Organizational Structure

Organizational structure is the specification of the jobs to be done within a business and how those jobs relate to one another. It is the company’s official blueprint — defining who does what, who reports to whom, and how authority flows.

How It Appears Per Course

ADMN 201

Ch7 opens with this definition as its foundation. Everything else in the chapter — departmentalization, authority, centralization, formal structures — is built on top of it. The organizational chart is the visual representation of the structure, but the structure itself is the underlying design.

What an Organizational Structure Specifies

1. Jobs to be done — defined through specialization (see Departmentalization)
2. How jobs relate — defined through authority, delegation, and span of control
3. How decisions are made — centralized vs. decentralized (see AuthorityDelegation)
4. How the firm is divided — functional, divisional, matrix, or other designs (see OrganizationalDesigns)

The Organizational Chart

The organizational chart is a physical diagram showing employee titles and their relationships. It makes the formal structure visible. However:

• It only shows the formal structure
• It does not capture the informal organization (see InformalOrganization)
• It can become outdated quickly in fast-changing firms

Factors That Influence Structure

Factor	How It Shapes Structure
Size	Larger firms need more formalized, layered structures
Strategy	A differentiation strategy may favour divisional structure; cost leadership may favour functional
Environment	Stable environments suit mechanistic (centralized) structures; dynamic environments suit organic (decentralized)
Technology	Routine work suits functional; complex/project work suits matrix or project structures

Structure Map

graph TD
    A["Organizational Structure\nBlueprint of the firm"] --> B["Building Blocks\nSpecialization + Departmentalization"]
    A --> C["Authority System\nResponsibility · Authority · Delegation"]
    A --> D["Formal Designs\nFunctional · Divisional · Matrix · Project"]
    A --> E["Decision-Making\nCentralized vs. Decentralized"]
    A --> F["Informal Layer\nInformal Org + Grapevine"]

(diagram saved)

Cross-Course Connections

Departmentalization — the two building blocks: specialization and grouping jobs AuthorityDelegation — how responsibility, authority, and power flow through the structure OrganizationalDesigns — the five main formal structure types InformalOrganization — the unofficial network that exists alongside the formal structure ManagementProcess — organizing is one of the four POLC functions; structure is its output

Key Points for Exam/Study

• Definition: specification of jobs to be done and how they relate
• Org chart = visual depiction of formal structure only
• Two building blocks: specialization (define jobs) + departmentalization (group jobs)
• Structure is influenced by size, strategy, environment, and technology
• Formal structure ≠ the full picture — informal organization always coexists