1.

Introduction (Introduction on the concept of organizational structure)

Every operating organization should have its own structure in order to operate their
work effectively and efficiently. What is organization? An organization is a group of
people who working together discuss their work to achieve a common goal. They
must find the best way to organize their work so they can meet their goals easily. The
organizational structure of an organization tells us that every character of an
organization have their own roles and values so that everyone understand their
responsibilities to the group. Therefore if you join a new organization, you must get
to know and understand their organization structure. In other words, the concept of
organizational structure also can be defined as the way of a company that arranges
their employees according to their personalities in suitable positions. It may allow
them to perform well. Normally it is depend on the company size or level and
numbers of their employees. The best organizational structure can be say as use the
limited facilities, small size of employees and to get the more profit or revenue.
Concept of organizational structure also can be defined as the typically hierarchical
arrangement of the authority, communications, duty and rights of an organization.
Organizational structure determines how the roles and responsibilities are assigned,
coordinated and controlled, and how information flows between the different levels
of management. It depends on the organizations objectives and strategy. In other
words, it is more look like a pyramid, which include workers, manager or supervisor,
vice president and CEO. A large base of workers, who are directly supervised by the
smaller level above them, who are called manager or supervisor, supervisor will
report their work to the vice president; vice president will bring the report to the top
ranking officer such as the company president or CEO. An organizational structure is
depends on the organizations objectives and strategy. The top layer of management,
which is CEO, has most of the decision making power and control over the
departments and divisions. While make the decision, it have to look different way,
for example, a company which sell clothing, may organize their structure to different
groups, it depend on the geographical area as well.

2. Identification and explanation on the types of departmentalization.

Departmentalization is an aspect of organizational design that includes the
subdivision of a business into units based on their function or other criteria. It
divided into different departments, it perform according to the departments
specialization in the organization. There are five types of departmentalization, which
are

functional

departmentalization,

product

departmentalization,

customer

departmentalization, geographic departmentalization and matrix departmentalization.

Each departmentalization has different types of job scope and their roles.
2.1 Functional departmentalization
In functional departmentalization, it means it separating the activities
performed within an organization into different groups follow by the function
they perform. In other words, it group together the job with the same or
similar activities and it allows the organization to staff all the important
position with functional experts and facilitates coordination and integration.
For example, a manufacturing company may create a production department,
sales and marketing department, accounting department and human resources
department. Each different department plays their own roles. In simple way to
say, functional departmentalization is the jobs are grouped by the functions
performed. This approach can be used in all types of organizations, although
the functions change to reflect the organizations objectives and work
activities.
2.2 Product departmentalization
Product departmentalization can be define as the internal process of the
company by typically grouped their business activities up according to the
type of goods and services produced, or called product line. Each major
product has its own department, and specialists in all of the functions needed
to produce and sell that product, such as marketing manufacturing,
accounting and human resources. Every product line is under one senior

manager who is specializes in that aspect of the companys business. In other

words, its grouped according to a specific product or service. For example,
Lifes Good Company (LG), it manufacture different product like mobiles, air
conditioners, TV and others. It create a department for each product and that
department control all activities related to the product including development,
sales and marketing, distribution and production.
2.3 Customer departmentalization
Customer departmentalization means that it grouping the customer into
different group according to a specific product or services. Its grouping
activities to respond to and interact with specific customers or customers
groups, say Ricky W.Griffin(2013). Different customer with different
personality has their own need and wants; it can be classified into different
types such as, international or foreign customers, bulk purchasing or
wholesale customers, or retail customers and others. Organization can serve
their customers easily and better by grouping skilled specialists to engage in
customer interactions. Organization grouping or coordinates their employee
into different group or so that their employees are responsible for specific
types of consumers only. This can help to focus more easily and fulfill
customers needs and wants.
2.4 Geographic departmentalization
Geographic departmentalization means jobs are grouped on the basis of a
territory or geography depend on the organization product. Its organized
along geographic lines. Organizations are responsible for conduct
international business activities in certain geographical locations. It spends
over wide areas and can provide better services to the customers. Its a good
idea for large multinational company who doing business around the world.
All activities in each region are handled by a department in that region. In
geographic departmentalization, separate departments are made based on the

companys operations to be carried out either over a vast area or within some
restricted area through branches or offices established at different zones or
places. It is important to an organization because with the good or suitable
location, its better to serve their customers easily. For example, luxury
product will normally locate in town or big city because in those areas, they
can satisfy their customer needs and wants.
2.5 Matrix departmentalization
Matrix departmentalization can be defined as the combination of two or more
types of departmentalization at the same time, to improve the synchronization
of multiple components for a single activity. There are several factors that
differentiate matrix departmentalization from the other types of structures;
that is the employees report to two different supervisors or managers. The
advantage of matrix departmentalization is that it allows the organization to
manage the activities or projects more efficiently. It responsible to find out
the profit of the product. However, it also have disadvantages, because of the
uncertainty in reporting relationships, it will conflict in organization authority
exists. It requires a higher level of coordination to manage the complexity
involved in order to conduct big projects or projects that have many phases to
be completed.
3. Discussion on the importance of considering the new emerging organizational
design.
Organizational design can be define as the pattern of management to achieve the
right combination of differentiation and integration of the organizations operations.
Management is often included as a factor of production along with money, machines
and materials. There are two types of organization design mechanistic organization
and organic organization. According to the Peter Drucker (1909-2005), Father of
Modern Management; the basic task of management includes both marketing and
innovation. In other word, organizational design is a step-by-step method which

