ORGANIZING FUNCTION

Comprehensive Examination Study Guide

Strathmore University Business School

Principles of Management
 Covers: Definition · Process · Structures · Delegation · Formal vs Informal

■ This guide is designed for end-of-semester examination revision. It includes full content summaries,
comparison tables, and 20 detailed exam-style questions with comprehensive model answers drawn
directly from your lecture slides.
TABLE OF CONTENTS

1 What is Organizing?
2 Why Organize? — Purposes and Benefits
3 The Organizing Process — Key Questions
4 Basic Elements of Organizing
4.1 Work Specialization
4.2 Departmentalization
4.3 Pattern of Authority (Centralization vs Decentralization)
4.4 Span of Control
4.5 Delegation of Authority
5 Organization Structure
5.1 Simple Structure
5.2 Functional Structure
5.3 Divisional Structure
5.4 Conglomerate Structure
5.5 Hybrid Structure
5.6 Matrix Structure
5.7 Team-Based Structure
5.8 Network Structure
5.9 Contingency Design
6 Factors Affecting Organizational Design
7 Formal vs Informal Organizational Structures
8 Exam Practice Questions & Model Answers
 CHAPTER 1: WHAT IS ORGANIZING?

Definition
Organizing is the second function of management, occurring after planning has set out the goals and
objectives. It is the managerial function of designing and maintaining a system of roles so that people can
work together effectively to achieve organizational goals.

Two complementary definitions:

• Definition 1: A management function that involves arranging human and non-human resources to help
attain organizational objectives by establishing the relationship between activity and authority.
• Definition 2: The process of identifying the activities to be performed, grouping these activities into work
units, assigning tasks to the various job positions, defining rules, and establishing the relationship of
authority and responsibility among them.

Key Outcomes:
• The result of an organizing process is an organization.
• An organization is a system consisting of unified parts acting in harmony to execute tasks to achieve
goals effectively and efficiently.

Requirements of an Organizational Role

For a role to be meaningful it must include:
1. Major activities of the role — what must be done.
2. Authority — the right to make decisions and direct others.
3. Availability of necessary information and other resources — so the role-holder can perform
effectively.
 CHAPTER 2: WHY ORGANIZE?
Organizing is not merely an administrative exercise. It serves several critical functions that directly
influence organizational performance:
• Efficient Resource Use
Organizing ensures that both human and non-human resources are deployed where they are most
needed, eliminating waste and redundancy.

• Role Clarity
It improves employee understanding of their job duties and responsibilities, reducing role conflict and
ambiguity.

• Employee Morale
When people know what they are supposed to do and have the authority to do it, motivation and job
satisfaction improve.

• Direction for Functional Areas

Organizing provides a clear sense of direction for each of the organization's functional areas (Finance,
HR, Marketing, Operations, etc.), ensuring all parts are aligned with overall objectives.
 CHAPTER 3: THE ORGANIZING PROCESS
Before an organizational structure can be designed, managers must answer five fundamental questions.
The answers collectively determine the most appropriate structure for the organization.
1. What specific tasks are required to implement our plans?
Managers must decompose the overall plan into discrete, assignable tasks — a process called work
identification.

2. How many organizational positions are required to perform all the required tasks?
Once tasks are identified, they must be bundled into jobs and positions, determining total headcount
needs.

3. How should these positions be grouped?

Related positions are clustered into departments or units — this is departmentalization.

4. How many layers of management are needed to coordinate?

This determines the height of the hierarchy (tall vs. flat), influencing decision-making speed and cost.

5. How many people should a manager supervise directly?

This is the span of control question — too many subordinates overwhelm a manager; too few is
inefficient.

The answers to these five questions enable organizations to create an organizational arrangement /
structure that puts plans into action.
 CHAPTER 4: BASIC ELEMENTS OF ORGANIZING

4.1 Work Specialization

Work specialization refers to the degree to which tasks in an organization are divided into separate jobs. It
can be high (each person does a narrow, specific task) or low (employees perform a wide variety of
tasks). High specialization increases efficiency through expertise but can lead to boredom and inflexibility.

4.2 Departmentalization

Departmentalization is the grouping of jobs into units for effective coordination. Common bases include:
• Functional Departmentalization: Groups by activity (e.g., HR, Finance, Marketing, Operations).
• Product Departmentalization: Groups by product line or service type.
• Customer Departmentalization: Groups by type of customer served.
• Geographic Departmentalization: Groups by region or location.

