Organizational departmentalization

It is common to think of organizational hierarchies in terms of functions. As the functional groups become larger, think of them in terms of departmentalization. A department can loosely be defined as an organizational activity involving over 20 people. When a functional group grows to departmental size, the organization can reorient the group to one of the following areas or a hybrid thereof:

• Function – preferred for specialization, the pooling of resources and reducing duplication
• Product – preferred for servicing businesses with strategies of diverse and new products, usually manufacturing businesses
• Market space or customer – preferred for organizing around market structures. Provides differentiation in the form of increased knowledge of and response to customer preferences
• Geography – the use of geography depends on the industry. By providing services in close geographical proximity, travel and distribution costs are minimized while local knowledge is leveraged
• Process – preferred for an end-to-end coverage of a process.

Certain basic structures are preferred for certain service strategies, as shown in Table 6.1.

Basic structure	Strategic considerations
Functional	Specialization Common standards Small size
Product	Product focus Strong product knowledge
Market space or customer	Service unique to segment Customer service Buyer strength Rapid customer service
Geography	On-site services Proximity to customer for delivery and support Organization perceived as local
Process	Need to minimize process cycle times Process excellence

Table 6.1 Basic organizational structures

Organizational design

The starting point for organizational design is strategy (Figure 6.10). It sets the direction and guides the criteria for each step of the design process.

Дата добавления: 2015-11-14