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Chapter 10
Organisational Structure and
Design
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Defining organisational structure and
design
zOrganisational structure
The formal arrangement of jobs within an organisation.
zOrganisational design
A process involving decisions about six key elements:
Work specialization
Departmentalization
Chain of command
Span of control
centralisation and decentralisation
Formalization
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Organisational structure
zWork specialisation
The degree to which tasks in the organisation are divided
into separate jobs with each step completed by a
different person.
Overspecialization can result in human diseconomies from
boredom, fatigue, stress, poor quality, increased
absenteeism, and higher turnover.
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Departmentalisation by type
zFunctional
Grouping jobs by
functions performed
zProduct
Grouping jobs by
product line
zGeographic
Grouping jobs on the
basis of territory or
geography
zProcess
Grouping jobs on the
basis of product or
customer flow
zCustomer
Grouping jobs by type
of customer and needs
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