Chapter 11: Org Structures & Design môn Principle of Management | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

Chapter 11: Organizational Structures and Design
Study Guide for Management by John R. Schermerhorn, Jr. June 8, 2025 Introduction
This chapter examines how organizations are structured to achieve their goals
efÏciently, covering the management function of organizing, traditional and hor-
izontal structures, and evolving organizational designs. Below, I address the
four study questions from the slides, providing clear definitions, thorough ex-
planations, and specific, real-world examples using well-known companies to
demonstrate a deep understanding of the concepts.
1 Study Question 1: What is organizing as a man- agement function?
Definition: Organizing is the management process of arranging people, resources,
and tasks into a structured system to accomplish organizational objectives effec- tively.
Explanation: Organizing is like designing the architecture of a company—it cre-
ates a framework that defines who does what, who reports to whom, and how
information flows. It ensures that tasks are divided logically, resources are allo-
cated efÏciently, and employees work together toward shared goals. Organizing
interacts with other management functions: it translates plans into actionable
tasks, supports leadership by clarifying roles, and enables control by establish-
ing accountability. The structure of an organization can be formal (ofÏcial and
documented) or informal (based on social relationships). 1.1 Formal Structures
Definition: A formal structure is the ofÏcial arrangement of roles, responsibil-
ities, and reporting relationships within an organization, typically shown in an organization chart.
Explanation: The organization chart is a visual representation of the company’s
hierarchy, showing how work is divided into departments, who supervises whom, 1
and how communication flows. It includes the division of work (e.g., depart-
ments like marketing or finance), supervisory relationships (e.g., managers over-
seeing teams), communication channels (e.g., how reports move up the chain),
major subunits (e.g., regional ofÏces), and management levels (e.g., executives,
middle managers, frontline supervisors). This structure provides clarity and en- sures efÏcient coordination.
Example: At Walmart, the formal structure includes a CEO at the top, followed
by regional vice presidents who oversee specific geographic areas (e.g., North
America, Asia). Each region has store managers who report to regional direc-
tors, and within stores, departments like electronics or groceries have their own
supervisors. This clear hierarchy ensures that Walmart’s thousands of stores
operate consistently, with defined roles for ordering inventory, managing staff, and reporting sales data. 1.2 Informal Structures
Definition: Informal structures are the unofÏcial, social relationships and net-
works that develop naturally among employees, often identified through social network analysis.
Explanation: Beyond the formal hierarchy, employees form personal connec-
tions through shared interests, friendships, or informal collaborations. These
networks can enhance communication and problem-solving but may also cre-
ate challenges, such as spreading rumors or excluding outsiders. Social network
analysis helps map these relationships, identifying key influencers who connect
different groups within the organization. Advantages:
• Facilitates quick problem-solving by bypassing formal channels.
• Encourages knowledge sharing across departments.
• Builds interpersonal networks that boost morale.
• Supports informal learning through mentorship or peer advice. Disadvantages:
• Can spread inaccurate information or rumors.
• May foster resistance to organizational changes.
• Risks diverting focus from company goals to personal agendas.
• Can alienate employees outside the network.
Example: At Apple, informal structures play a significant role in innovation.
Engineers and designers often collaborate informally during lunch breaks or
in shared workspaces, sharing ideas that lead to new product features, like the
iPhone’s Face ID. However, these tight-knit groups can sometimes exclude newer
employees, creating feelings of alienation, or lead to rumors about upcoming
product launches that disrupt formal communication plans. 2
Example in Practice: At Starbucks, the formal structure includes a CEO, re-
gional directors, and store managers, ensuring standardized operations across
thousands of cafes. Informally, baristas at a store might form a WhatsApp group
to share shift schedules or customer service tips, improving efÏciency but occa-
sionally leading to misinformation about new policies if not aligned with ofÏcial communications.
2 Study Question 2: What are the traditional orga- nization structures?
Definition: Traditional organization structures are conventional frameworks
that group employees and tasks based on specific criteria, such as expertise,
products, or regions. They rely on departmentalization and include three main
types: functional, divisional, and matrix structures.
Explanation: These structures organize work by grouping people into formal
units or teams, which are then linked to form the organization’s overall frame-
work. Each structure suits different organizational needs, balancing specializa-
tion, flexibility, and coordination, but each also has unique challenges. 2.1 Functional Structures
Definition: A functional structure groups employees with similar skills or tasks
into departments, such as marketing, finance, or operations.
Explanation: Employees in a functional structure work within their area of
expertise, reporting to a department head. This structure maximizes specializa-
tion, making it ideal for organizations with a narrow focus, like small businesses
or those with few products. However, it can create silos, where departments
prioritize their own goals, leading to the functional chimneys problem, where
collaboration across departments suffers. Advantages:
• Economies of scale: Shared resources within departments reduce costs.
