Organization design refers to the overall set of elements used to configure an organization. The purpose of this exercise is to give you insights into how managers must make decisions within the context of creating an organization design.

Introduction: Whenever a new enterprise is started, the owner must make decisions about how to structure the organization. For example, he or she must decide what functions are required, how those functions will be broken down into individual jobs, how those jobs will be grouped back together into logical departments, and how authority and responsibility will be allocated across positions.

Instructions: Assume that you have decided to open a handmade chocolate business in your local community. Your products will be traditional bars and novelty shaped chocolates, truffles, other chocolate products such as ice cream, and gift baskets and boxes featuring chocolates. You have hired a talented chef and believe that her expertise, coupled with your unique designs and high-quality ingredients, will make your products very popular. You have also inherited enough money to get your business up and running and to cover about one year of living expenses (in other words, you do not need to pay yourself a salary).

You intend to buy food items including chocolate, cocoa, white chocolate, nuts, and fruit from suppliers who deliver to your area. Your chef will then turn those ingredients into luscious products that will then be attractively packaged. Local grocery store owners and restaurant chefs have seen samples of your products and indicated a keen interest in selling them. You know, however, that you will still need to service accounts and keep your customers happy. At the present time, you are trying to determine how many people you need to get your business going and how to group them most effectively into an organization. You realize that you can start out quite small and then expand as sales warrant. However, you also worry that if you are continually adding people and rearranging your organization, confusion and inefficiency may result.

Under each of the following scenarios, decide how best to design your organization. Sketch a basic organization chart to show your thoughts.

• Scenario 1. You will design and sell the products yourself, as well as oversee production. You will start with a workforce of five people.

• Scenario 2. You intend to devote all of your time to sales to increase revenues, leaving all other functions to others. You will start with a workforce of nine people.

• Scenario 3. You do not intend to handle any one function yourself but will instead oversee the entire operation and will start with a workforce of 15 people.

1. After you have created your organization chart, form small groups of four to five people each. Compare your various organization charts, focusing on similarities and differences.

2. Working in the same group, assume that five years have passed and that your business has been a big success. You have a large factory for making your chocolates and are shipping them to 15 states. You employ almost 500 people. Create an organization design that you think fits this organization best.

What basic factors did you consider in choosing a design?