4.3 Pattern of Authority — Centralization vs Decentralization

The pattern of authority concerns who retains decision-making rights. In a centralized structure,
authority is concentrated at the top. In a decentralized structure, authority is delegated downward.

Factors Influencing Centralization of Authority:

• Costliness of decisions — upper management retains authority over the most costly decisions.
• Top management philosophy — some leaders prefer tight control.
• Sensitivity of the decisions to be made.
• Desire for uniformity in decisions across the business/businesses.
• Training and qualification levels of middle and lower managers — a shortage of qualified managers
pushes authority upward.
• Size of the organization — larger organizations tend toward more formalization and centralization.

4.4 Span of Control

Span of control refers to the number of subordinates who report directly to a given manager. It can be
narrow or wide:

Narrow Span Wide Span

Number of direct reports Few (2–5) Many (8–15+)

Hierarchy Tall (many levels) Flat (fewer levels)

Supervision Close, detailed General, loose

Cost Higher (more managers) Lower (fewer managers)

Decision speed Slower Faster

 Best when Complex, varied tasks Routine, similar tasks

4.5 Delegation of Authority

Delegation is the assignment of authority to accomplish a task to a junior employee while the
delegating manager retains overall accountability for the outcomes. It is not abdication — the manager
remains responsible for the results.

Importance / Benefits of Delegation:

1. Speeds up goal achievement through distribution of workload.
2. Speeds up the decision-making process (decisions made closer to the action).
3. Expands the assistance available to management.
4. Enables managers to seek and accept greater responsibility from higher positions.
5. Makes training and development of subordinates a necessity, building organisational capacity.
6. Improves task implementation since work is done by specialists.
7. Improves teamwork across the organization.
8. Leads to more efficient and effective time management by managers.

Barriers to Effective Delegation:

• Lack of trust and confidence in subordinates.
• Inability to determine what should be delegated.
• Belief that subordinates lack the experience to handle delegated tasks.
• Fear that subordinates may outperform the manager ('fear of being outshone').
• Fear of losing control over work outcomes.
• Fear of sharing sensitive information with subordinates.
• Manager's own failure to understand the importance of delegation.
• Expert syndrome — a 'know-it-all' attitude that prevents letting go of tasks.
• Reluctance of subordinates to accept delegation due to fear of criticism for mistakes.

Measures to Improve Delegation:

• Clearly define the authority and task to be delegated.
• Select subordinates who are qualified and willing to accept responsibility.
• Train subordinates and equip them with the necessary skills.
• Offer guidance: provide the information and resources required.
• Offer rewards to motivate subordinates to accept delegation.
• Create open lines of communication to allow the free exchange of information.
 CHAPTER 5: TYPES OF ORGANIZATIONAL
STRUCTURES
An organizational structure is a system of tasks, workflows, reporting relationships, and communication
channels that link together diverse individuals and groups. Nine major types are covered:

5.1 Simple Structure

There is only one hierarchical level of management beneath the owner. Typically found in small,
owner-managed businesses. Decision-making is fast, communication is direct, and roles are flexible, but
growth potential is limited.
• Example: A small kiosk or sole trader with one assistant.

5.2 Functional Structure

Activities are grouped by function (e.g., Marketing, Finance, Production, HR). Each department is headed
by a functional specialist who reports to the president/CEO.

Advantages Disadvantages

Provides logical grouping of similar activities. Decision-making becomes slower and more bureaucratic.

Each department can be staffed by functional experts. Reduces coordination between functions/departments.

Simplifies training and supervision of subordinates. Responsibility for overall profit lies only at the top.

Coordination within departments is easy. Slow adaptation to changes in the environment.

5.3 Divisional Structure

Activities are grouped into self-contained divisions, each responsible for a distinct area. There are three
variants:
• Product Divisions: Activities arranged around similar products or services (e.g., a media company with
TV, Music, and Book divisions).
• Customer Divisions: Activities arranged around common customer segments (e.g., a bank with
Consumer Loans, Business Loans, Agriculture Loans).
• Geographic Divisions: Activities arranged by regional location (e.g., Western, Northern, Southern,
Eastern regions).

5.4 Conglomerate Structure

A corporation made up of several different, independent businesses under one parent company.
Each subsidiary operates in a different industry (e.g., FMCG, Hotels, Agribusiness). The parent provides
capital and strategic oversight, but subsidiaries operate autonomously.

