Contextual Dimensions and Structural OptionsNiraj Shirsat 2010152Pankaj Arora 2010153Pankhuri Pandey 2010154Paul Mampally 2010155Praveen Trivedi 2010156Priyam Gupta 2010157Preet Kamal Kaur 2010158

Organizational Structures – A Brief History Post Industrial Revolution

Single Rigid Hierarchical and functional organizational structure.

Post 1920’s Great Depression Alfred Sloan proposed and adopted the divisional

model. Principle of decentralized operations with

centralized control. Information Revolution Age

Rise of a number of varieties of organizational structures to maintain competitive edge.

Simple Structure Normally found in entrepreneurial

organizations still in its formative stages. Decision making and control are

centralized at the owner. Characteristics

Low Degree of Departmentalization. Wide span of control. Authority centralized in a single person. Very little formalization.

Simple Structure Features

Owner-Manager makes decision. Little specialization of tasks. Very few rules, little formalization.

Advantages Provides high flexibility. Rapid product introduction. Few coordination problems.

Functional Organization Organization is divided into numerous

functional areas Specialists are conferred top positions in

each area Holders conferred with limited power of

command over departments concerning their function

Standardizes quality and uniformity of functional areas in organization

More appropriate for small firms

Advantages Specialization: every head is an expert in his

area Better control: Joint supervision vis-à-vis one

man control Reduction of workload: Functional head

responsible for one function only Higher efficiency: employees work in functions

they are expert in Flexibility: Organization more adaptable to

changes Easier staffing: recruitment and training

becomes easier with only one function in focus

Disadvantages Double command: Employee accountable to

numerous heads, loyalty is divided and responsibility cannot be fixed

Problem of succession: Executives at lower level fail to gain all-round experience

Delay in decision making: decision making requires several specialists

Complexity: Cross-relationships w.r.t. superiors Lack of co-ordination: Limited perspective of his

own function Expensive: large number of specialists required

Bureaucracy A structure with highly

routine operating tasks achieved through specialization.

Very formalized rules and regulations

Tasks grouped into functional departments.

Centralized authority Narrow span of control Decision making follows

chain of commands.

Strengths Functional economies of scale. Minimum duplication of personnel and

equipment. Enhanced communication Centralized decision making.

Weakness Conflicts of subunits’ goals and overall

organizational goals. Obsessive concern with rules and

regulations, means are important than ends.

Lack of employee discretion to deal with problems due to rigidity of rules and procedures.

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