Principles of Management

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Definition: Organizational design is engaged when managers develop or change an organization`s structure. Organizational Design is a process that involves decisions about the following six key elements:

I.

Work Specialization: describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity

II.

Departmentalization It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities.

There are five common forms of departmentalization:
I.

Functional Departmentalization. As shown it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.
Example of Functional Departmentalization

Different aspects on this type of departmentalization:
Positive Aspects
o

o
o

Efficiencies from putting
together similar specialties
and people with common
skills, knowledge, and
orientations
Coordination within
functional area
In-depth specialization

Negative Aspects
o
o

Poor communication across
functional areas
Limited view of
organizational goals

2. Product Departmentalization . It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization
Example of Product Departmentalization
Source: Bombardier Annual Report

Different aspects on this type of departmentalization:
Positive Aspects
Allows specialization in
particular products and
services
o Managers can become
experts in their industry
o Closer to customers
o

Negative Aspects
Duplication of
functions
o Limited view of
organizational goals
o

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