5.5 Hybrid Structure

A hybrid structure combines two or more structural types — for example, product divisions at the top
level, functional departments within each division, and geographic managers below that. It is used by
large, complex corporations (e.g., GM with Cadillac, Buick, Pontiac, Chevrolet divisions, each with
functional VPs and regional managers).

Advantages Disadvantages

Local decision-making where personnel understand the problems

Expensive
best. due to duplication of service departments across units.

Combines the strengths of multiple structural forms. Top management find it difficult to control separate units.

5.6 Matrix Structure

A matrix structure sets up reporting relationships as a grid rather than a traditional hierarchy.
Employees have dual reporting relationships — to both a functional manager AND a project/product
manager. It is used mainly in large project management and product development contexts.

Advantages Disadvantages Works Best When

Resources (experts, equipment) shared across

Violates
projects
the principle
efficiently.
of unity of [Link] is very large.

Projects formally coordinated across functional

Divideddepartments.
loyalty for project team [Link] environment is uncertain and unpredictable.

Information flows both horizontally and vertically.

Conflict over resource allocation and authority
High division.
technological interdependency across functions exis

Employees contact many people, speeding

Employees
information
may
sharing
face unclear
and decisions.
roles and inconsistent
Goal is product
job demands.
specialization and innovation.

5.7 Team-Based Structure

The organization is arranged around permanent or semi-permanent teams that handle entire processes
or services. Teams have management, control, and service functions within them, supported by shared
support functions (e.g., IT, Legal). Teams interact with each other laterally rather than through a strict
hierarchy. Encourages collaboration, shared accountability, and flexibility.

5.8 Network Structure

A network structure consists of a small core organization that outsources or subcontracts major
business functions to external specialists. The core company coordinates the network of partners. For
example, a personal computer company in the USA may outsource design to Sweden, engineering to
Japan, assembly to Mexico/Asia, distribution to Canada, and keep accounting in-house.
• Advantage: Maximum flexibility, low overhead, access to world-class specialists.
• Disadvantage: Loss of direct control; reliance on external partners; risk of quality inconsistency.

5.9 Contingency Design

Contingency design is the process of fitting the organization to its environment. Most management
theorists today agree that there is no single best way to organize. What matters is achieving a fit
between the organization's structure, its size, its technology, and the requirements of its environment.
 CHAPTER 6: FACTORS AFFECTING
ORGANIZATIONAL DESIGN

6.1 Mechanistic vs Organic Organizations

Organizations can be designed along a spectrum from mechanistic (bureaucratic) to organic (flexible):

Dimension Mechanistic Organization Organic Organization

Hierarchy Centralized Decentralized

Rules Many rules and procedures Few rules and procedures

Tasks Specialized Shared

Communication Formalized Informal

Teams Few teams or task forces Many teams or task forces

Span of Control Narrow, taller structure Wide, flatter structure

Best for Stable, predictable environments Dynamic, unpredictable environments

6.2 Differentiation vs Integration

Differentiation Integration

The tendency of parts of an organization to disperse and fragment.

The tendency of the parts of an organization to draw together to achieve a

Differentiated parts develop their own sub-culture and processes.

Everyone shares the same corporate culture and direction.

Creates specialization and autonomy. Promotes unity and cohesion.

Risk: Silos, duplication, poor coordination. Risk: Rigidity, loss of specialist identity.

6.3 Size

Organizational size is usually measured by the number of full-time employees. The larger the
organization, the more mechanistic it tends to become — more formal rules, more layers of management,
more specialization.

6.4 Technology

Technology can flatten organizational structures by developing functional connections that replace
vertical reporting relationships (e.g., tele-working increases remote employee participation). Three
production technologies predict different structures:
• Small-Batch Technology: Custom, one-off production (e.g., hand-crafted goods). Tends toward organic
structures.
• Large-Batch / Mass Production: Standardized, high-volume output (e.g., car assembly lines). Tends
toward mechanistic structures.
• Continuous Process: Non-stop production (e.g., oil refinery, chemical plant). Often requires organic
structures due to technical complexity.
 CHAPTER 7: FORMAL vs INFORMAL
ORGANIZATIONAL STRUCTURES
Every organization has two layers: the visible, official formal structure, and the hidden, dynamic informal
structure. Understanding both is critical for effective management.

Dimension Formal Organization Informal Organization

Nature Deliberately designed and documented. Emerges naturally and spontaneously.

