Overview

Organizing arranges people, tasks, and resources to accomplish goals. Structure clarifies roles, decision rights, and reporting relationships. Effective design balances control with flexibility, ensuring coordination as firms grow and environments change.

Key Concepts

• Departmentalization: Functional, divisional (product, geography), matrix, and network structures.
• Chain of Command: Line of authority from top to bottom.
• Span of Control: Number of direct reports per manager—wide vs. narrow.
• Centralization vs. Decentralization: Degree decision power rests at the top.
• Formalization: Extent to which jobs are standardized via rules and procedures.
• Line vs. Staff Authority: Line contributes directly to goals; staff offers advice/support.
• Delegation: Assigning responsibility & authority while retaining accountability.

Step-by-Step Example

Scenario: FreshFit, a 40‑person health‑food startup, plans national expansion. What structure should it adopt?

Step 1 – Assess Environment: Multiple product lines (snacks, drinks) and regions suggest complexity.

Step 2 – Evaluate Options: Functional structure offers efficiency but can silo marketing and R&D. Divisional by product enables focus but duplicates functions.

Step 3 – Hybrid Solution: Adopt divisional by product for Snacks vs. Drinks, with shared central services (HR, Finance) to maintain economies of scale.

Step 4 – Set Span & Delegation: Each division head manages 6 managers (wide span) and is empowered to adjust recipes regionally—decentralized decision‑making.

Answer: A product divisional structure plus shared services balances responsiveness with cost efficiency for FreshFit’s growth phase.

Quick Tip