Strategic Management: Formulation and Implementation


The process of combining jobs into groups in termed departmentalization. The purpose of departmentalization is to contribute to the more effective and efficient use of resources. Differing overall patterns of departmentalization often are referred to as organization designs.

By determining how individuals will be grouped, departmentalization influences the way an organization operates in several ways.

There is no standard way to divide organization into departments. However, the most commonly used patterns of departmentalization are functional, geographical, divisional, hybrid and matrix.I discuss these methods of departmentalization, ororganization design, in greater detail, further in this chapter.

Methods Of Vertical Coordination

The structure, which is reflected in an organization chart, designates formal reporting relationships and defines the number of levels in the hierarchy.

When small business are started, they consist of an ownermanager and a few employees. With growth, the organization of the business begins to involve from fluidity to a status of more permanent division of labor. As new employees are recruited, each it assigned to perform a specialized function. The organization has now added one vertical level a managerial one and has expanded into two separate departments. Growth expands the organization's structure, both vertically and horizontally.

Vertical growth refers to an increase in the length of the organization's hierarchical chain of command. Five particularly important means of achieving effective vertical coordination are formalization, span of management, centralization versus decentralization, delegation, and line and staff positions.