Departmentalization

1. As the tasks of organization become increasingly complex, the organization must be departmentalized, or subdivided into smaller units.
   1. Line departments are responsible for activities that directly involve the organization's product or service, either its creation or getting it to the consumer. They are responsible for the principal activities of the firm.
   2. Staff departments provide specialized or professional skills that support line departments
    
2. There are three basic approaches to departmentalization: functional, divisional, and matrix.
   1. In a functional organization jobs are specialized and grouped according to business function and the skills they require.

      

      
      

      1. A functional organization can be organized around a firm's value chain.
         1. The value chain depicts the relationships among separate activities that are performed to create a product or service.
      2. The functional form is a traditional approach and has several potential advantages.
      3. Economies of scale can be gained through the grouping of similar jobs.
         1. The environment can be monitored effectively because each group is on top of developments in their own field.
         2. Performance standards can be maintained through employee training and because employees share a concern for their jobs.
         3. Employees have greater opportunities for specialization and in-depth skill development.
         4. Technical specialists are relatively free of administrative work.
         5. Decision making and lines of communication are simple and clearly understood.
      4. Several disadvantages of this approach are:
         1. People may be loyal to their function and not the company, or may lose focus on the product by focusing in their functional task.
         2. Specialists may have trouble communicating across functions.
         3. There may also be slow responses to the market place.
      5. Cross functional coordination is essential for total quality management.
        
3. In the divisional organization all functions are grouped into a single division, and functions are duplicated across all of the divisions.
   1. In the product division organization, all functions that contribute to a given product are organized under one manager.
      1. The product approach offers a number of advantages.
         1. Information needs are managed more easily because there is a reduced need for information. Groups need only worry about one product.
         2. Employees have a full-time commitment to a particular product line and understand how their job fits into the big picture.
         3. Task responsibilities are clear and managers are independent and accountable.
         4. Employees receive broader training and develop a wide variety of skills.
      2. Disadvantages of the product approach also exist.
         1. There may be difficulty in coordinating across product lines and divisions.
         2. Managers do not develop functional expertise.
         3. Departments, which are necessary for each division, are duplicated in each division.
         4. Delegation must be managed properly.
      
      
      1. In customer or geographical departmentalization, structures are based on groups of customers or around geographical distinctions.
      2. The advantage is the ability to focus on customer service.
      3. The disadvantage comes from duplication of activities.

         

         
         

       
4. Matrix organizations are a hybrid form of organization where functional and divisional forms overlap, resulting in a dual line of command where employees and managers report to two superiors.

   

   Matrix Organization Structure

   1. The major advantage is the high degree of flexibility and adaptability that the structure affords organizations operating in uncertain environments.
   2. The major disadvantage stems from the fact that employees report to two superiors, which violates the unity-of-command principle.
   3. Managers can avoid the problems linked to the dual line of command by utilizing some key behavioral skills. These skills involve balancing the demands of and establishing collaboration between product and functional orientations.
   4. The matrix form has become popular again in the 1990s. The reasons for this surge in popularity are related to pressures to consolidate costs and be faster to market, creating a need for better coordination across functions and a need for coordination across countries for firms with global business strategies.
    
   source:http://homepage.usask.ca/~dpm021/textbook_chapters/chapter_8.htm