• Specialized expertise: Employees deepen their skills in specific areas.
• Clear career paths: Promotions occur within functional areas.
• High-quality problem-solving: Experts focus on technical challenges.
• In-depth training: Employees receive specialized skill development. Disadvantages:
• Silo mentality: Departments may lack cooperation.
• Narrow focus: Department goals may overshadow organizational objec- tives.
• Decision delays: Issues are often referred to higher levels, slowing responses. 3
Example: Coca-Cola uses a functional structure in its corporate ofÏces, with sep-
arate departments for marketing, finance, and supply chain management. The
marketing team focuses on brand campaigns (e.g., “Taste the Feeling”), while the
supply chain team ensures bottling operations run smoothly. This specialization
drives efÏciency but can lead to delays if, for example, marketing and supply
chain teams disagree on launching a new product flavor, requiring executive intervention. 2.2 Divisional Structures
Definition: A divisional structure groups employees based on products, ser-
vices, customers, or geographic regions, creating semi-autonomous units.
Explanation: Each division operates like a mini-organization, with its own re-
sources (e.g., marketing, sales) tailored to its specific focus. This structure is
common in large, complex companies, as it allows flexibility to address unique
market or customer needs. However, it can lead to resource duplication and competition between divisions. Advantages:
• Flexibility: Divisions adapt quickly to their specific markets.
• Clear accountability: Each division has defined responsibilities.
• Customer/product focus: Divisions tailor strategies to their audience.
• Easier restructuring: Divisions can be added or removed as needed. Disadvantages:
• Resource duplication: Multiple divisions may replicate functions.
• Inter-divisional competition: Divisions may prioritize their own success.
• Goal misalignment: Divisional goals may conflict with organizational ones.
Example: Procter & Gamble (P&G) uses a product-based divisional structure,
with divisions for brands like Tide (laundry), Pampers (baby care), and Gillette
(grooming). Each division has its own marketing and R&D teams, allowing Tide
to focus on detergent innovation while Pampers targets baby product needs.
However, this can lead to duplicated marketing efforts, such as separate ad cam-
paigns for each brand, increasing costs. 2.3 Matrix Structures
Definition: A matrix structure combines functional and divisional structures,
with employees reporting to both a functional manager (e.g., based on expertise)
and a project or divisional manager.
Explanation: The matrix structure balances specialization with project-based
flexibility, making it ideal for industries requiring cross-functional collabora-
tion, like technology or consulting. Employees work under a dual reporting sys- 4
tem, which fosters cooperation but can cause confusion or conflicts due to com- peting priorities. Advantages:
• Enhanced collaboration: Functions work together on projects.
• Faster decisions: Project managers can act quickly.
• Improved accountability: Clear project goals track performance.
• Flexibility: Easy to reallocate resources for new projects. Disadvantages:
• Dual reporting conflicts: Two bosses may have conflicting demands.
• Time-consuming meetings: Teams spend significant time coordinating.
• Groupitis: Teams may become overly insular, focusing on their own goals.
Example: Accenture, a global consulting firm, uses a matrix structure. Con-
sultants report to a functional manager in their area of expertise (e.g., digital
transformation) and a project manager for specific client engagements (e.g., im-
plementing software for HSBC). This allows Accenture to leverage specialized
skills for client projects but can lead to stress if a consultant receives conflicting
priorities, such as urgent deadlines from both managers.
Example in Practice: Unilever combines these structures strategically. Its R&D
department operates functionally to develop expertise in product formulation,
while its divisions (e.g., personal care for Dove, food for Knorr) focus on specific
product lines. For cross-functional projects, like launching a sustainable packag-
ing initiative, Unilever uses a matrix structure, bringing together experts from
R&D, marketing, and supply chain to collaborate.
3 Study Question 3: What are the types of horizon- tal organization structures?
Definition: Horizontal organization structures prioritize collaboration, flexibil-
ity, and minimal hierarchy, using teams and networks to enhance communica-
tion and adaptability. The three main types are team structures, network struc-
tures, and boundaryless structures.
Explanation: Unlike traditional structures, horizontal structures reduce bar-
riers between departments and external partners, fostering innovation and re-
sponsiveness. They are ideal for dynamic industries like technology or retail,
where speed and collaboration are critical. 3.1 Team Structures
Definition: Team structures rely on permanent or temporary teams, often cross-
functional (with members from different departments) or project-based (formed 5
for specific tasks), to manage work or solve problems.