identifying the work flow, structures, procedures and system, revises them in current
business realities and goals and then develops plans to implement the new changes.
There are four new organizational designs team structure, modular organization,
virtual organization and borderless organization. Every organization needed to
update or change their new organization design depends to their organization goals.
It is important to the organization future.
3.1 New organizational design can help company growth.
A company with the good organizational design can prepare better to take
advantage of growth opportunities than more loosely designed companies. A
stable organizational design must have a strong technological infrastructure.
It may allow the company easily to manage or hire a new employee into the
company network when needed. For example, if the company business is
getting better every year, the organization must upgrade their organizational
design, like distribute more branches. If an organization with no technology
planning or use the old school organizational design. It may face many
problem even hire a single employee.
3.2 The team or network structure makes more opportunities.
The new organizational design uses the team to coordinating their working
activities. For a small company, their overall organization is perceived as a
team; for bigger company usually have more than one team working to
achieve the goals more efficiently. A well-structured and growing company
with a formal advancement track can motivate employees to excel. For
example, while a company with a lean organizational structure can convince
employees that there are more opportunities to move into management. It will
motivate their employee to working hard, learning from each others. In fact,
the company business will get bigger and better.
3.3 Borderless organization helps to bring the business into international
market.

Borderless organization is an organization that tries to eliminate the chain of

command and to replace it with team authority. It can describe as a
multinational corporation. The advantage of a borderless organization is that
organization will be able to utilize its knowledge, expertise and capabilities of
employees in a better way. This type of organization set the headquartered in
one country, and sell the branches or franchise with officers and production
facilities in multiple countries. Of course they set business goals or target to
those franchisee and need them to submit business sales every month. For
example, McDonald restaurants, its the largest chain of hamburger fast food
restaurants in the world. The headquarters set in United States. McDonalds
does business with over 36000 restaurants in more than 100 countries. The
power of franchisees, suppliers and employees working together toward with
a common goal makes it become so successful now. A warning letter will
send by headquarter or withdraw franchise to the franchisees who slander
companys reputation so that the companys reputation will not be damaged.
3.4

4. Discussion on how organizational design may increase organizational

competitiveness.
Organizational competitiveness can be define as the ability and performance of a
firm or nation to sell and supply products and services which meet the quality
standards of local and world market price. It also can be define as ability of a region
to export more than imports when including terms of trade to reflect all government
discounts and import barriers. A firm with the good organizational design may
always increase organizational competitiveness. It will help the firm achieve their
goals easily. There are several ways that organizational design may increase the
organizational competitiveness.

4.1 Salary is the main factor which attracting employees to be more high
quality.
Many employees like to change their jobs because they want to be promoted
or learn more skills from different firms. Of cause the major factor are they
want to transfer to the company who willing pay higher salary to them. Salary
is the main factor of increasing higher quality of employees. Employees will
compare their salary between firms to firms, while they found which firms are
willing pay higher salary to them, they will go to that firm working to
increase their standard of life.
4.2 Employees will work more harder and effectively through a reward
A firm can reward to the employees who are good performance in the work. It
can encourage them to put more effort in their work. Employees will feel that
the firm gives affirmative to them. For example, a firm will pay the minimum
standard salary to their employees, and give the bonus or extra reward to their
employees who are perform well in their job in that month.

4.3 Methods of motivation through salary is short term

The research shows that increase salary can cause the employees feel
satisfaction at the moment. High salary will affect their performance because
they feel satisfy about their salary. For example, when employees well
performance, their firm pay or increase their salary, they will feel that no
matter they work hard or not, they also maintain the high salary.
4.4 Evaluate employee through financial rewards and non-financial rewards
All employees need to be evaluated either for themselves or for their
achievements. The motivation can create the opportunity to let the employees
work harder. A good organization will always care or pay attention to their

employees daily performance. They will always encourage their employees

to work hard and tell them they deserve to get more rewards depend on their
performance.

5. Summary on the types of departmentalization and importance of considering

the new emerging organizational design.
Departmentalization is the process of breaking down an enterprise into various
departments, each department play their own roles. Functional departmentalization
separates the organization into different groups according to their similarities.
Product departmentalization is the internal process of the company, grouped
according to the product line. Each major product has own department. Customer
departmentalization means that grouping the customer into different group according
to a specific product or services and different types of customers, international or
foreign, wholesale or retail. Geographic departmentalization coordinates the work
and employees from different units, responsible for conducting business activities in
certain locations. This can help organization to react with speed and efficiency to the
requirements of specific markets. Matrix departmentalization is a combination of
two or more types of departmentalization at the same time. It normally combines the
function departmentalization and task force departmentalization to make their work
more effective and efficiency. A good company will manage and always upgrade
their department in order to increase their company sales and profit.
We all know that organization design is important to a company. A well organization
design can help the company to make more profit. But, a company needs the new
emerging organization design to help them to reach their goals more easily. The new
emerging organization design can help the organizational to be more adapted with
the factors that influence the effectiveness of the strategies.
Trust to each other is needed and its importance to the organization. Working as a
team can increase employees performance. They are interdependent and

complementary to each others. They will understanding the whole process of the
operation and make them reach the organization goals easily.
(2332 words)

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