Stability Enduring unless deliberately altered. Constantly evolving.

Direction Top-down. Grass roots (bottom-up or lateral).

Adaptability Static. Dynamic and responsive.

Strength Excellent at alignment. Excellent at motivation.

Visibility Plain to see (org charts, manuals). Requires insider knowledge to observe.

People vs Roles Equates 'person' with 'role'. Treats people as individuals.

Structure Hierarchical. Flat and fluid.

Cohesion Bound by codified rules and order. Cohered by trust and reciprocity.

Communication Follows chain of command. Flows in all directions (grapevine).

Authority Formal authority from position. Informal power attached to the person.

Best for Known, consistent situations. Rapidly changing or unclear situations.

The Grapevine
The grapevine is the informal communication network. Unlike formal communication (which follows the
chain of command), grapevine information can travel in any direction — upward, downward, diagonally,
or horizontally. Rather than suppressing it, effective managers tune into the grapevine, identify key
information influencers, and use them to disseminate accurate information.

Key Insight — Formal Authority vs Informal Power:

In the formal organization, authority is positional — it stays with the role, not the person. An individual
holds authority only while occupying the position. In the informal organization, informal power is
personal — it is attached to the individual, based on their relationships, expertise, charisma, or access to
information.
 CHAPTER 8: EXAM PRACTICE QUESTIONS & MODEL
ANSWERS
The following 20 questions represent the types of questions most likely to appear in your end-of-semester
examination. Read the model answers carefully — they are written at exam standard.

Q1. Define 'organizing' as a management function and explain why it is important.

Answer:
Organizing is the second function of management. It can be defined as the managerial function of
designing and maintaining a system of roles — arranging human and non-human resources to help
attain organizational objectives by establishing the relationship between activity and authority.
More comprehensively, organizing is the process of: (i) identifying the activities to be performed; (ii)
grouping them into work units; (iii) assigning tasks to specific job positions; (iv) defining rules; and (v)
establishing the relationships of authority and responsibility among people. The result of this process is
an organization — a system of unified parts acting in harmony to achieve goals effectively and
efficiently.
It is important because it: assures more efficient use of resources; improves employee understanding
of job duties; improves morale; and provides direction for each functional area. Without organizing,
even a well-crafted plan cannot be executed — people would not know who does what, with what
authority, and with what resources.

Q2. What five key questions must managers answer in the organizing process? Why are
these questions critical?
Answer:
Before designing a structure, managers must answer:
1. What specific tasks are required to implement our plans? — This identifies the total work to be done
and prevents tasks from being overlooked.
2. How many organizational positions are required to perform all the required tasks? — This determines
the number of jobs/roles needed.
3. How should these positions be grouped? — This is the departmentalization decision, determining
how units are clustered for coordination.
4. How many layers of management are needed to coordinate? — This determines the height of the
hierarchy and affects communication speed.
5. How many people should a manager supervise directly? — This is the span of control decision,
balancing oversight effectiveness against management cost.
These questions are critical because their answers collectively determine the most appropriate
organizational structure for translating plans into action.
Q3. Distinguish between work specialization, departmentalization, and span of control.
Answer:
Work Specialization: The degree to which organizational tasks are divided into separate, specific jobs.
High specialization means each worker performs a narrow task repeatedly (e.g., assembly line),
increasing efficiency and expertise. Low specialization means workers perform varied tasks, improving
flexibility and job satisfaction.
Departmentalization: The grouping of jobs and positions into units (departments) for effective
coordination and management. It can be based on function (HR, Finance, Marketing), product,
customer type, or geography. It determines how the organization's work is clustered.
Span of Control: The number of subordinates who report directly to a given manager. A narrow span
means few direct reports (close supervision, tall hierarchy, higher cost). A wide span means many
direct reports (general supervision, flat hierarchy, lower cost). The appropriate span depends on task
complexity, subordinate ability, and information availability.

Q4. What is delegation of authority? Discuss EIGHT benefits of delegation.