Explanation: Teams break down departmental silos by bringing together di-
verse expertise to tackle projects or daily tasks. Cross-functional teams combine
skills (e.g., marketing and engineering), while project teams disband after com-
pleting their objectives. This structure enhances communication but requires
effective management to avoid conflicts. Advantages:
• Better communication: Teams share information directly across functions.
• Higher engagement: Employees feel more involved in decision-making.
• Faster decisions: Teams resolve issues without excessive hierarchy. Disadvantages:
• Conflicting loyalties: Team members may prioritize team goals over com- pany ones.
• Time-intensive: Meetings can consume significant time.
• Management dependency: Success relies on strong team dynamics.
Example: At Google, cross-functional teams develop products like Google Maps.
A team might include software engineers, UX designers, and product managers
working together to add features like real-time trafÏc updates. This fosters inno-
vation but can lead to conflicts if, for example, designers prioritize user interface
while engineers focus on technical performance. 3.2 Network Structures
Definition: Network structures involve a core organization that outsources non-
core functions (e.g., manufacturing, logistics) to external partners, connected
through information technology.
Explanation: The organization focuses on its strengths (e.g., design, branding)
and partners with external firms for other tasks, reducing costs and increasing
flexibility. IT systems like cloud platforms enable coordination, but managing
external partners can be complex. Advantages:
• Cost efÏciency: Fewer full-time staff reduce overhead.
• Global scalability: Partnerships enable operations across regions.
• Flexibility: Easy to adjust partnerships as needs change. Disadvantages:
• Coordination challenges: Managing external partners is complex.
• Loss of control: Outsourced tasks may not align with standards.
• Loyalty issues: Contractors may lack commitment to the company. 6
Example: Nike uses a network structure, focusing on design and marketing in-
house while outsourcing manufacturing to factories in Vietnam and China. This
allows Nike to produce millions of sneakers cost-effectively, but quality control
issues, like defective products, can arise if factories aren’t closely monitored. 3.3 Boundaryless Structures
Definition: Boundaryless structures eliminate internal (between departments)
and external (with the environment) barriers, combining team and network ap-
proaches with a focus on flexibility and temporariness. Virtual organizations
are a subset, operating through IT-enabled external alliances.
Explanation: These structures minimize hierarchy, empower employees, and
use technology to create fluid, adaptive organizations. They encourage creativity
and knowledge sharing but require a culture that embraces change and strong
leadership to manage complexity. Advantages:
• Innovation: Fluid structures foster creative problem-solving.
• Knowledge sharing: Open communication enhances learning.
• EfÏciency: Reduced bureaucracy speeds up processes. Disadvantages:
• Complexity: Managing fluid networks is challenging.
• Impermanence: Constant change can unsettle employees.
• Coordination needs: Requires strong leadership to align efforts.
Example: Airbnb operates as a virtual organization, using a platform to connect
hosts and guests without owning properties. Its boundaryless structure allows
rapid expansion (e.g., entering new markets like Japan), but coordinating hosts
globally and ensuring consistent guest experiences (e.g., cleanliness standards) is a challenge.
Example in Practice: Spotify uses a team structure with “squads” (cross-functional
teams) working on features like playlist algorithms. It also employs a network
structure by partnering with cloud providers like Amazon Web Services for data
storage, creating a boundaryless approach that drives innovation but requires
careful coordination to maintain service reliability.
4 Study Question 4: How are organizational designs changing the workplace?
Definition: Organizational design is the process of creating structures that align
with an organization’s mission, objectives, and external environment, adapting
to changing conditions through a contingency perspective. 7
Explanation: Organizational design is about choosing the right structure to fit
the organization’s goals and environment. The contingency perspective suggests
that no single structure works for all organizations—stable environments favor
mechanistic designs (rigid, bureaucratic), while dynamic environments require
organic designs (flexible, adaptive). Modern trends are shifting toward organic,
employee-centric designs to keep pace with rapid change.
4.1 Contingency in Organizational Design
Definition: The contingency perspective holds that the best organizational de-
sign depends on factors like the external environment, organizational size, and goals.
Explanation: Bureaucratic designs, with strict hierarchies and rules, suit sta-
ble environments where consistency is key. Organic designs, with decentral-
ized authority and teamwork, thrive in uncertain, fast-changing environments.
Adaptive organizations blend these approaches, empowering employees while maintaining some control.
Example: Ford Motor Company uses a mechanistic design for its assembly lines,
ensuring consistent production of vehicles like the F-150 truck. However, its au-
tonomous vehicle division adopts an organic design, with engineers and data
scientists collaborating flexibly to develop self-driving technology.
