2.1 Organizational Structure and Information System

	An organization is a stable, formal social structure that takes and collects resources from the environment and
	processes them to produce outputs.

	Another definition for organization is a formal collection of people and other resources established to accomplish
	a set of goals.

An organization is more stable than an informal collection of people in terms of longevity and routine.

Organization accepts input and produce output through transformation process.

Concerning money and profit there are two types of organizations: for-profit and non-profit organization.

	For profit organization is a business or other organization whose primary goal is making money (a profit), and is
	concerned with money only as much as necessary to keep the organization operating.

	Non-profit organization is an incorporated organization which exists for educational or charitable reasons, and
	from which its shareholders do not benefit financially.

	Value chain is a series of basic activities that add a margin of value to a firm's products or services. Basic
	activities are categorized into primary and support activities.

2.1 Organizational Structure and Information System

Primary activities include inbound logistics, operations, outbound logistics, sales and marketing, and service.

	Support activities are activities that make the delivery of the primary activities possible. These activities consist
	of the organization's infrastructure, human resources, technology and procurement

Different Organization Structures

	The organization structure is the typical hierarchical arrangement of lines of authority, communications, rights
	and duties in the organization.

A structure depends on the organization's objectives and strategy.

Traditional Organizational Structure:

Also known as hierarchical structure.

		It is pyramid-like organization where one person is in charge of a functional area (engineering, finance,
		marketing, etc...) with one or more subordinates handling the sub-functions.

A hierarchical structure has many layers of management, each with a narrow span of control.

Instructions go downwards from higher level of management to those below.

2.1 Organizational Structure and Information System

Feedback comes from the lower levels and flies upwards.

Disadvantage:

It can take a long time for information to pass up and down the chain of command.

Staffs are not fully empowered.

This is bad for employee morale, reducing their motivation to work.

		The use of information system results in reduced layers of management resulting in flat organizational
		structure.

		Flat organizational structure is a structure with a reduced number of management layers empowering
		employees at the lower levels to make decisions and solve problems without needing permission from upper
		level managers.

		Empowerment is giving employees and their managers more responsibility and authority to make decisions,
		take certain actions to specified limits to have more control over their jobs.

2.1 Organizational Structure and Information System

Project Organizational Structure:

		The project structure which is centered on major products or services consists of a number of horizontal
		organisational units to complete projects of a long duration.

		The main disadvantage is as the project staff consists of personnel from diverse fields, it might be quite
		challenging for the project manager to coordinate among them.

Advantages:

Special attention can be provided on project in order to meet the complex demand of the project.

			Because it consists of staff from different area it allows maximum use of specialist knowledge thus
			chances of failure are very few.

			Project staff works as a team towards common goal which results in high motivation level for its
			members.

Team Organizational Structure:

		It is non-traditional, innovative work environment relying on teams or groups to achieve organization's
		objectives.

2.1 Organizational Structure and Information System

Major characteristics:

Mutual trust.

Employee empowerment in planning, organization, and goal-setting.

Shared responsibility for self-management.

Shared accountability for performance.

Shared leadership.

Disadvantages:

Increased need for effective leadership.

Less contact with other functions.

More change and instability.

Less organizational consistency.

2.1 Organizational Structure and Information System

Multidimensional Organizational Structure:

It, also known as matrix organizational structure, may incorporate several structures at the same time.

		The matrix structure is a combination of the functional and divisional structures. The functional structure
		divides departments within a company by the functions performed, while the divisional structure
		divides them by products, customers or geographical location.

Advantages:

Better coordination and control.

Adaptable to dynamic environment.

Effective utilization of resources.

Particular management.

Sufficient time for top management.

Excellence in inter disciplinary specialization.

Development in team work

2.1 Organizational Structure and Information System

Disadvantages:

Multiple authority lines.

Costly structure.

Problem of overspecialization

Difficult to balance.

Feeling of insecurity.

Lack of white coordination.

Virtual Organizational Structure:

		It is a structure that employs individuals, groups, or complete business units in geographically dispersed
		areas.

These groups can last for a few weeks or years often requiring telecommunications and Internet.

		Virtual teams help ensure the participation of the best available people to solve important organizational
		problems.

2.1 Organizational Structure and Information System

A virtual organization structure can also reduce costs for an organization.

Successful virtual organizational structures share key characteristics.

One strategy is to have in-house employees.

Using information systems to coordinate the activities of a virtual structure is essential