Answer:
Delegation of authority is the assignment of the authority to accomplish a task to a junior employee,
while the delegating manager retains overall accountability for the actions and outcomes of the
delegate. It is NOT the transfer of accountability — the manager remains responsible.
Eight benefits of delegation:
1. Speeds up goal achievement by distributing the workload among more people.
2. Speeds up decision-making, as decisions are made by those closest to the issues.
3. Expands managerial capacity — a manager can handle a broader scope of work when supported by
capable delegates.
4. Enables managers to take on increased responsibility from higher positions (career progression).
5. Makes training and development of subordinates a necessity, building organizational bench strength.
6. Improves task implementation because delegated tasks are performed by specialists.
7. Improves teamwork by involving more people in achieving shared goals.
8. Leads to more efficient time management, freeing the manager to focus on strategic priorities.
Q5. Identify and explain FIVE barriers to effective delegation.
Answer:
1. Lack of trust and confidence in subordinates: The manager believes that no one else can do the job
as well as they can, leading to an unwillingness to hand over authority.
2. Lack of ability to delegate: The manager is unable to determine what should be delegated versus
retained, leading to either over- or under-delegation.
3. Fear that subordinates may outshine the manager: Insecure managers withhold delegation to avoid
being overshadowed by a high-performing subordinate.
4. Expert syndrome ('know-it-all'): The manager believes their expertise is irreplaceable and therefore
resists delegating even routine tasks.
5. Reluctance of subordinates to accept delegation: Subordinates may fear making mistakes and facing
criticism, especially in cultures where failure is punished severely.
Other barriers include: fear of losing control; fear of sharing secrets; and a manager's fundamental
misunderstanding of the importance of delegation.

Q6. Discuss the factors that influence whether an organization centralizes or

decentralizes its authority.
Answer:
Centralization refers to the concentration of decision-making authority at the top of the hierarchy.
Decentralization pushes authority downward. The following factors influence this choice:
1. Costliness of decisions: Upper management typically retains authority over the most expensive or
high-stakes decisions. Routine low-cost decisions are decentralized.
2. Top management philosophy: If senior leaders prefer tight control, centralization prevails. Leaders
who trust their people and value speed decentralize.
3. Sensitivity of decisions: Decisions involving confidential strategy, legal risk, or brand reputation tend
to remain centralized.
4. Desire for uniformity: Organizations needing consistent decisions across all units (e.g., a franchise)
prefer centralization.
5. Training and qualification of lower-level managers: A shortage of capable middle managers forces
authority to remain at the top. As talent is developed, decentralization becomes feasible.
6. Size of the organization: Larger organizations often decentralize because it is impractical for a small
top team to make all decisions for thousands of employees.
Q7. Compare and contrast narrow and wide spans of control. Under what circumstances
is each appropriate?
Answer:
Span of control is the number of subordinates who report directly to a manager.
Narrow Span of Control: Few direct reports (2–5). Creates a tall hierarchy with many levels. Allows
close, detailed supervision and strong control. Higher management cost due to more managerial
positions. Slower decision-making. Appropriate when: tasks are complex and non-routine; subordinates
are new and need guidance; errors carry high consequences.
Wide Span of Control: Many direct reports (8–15+). Creates a flat hierarchy with fewer levels. Allows
general supervision; subordinates have more autonomy. Lower management cost. Faster
decision-making. Appropriate when: tasks are routine and repetitive; subordinates are experienced and
capable; strong information systems exist to support coordination.
In modern organizations the trend is toward wider spans of control, enabled by technology,
better-trained workforces, and the need to reduce costs and improve agility.

Q8. Describe the functional organizational structure. What are its advantages and
disadvantages?
Answer:
In a functional structure, the organization is divided into departments based on specialized functions
(e.g., Marketing, Finance, Production, Human Resources). Each department is headed by a functional
expert who reports to the president or CEO.
Advantages:
• Provides a logical grouping of similar activities, maintaining the prestige of major functions.
• Each department can be staffed by functional experts, ensuring high-quality work.
• Simplifies training and supervision within functional areas.
• Coordination of activities within a department is straightforward.
Disadvantages:
• Decision-making becomes slower and more bureaucratic as cross-functional approval is required.
• Reduces coordination between different functions — 'silo' mentality can develop.
• Responsibility for overall profit rests only at the top; middle managers have narrow accountability.
• The organization adapts slowly to environmental changes because cross-functional responses require
coordination across multiple departments.
Q9. Explain the three types of divisional structure with examples.
Answer:
Divisional structures group activities into self-contained, autonomous units. There are three types:
1. Product Divisional Structure: Activities grouped around similar products or services. Each division
manages its own product line end-to-end. Example: A media conglomerate with Motion Pictures & TV,
Music, Magazine & Book, and Internet Products divisions.
2. Customer Divisional Structure: Activities grouped around distinct customer segments. Example: A
commercial bank with Consumer Loans, Mortgage Loans, Business Loans, and Agriculture Loans
divisions — each serving a different customer type.
3. Geographic Divisional Structure: Activities grouped by region or location. Allows local
responsiveness. Example: A company with Western, Northern, Southern, and Eastern regional
divisions, each managing all functions in their territory.
The key advantage of all three is that each division operates like a semi-independent business, with
clear profit responsibility. The key disadvantage is duplication of functions and resources across
divisions.

