variety of beers unlike most in the U.S. These became
Is New Belgium Brewery centralized or decentralized?
New Belgium Brewery is decentralized. Employees have a voice in decision making. Since 1996,
How does this make them more effective?
Their open book management practice requires training of employees in financial literacy but also
Virtual Workplace: Out of the Office Reply
I. Introduction
Telecommuting is a flexible working option that many companies have embraced. The ad-
II. Learning Objectives
1. To assess students’ understanding of the challenges of telecommuting.
CHAPTER VIDEO
SUPPLEMENTAL FEATURES
MANAGER’S HOT SEAT (MHS)
Chapter 08 – Organization Structure
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2. To analyze and evaluate managerial actions related to telecommuting.
III. Scenario Description:
Overview: Three months ago, Ralph Ramos assigned a number of employees to work as tele-
commuters to alleviate the lack of space in their office building. Among them was Angela Zono-
Profile:
• Ralph Ramos is the Senior Manager of Claims, managing a 75 employee department, at
References: The references included in the DVD are:
• Advantages and Challenges for Employees (PPT 12-3)
Back History: Angela was one of five employees that moved to home offices three months ago.
She had volunteered right off the bat because she could spend more time with her family if she
eliminated all that commuter time [on a bad day she was losing over three hours roundtrip!]
Ralph is happy with the way things are working out. The office is no longer over-crowded or dis-
turbingly noisy. The telecommuters are doing their work and reporting regularly. He is having
more trouble staying on top of their reports and their projects but that’s probably because he’s so
busy.
Scene Set-up: Ralph and Angela are meeting to discuss their recent miscommunications and An-
gela reveals her dissatisfaction with her recent treatment.
The Meeting – Summary: Ralph brings up the missed deadline and Angela says she was not in-
formed that the deadline had been moved. Ralph explains how the information was conveyed.
She says she feels that she is out of sight, out of mind and that since she began telecommuting it
Chapter 08 – Organization Structure
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Two weeks later – Angela misses an appointment with Ralph and deliberately fails to provide
work on time. Ralph wants to understand what has happened to change the good working rela-
Afterthoughts – Summary: Ralph states his strategy was to listen to Angela. He notes that he
often has issues with people working from home because it’s difficult to keep track of what is go-
Dossier: The specific artifacts included in the DVD are:
1. Emails between Ramos and Zanoni
2. Voicemail from Sorento to Zanoni
3. Ramos’ Assistant’s Voicemails to Zanoni
IV. Discussion Questions:
The References and related Discussion Questions may be found in PowerPoint slides 12-1 to 12-9.
Learning Objective #1: To assess students’ understanding of the challenges of telecommuting.
1. What advantages and disadvantages to telecommuting is Angela experiencing? See PPT 12-3.
Angela enjoys not having to commute and likes to be closer and more available for her family. The
1. How should Ralph respond [when Angela says “since I’ve been working from home,
I’m out of sight”]?
A. Compassionately
2. What advantages and disadvantages to managing a telecommuter is Ralph experiencing? See PPT
12-5.
Chapter 08 – Organization Structure
2. What is Ralph’s strategy?
A. Emphasize strengths
3. How was this [initial] meeting?
A. Successful
Learning Objective #2: To analyze and evaluate managerial actions related to telecommuting.
1. What should Angela have done to prepare herself for telework? Refer to PPT 12-7.
Angela needed to really assess whether her work style was suited for telecommuting. While there
4. Angela is dejected. Ralph should focus on:
A. Her value
2. What should Ralph have done to prevent this problem from occurring? Refer to PPT 12-9.
5. What should Ralph do [when Angela says she want to resign]?
A. Accept resignation
Chapter 08 – Organization Structure
8-35
6. What’s Ralph’s next step?
A. Find replacement
• Identify Your Preferred Organizational Structure
SELF-ASSESSMENTS