Chapter 4 – Organizations

1. Describes the static structure of an organization.

2. Involves the distribution of tasks and authorizations.

3. Contains jobs and departments.

Describes the dynamic configuration of work processes.

Key types include:

• Single line system.

• Oriented on performance.

• Segmentation of functions on the second hierarchy level.

1. Simple and manageable structure.

2. Utilization of specialization effects (economies of scale, experience curve).

3. Self-contained, clearly defined, and easily controllable functional areas.

1. Large number of interfaces and interdependencies leading to considerable coordination problems.

2. The danger of departmental selfishness and suboptimization.

3. Overloading of company management (chimney effect).

4. Overemphasis on specialization.

5. Limited possibilities for personnel development.

Suitable for small and medium-sized companies with a manageable and homogeneous range of services that have a relatively stable corporate environment.

1. Single line system.

2. Oriented on products, markets, business units, or projects.

3. Segmentation of functions on the second hierarchy level.

1. Relieves management to focus on strategic issues.

2. Better coordination and faster decisions within divisions.

3. Flexible reaction to environmental changes.

4. Division heads have autonomy, boosting motivation and better success assessment.

5. More opportunities for personnel development.

1. Risk of divisional egoism and short-term focus on profit.

2. Resource allocation issues and possible work duplication.

3. Requires more management positions.

4. Needs central functions for overall coordination.

5. Risk of conflicts between divisions and central functions.

• Suitable for medium and large multi-product companies in a dynamic business environment.

Schein’s 3-Level Model identifies three levels of organizational culture: artifacts, espoused values, and basic underlying assumptions.

1. Tangible or verbally identifiable elements.

2. Examples: Rituals, stories, legends, dress codes, office layout, symbols.

1. Partly tangible, partly intangible elements.

2. Examples: Norms and standards like maxims, regulations, prohibitions, company philosophies, mission statements.

1. Intangible and mostly unconscious elements.

2. Examples: Beliefs about the environment, truth, time, people, actions, social interactions.

Artifacts are visible but hard to interpret, espoused values are stated and easier to identify, and basic underlying assumptions are deeply embedded and hardest to change.