Q10. What is a matrix structure? Discuss its advantages and disadvantages.

Answer:
A matrix structure sets up reporting relationships as a grid rather than a traditional hierarchy. Functional
departments (Finance, Operations, HR, etc.) focus on specialized resources, while lateral project or
product teams focus on outputs. Employees have DUAL reporting relationships — to both a functional
manager and a product/project manager simultaneously.
Advantages:
• Resources (experts and equipment) can be shared across multiple projects, improving efficiency.
• Projects are formally coordinated across functional departments.
• Information flows both horizontally and vertically throughout the organization.
• Employees interact with many colleagues, accelerating information sharing and decision-making.
• Skill diversification and cross-functional training is easier.
Disadvantages:
• Violates the classical principle of unity of command (one boss per employee).
• Divided loyalty — employees torn between their functional manager and project manager.
• Conflict over allocation of resources and division of authority between managers.
• Employees may face unclear roles and inconsistent job demands from two superiors.
Best suited for: large organizations, uncertain environments, high cross-functional interdependency,
and a goal of product specialization and innovation.
Q11. Differentiate between the formal and informal organizational structure.
Answer:
Formal Structure: The officially designed and documented system of roles, relationships, rules, and
communication channels. It is top-down, static, hierarchical, and visible (in org charts and manuals).
Authority is positional — it comes with the role. It is excellent at alignment and critical for handling
known, consistent situations.
Informal Structure: The hidden, naturally evolving system of social and personal relationships,
networks, and shared interests that emerge without official sanction. It is grass-roots, dynamic, flat, and
fluid. Power is personal — attached to specific individuals based on their relationships and influence,
not their title.
Key differences in communication: Formal communication follows the chain of command. Informal
communication (the grapevine) can flow in any direction — upward, downward, diagonally, or
horizontally.
Managerial implication: Rather than suppressing the informal organization, effective managers should
identify key influencers in the informal network and leverage them to disseminate accurate information
and maintain morale.

Q12. What is contingency design? Discuss the factors that determine the appropriate
organizational structure.
Answer:
Contingency design is the process of fitting the organization to its environment. It is premised on the
idea that there is NO single best way to organize — the optimal structure depends on the specific
circumstances of the organization.
Key contingency factors:
1. Size: Larger organizations tend toward mechanistic structures (more formalization, more
specialization, more layers). Smaller organizations can remain organic.
2. Technology: The production system shapes structure. Small-batch technology suits organic
structures; large-batch/mass production suits mechanistic structures; continuous process tends back
toward organic.
3. Environment: Stable, predictable environments favor mechanistic structures. Dynamic, uncertain
environments require organic structures for responsiveness.
4. Strategy: Structures must align with strategy. A cost-leadership strategy may favor mechanistic
efficiency; an innovation strategy may favor organic flexibility.
5. Life Cycle Stage: Start-ups tend to be organic (simple/flat). As organizations grow and mature, they
formalize and may become more mechanistic.
The goal is always alignment — a 'fit' between structure, size, technology, and environment.
Q13. Compare mechanistic and organic organizations. Give an example of each.
Answer:
Mechanistic organizations are highly structured, bureaucratic entities with centralized authority, many
rules, specialized tasks, formalized communication, few teams, and a narrow span of control (tall
hierarchy). They perform best in stable, predictable environments where efficiency and consistency are
paramount. Example: A government agency, a traditional manufacturing company, or a fast-food
franchise.
Organic organizations are flexible, adaptable entities with decentralized authority, few rules, shared
tasks, informal communication, many teams, and a wider span of control (flat hierarchy). They thrive in
dynamic, uncertain environments where innovation and rapid response are critical. Example: A
technology start-up, a creative agency, or a consultancy firm.
Most real organizations fall somewhere between these two extremes and may combine features of both
— organic at the front-line where flexibility is needed, mechanistic at the back-office where
standardization improves efficiency.