4.2 Mechanistic vs. Organic Designs Mechanistic Designs:
Characteristics: Centralized authority, strict rules, narrow spans of control,
specialized tasks, formal coordination.
Explanation: These designs prioritize control and efÏciency, ideal for predictable
environments. They rely on clear hierarchies and standardized processes but can be slow to adapt.
Example: McDonald’s uses a mechanistic design to ensure consistent food qual-
ity across its global restaurants. Standardized procedures for cooking fries or
assembling burgers maintain efÏciency, but this rigidity can hinder quick menu
changes in response to trends like plant-based diets. Organic Designs:
Characteristics: Decentralized authority, few rules, wide spans of control, shared tasks, informal coordination.
Explanation: These designs foster flexibility and collaboration, suiting indus-
tries with rapid innovation. They empower employees to make decisions and work in teams.
Example: Tesla uses an organic design for its engineering teams, allowing engi-
neers to collaborate across functions to develop new battery technologies. This 8
flexibility drives innovation but can lead to chaotic workflows if not managed well.
4.3 Trends in Organizational Designs
Explanation: Modern organizations are adopting flatter, more flexible struc-
tures to stay competitive. Key trends include:
• Shorter chains of command: Reducing management layers speeds up deci-
sions. Amazon has a flat structure, with teams like fulfillment center staff
reporting directly to regional managers, enabling rapid scaling.
• Less unity of command: Employees report to multiple supervisors, espe-
cially in matrix or team structures. At Deloitte, consultants may report to
a client project leader and a functional manager, enhancing client service
but risking conflicting priorities.
• Wider spans of control: Managers oversee more subordinates as hierar-
chies flatten. Walmart store managers oversee large teams of associates,
increasing efÏciency but requiring strong leadership.
• More delegation and empowerment: Managers assign tasks and author-
ity to employees, fostering accountability. Google empowers engineers to
spend 20% of their time on personal projects, leading to innovations like Gmail.
• Decentralization with centralization: Organizations balance decentralized
decisions with centralized control. H&M allows regional teams to design
collections for local markets but centralizes supply chain management to reduce costs.
• Reduced use of staff: Organizations minimize specialized staff roles to stream-
line operations. IBM has reduced internal HR staff, relying on line man-
agers and external consultants for efÏciency.
Example: Microsoft exemplifies these trends. Its flat structure empowers prod-
uct teams (e.g., Azure cloud services) to make decisions quickly, while central-
ized oversight ensures alignment with corporate goals. Cross-functional teams
and wide spans of control drive innovation, but reduced staff requires managers
to take on more responsibilities.
Example in Practice: Adidas uses an organic design to adapt to fashion trends,
with decentralized teams in Europe and Asia designing region-specific sneakers.
It delegates authority to these teams for faster market response but maintains
centralized logistics to optimize global distribution, reflecting a balance of de-
centralization and centralization. 5 Tips for Your Final Exam
To address your concerns about the exam and the need for specific, real-world
examples, here’s how to prepare: 9
1. Master Theories: Understand key concepts (e.g., functional vs. divisional
structures, mechanistic vs. organic designs) and practice explaining them
in your own words. For example, describe the “functional chimneys prob-
lem” as “when departments like marketing and production don’t collabo-
rate, causing delays in projects.”
2. Use Specific Examples: Always tie concepts to well-known companies. For
instance, instead of saying “a tech company,” say “Apple uses a matrix
structure for iPhone development.” Use the examples provided here (e.g.,
Walmart, Nike, Airbnb) or research others like Samsung or Toyota.
3. Paraphrase Effectively: Avoid slide text by rephrasing. For example, in-
stead of “economies of scale,” say “grouping employees with similar skills
saves money by sharing resources like equipment.”
4. Prepare for Varied Questions: Your teacher noted that exam questions may
ask for definitions, explanations, or examples, depending on the question. Practice different formats:
• Definition: “Define a network structure.” (Answer: A network struc-
ture focuses on core functions in-house, like design, while outsourcing
others, like manufacturing, to external partners, coordinated via tech- nology.)
• Explanation: “Explain the advantages and disadvantages of a matrix
structure.” (Use Accenture as an example, highlighting collaboration vs. dual reporting conflicts.)
• Example: “Provide an example of a company using a boundaryless
structure.” (Use Airbnb, explaining its platform-based model.)
5. Practice with Real Companies: Research companies in your region (e.g.,
VinFast in Vietnam for manufacturing) to make examples relatable and demonstrate initiative.
By studying this response, practicing paraphrasing, and using specific company
examples, you’ll be well-prepared to score high on your exam. If you need more
tailored examples (e.g., Vietnamese companies like Vinamilk) or practice ques- tions, let me know! Good luck! 10