ADMN 201 Ch7 — Organizing the Business Enterprise
Chapter Overview
Ch7 covers how businesses structure themselves internally: how jobs are defined and grouped (building blocks), how authority flows and decisions are made (chain of command), what formal structure types exist (designs), and what unofficial networks operate beneath the surface (informal organization).
Learning Objectives
| # | Objective | Key Concept Page |
|---|---|---|
| 1 | Elements that influence organizational structure | OrganizationalStructure |
| 2 | Specialization and departmentalization as building blocks | Departmentalization |
| 3 | Responsibility vs. authority; centralized vs. decentralized | AuthorityDelegation |
| 4 | Functional, divisional, project, matrix, international structures | OrganizationalDesigns |
| 5 | Informal organization vs. formal organization | InformalOrganization |
Chapter Structure
mindmap root((Ch7: Organizing\nthe Business)) Building Blocks Job Specialization Define individual roles Efficiency & expertise Departmentalization Functional Product Process Customer Geographic Authority System Responsibility vs Authority Delegation Accountability Line vs Staff Authority Span of Control Centralized vs Decentralized Organizational Designs Functional Divisional Matrix — dual reporting Project — temporary teams International Informal Organization Personal relationships Grapevine
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High-Priority Exam Topics
1. The Two Building Blocks
- Job Specialization = defining individual jobs (efficiency, expertise)
- Departmentalization = grouping jobs into logical units
2. Five Types of Departmentalization
| Type | Grouped By | Scenario Signal |
|---|---|---|
| Functional | Function/activity | ”Marketing Dept, HR Dept” |
| Product | Product line | ”Laptop Division, Tablet Division” |
| Process | Production step | ”Cutting → Sewing → Finishing” |
| Customer | Customer type | ”Corporate Clients, Personal Banking” |
| Geographic | Region/territory | ”North American Division, European Division” |
3. Responsibility / Authority / Delegation / Accountability (as a set)
- Responsibility = duty to perform
- Authority = power to decide — must be paired with responsibility
- Delegation = manager assigns both downward
- Accountability = subordinate justifies outcomes upward
4. Line vs. Staff Authority
- Line = direct chain of command (CEO → VP → Director)
- Staff = advisory based on expertise (legal counsel to CEO)
5. Centralized vs. Decentralized
| Centralized | Decentralized | |
|---|---|---|
| Decisions made by | Top managers | Middle/lower managers |
| Speed | Slower | Faster |
| Consistency | Higher | Variable |
6. Five Organizational Designs
| Structure | Key Feature |
|---|---|
| Functional | Group by activity; standard baseline |
| Divisional | Semi-autonomous units |
| Matrix | Two bosses (functional + project manager) |
| Project | Temporary specialist teams |
| International | Cross-border; dept / division / global |
Matrix is the most exam-distinct: the only structure where employees report to two supervisors simultaneously.
7. Informal Organization + Grapevine
- Informal org = personal relationships, unrelated to formal authority
- Grapevine = its communication channel — fast, unofficial, sometimes inaccurate
- Cannot be controlled by management, only influenced
Key Terms
OrganizationalStructure · Departmentalization · AuthorityDelegation · OrganizationalDesigns · InformalOrganization
Additional terms: Organizational chart · Span of control · Downsizing · Line authority · Staff authority · Legitimate/Reward/Coercive/Expert/Referent power
Connections to Other Chapters
- Ch6 ManagementProcess — Organizing is one of the four POLC functions; Ch7 is the deep dive into it
- Ch6 ManagerTypes — manager levels map to how centralized/decentralized a firm is
- Ch5 GlobalBusiness — international organizational structures connect to global strategy
- Ch6 CorporateCulture — informal organization is a key carrier of corporate culture