Q14. Explain what is meant by 'differentiation' and 'integration' in organizational design.

Answer:
Differentiation refers to the tendency of parts of an organization to disperse and fragment, with each
unit developing its own subculture, processes, and goals. Differentiated units (e.g., separate divisions
or departments) operate with a high degree of autonomy. High differentiation improves specialization
but risks creating silos — units that fail to communicate or cooperate with each other.
Integration refers to the tendency of the parts of an organization to draw together to achieve a common
purpose. In integrated organizations, everyone shares the same corporate culture, values, and
direction. Integration promotes unity and coordination but can reduce the benefits of specialization.
The tension between them is a central challenge of organizational design. Too much differentiation
creates coordination problems ('gaps'). Too much integration can stifle diversity and create resource
overloads. Effective organizational design finds the right balance — using integrating mechanisms
(liaison roles, cross-functional teams, information systems) to coordinate differentiated units.
Q15. What is a network organizational structure? What are its advantages and
disadvantages?
Answer:
A network structure consists of a small core organization that outsources most of its major business
functions to a network of external specialist firms. The core company focuses on its key competencies
and coordinates the network. For example, a personal computer company might retain only the core
coordination function in the USA while outsourcing design to Sweden, engineering to Japan,
components assembly to Mexico/Asia, distribution to Canada, and accounting locally.
Advantages:
• Maximum organizational flexibility — the core firm can rapidly switch suppliers or partners.
• Access to world-class specialists in each functional area without carrying them as full-time employees.
• Very low overhead and fixed costs; the organization only pays for what it uses.
• Ideal for markets that change rapidly.
Disadvantages:
• Loss of direct control over key functions — quality, delivery, and security depend on partners.
• High dependence on external firms creates vulnerability if partners fail or exit.
• Risk of losing core competencies if too much is outsourced.
• Coordination across multiple independent firms is complex and costly.

Q16. An organization is experiencing rapid growth. How might its structure need to
change? Relate your answer to the life cycle concept.
Answer:
Every organization moves through a life cycle: birth/start-up, growth, maturity, and (potentially) decline.
Each stage has different structural implications.
Start-up/Birth Stage: The organization is small, typically uses a simple structure with one owner and
few employees. Decision-making is centralized, there are few formal rules, communication is informal,
and the span of control is wide. The structure is highly organic.
Growth Stage: As the organization grows, more employees are hired, tasks become more complex,
and informal coordination no longer suffices. The organization begins to departmentalize (e.g., by
function), establish formal rules and procedures, and introduce middle management layers. Authority
may be partially decentralized. The structure becomes more mechanistic.
Maturity Stage: At maturity, the organization is large and formal, often with a functional or divisional
structure, multiple management layers, and standardized processes. Efficiency is prioritized. The
structure is predominantly mechanistic.
Implication: Rapidly growing organizations must proactively redesign their structures to match their new
size and complexity, or they risk coordination failures, duplication, and loss of agility.
Q17. What measures can a manager take to improve the effectiveness of delegation?
Answer:
Effective delegation requires deliberate effort. The following measures improve its success:
1. Clearly define the task and authority: The manager must specify exactly what is being delegated, the
boundaries of the delegate's authority, and the expected outcomes.
2. Select the right subordinate: Choose someone with the relevant skills, knowledge, and willingness to
accept responsibility.
3. Train and develop subordinates: Equip them with the necessary skills and knowledge before and
during delegation. Do not delegate and disappear.
4. Provide guidance and resources: Supply the information, tools, and resources the delegate needs to
succeed. Avoid setting them up for failure.
5. Offer rewards and recognition: Motivate subordinates to accept delegation by tying it to their
performance evaluations, career development, and compensation.
6. Create open communication channels: Maintain a two-way flow of information so delegates can seek
help, report progress, and flag problems without fear of criticism.
7. Exercise appropriate oversight: Monitor without micromanaging — check in at agreed milestones but
allow the delegate the freedom to make decisions within defined boundaries.

Q18. Why should managers pay attention to the informal organization rather than trying to
suppress it?
Answer:
The informal organization is the natural network of social relationships, friendships, and shared
interests that exist within any organization. It operates through the grapevine — an informal
communication channel that can transmit information faster than formal channels in any direction
(upward, downward, diagonally, or horizontally).
Managers should pay attention to it because:
1. It is a powerful information channel: The grapevine often carries information that never reaches
formal channels. Managers who tune into it get an early warning of employee concerns, morale issues,
and emerging problems.
2. It influences employee behaviour: Informal norms, values, and group pressures can powerfully
shape how employees behave — often more effectively than formal rules.
3. It supports motivation: The informal organization is excellent at motivation because it treats people
as individuals and builds bonds of trust. Formal structures cannot replicate this personal dimension.
4. It provides adaptability: In rapidly changing situations, informal networks mobilize responses faster
than formal hierarchies.
Best practice: Managers should identify the key informal influencers (information brokers) and feed
them accurate information that they can disseminate, effectively using the grapevine as a positive
communication tool rather than a source of damaging rumours.
Q19. A company decides to adopt a matrix structure. What challenges should
management anticipate, and how can they be managed?
Answer:
Adopting a matrix structure introduces significant management challenges:
Challenge 1 — Violation of unity of command: Employees report to two bosses (functional manager +
project manager). This can cause confusion about priorities. Management response: Clearly define the
respective authority of each manager from the outset; establish protocols for resolving competing
demands.
Challenge 2 — Role conflict and ambiguity: Employees may receive conflicting instructions from two
superiors. Management response: Regular role clarification meetings; written role descriptions that
specify each manager's domain.
Challenge 3 — Divided loyalty: Team members may feel allegiance to their functional home rather than
the project team, or vice versa. Management response: Team-building activities; reward systems that
recognise both functional and project contributions.
Challenge 4 — Conflict over resource allocation: Functional and project managers may compete for the
same employees or budget. Management response: Transparent resource allocation processes; senior
leadership arbitration when needed.
Challenge 5 — Coordination complexity: The matrix requires significant coordination effort.
Management response: Strong information systems, regular cross-functional meetings, and skilled
project managers who can build relationships across the organization.

Q20. Define organizational structure. Using examples, explain how an organization's

technology can influence its structural design.
Answer:
Organizational structure is a system of tasks, workflows, reporting relationships, and communication
channels that link together diverse individuals and groups in pursuit of organizational goals.
Technology — meaning the methods, tools, and processes used to transform inputs into outputs — has
a powerful influence on organizational structure. Joan Woodward's research identified three primary
production technologies with distinct structural implications:
1. Small-Batch (Unit) Technology: Produces custom, one-off, or small quantities of goods to customer
specification (e.g., a tailor, a high-end furniture maker, a law firm). Requires skilled workers with broad
competencies, informal coordination, and organic structures. Span of control tends to be wider.
2. Large-Batch / Mass Production Technology: Produces large volumes of standardized products (e.g.,
a vehicle assembly plant, a bottling factory). Tasks are highly specialized and repetitive. Mechanistic
structures with narrow spans of control, many rules, and formalized communication suit this technology
best.
3. Continuous Process Technology: Production is automated and non-stop (e.g., oil refinery,
pharmaceutical plant). Although highly technical, the process itself is stable. Operators must respond to
exceptions and technical problems, requiring organic structures with broad spans and decentralized
decision-making.
Additionally, information technology (e.g., ERP systems, remote work platforms) can flatten
organizational hierarchies by enabling direct communication across levels, reducing the need for
middle managers as information intermediaries.
 QUICK REVISION TIPS FOR YOUR EXAM

✔ Know your definitions cold.

Examiners will award marks for accurate, precise definitions. Memorize the definitions of organizing,
delegation, span of control, departmentalization, and organizational structure word-for-word from this
guide.

✔ Use a compare/contrast format for structure questions.

When asked to compare two structures (e.g., functional vs divisional, mechanistic vs organic), always
use a clear table or two-column paragraph to show you understand both sides.

✔ Always give examples.

Any question about organizational structures earns more marks when you illustrate with a real or
hypothetical company example (e.g., a bank for customer divisional, a car manufacturer for product
divisional).

✔ Link concepts to their consequences.

Don't just list features — explain what they MEAN for the organization. A narrow span increases costs
AND improves control. Delegation saves time AND builds subordinate capability.

✔ Address both sides of delegation.

Questions on delegation almost always expect you to cover both benefits AND barriers (and
sometimes measures to improve it). Never discuss only one side.

✔ Remember the informal organization.

This is often overlooked but frequently tested. Know the grapevine, the difference between informal
power (personal) and formal authority (positional), and why managers should work with the informal
organization rather than against it.

Best of luck in your examinations! — Prepared from Strathmore University Business School
lecture slides.