Transcript Chapter 5 Entrepreneurship

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Organizing
old Ch 6
new Ch 7
Basics of organization structure: organic or mechanistic,
differentiation, and integration
Authority
Span of control
How to delegate effectively
Centralized and decentralized organizations
Types of organization structures, and their strengths
Mechanisms to coordinate work
Improve agility—strategy, customers, technology
Fundamentals
Organization chart –reporting structure, division of labor
Mechanistic organization – formal, rule-based, obedient, focused
on efficiency
Organic organization– more informal, judgment-based,
decentralized, focused on adaptability
Differentiation:
High = high job specialization, high division of labor.
Integration: differentiated work units working together and
coordinating their efforts. Job activity and mechanisms that
link units.
Integration
In a complex, dynamic environment, a
company needs high differentiation and high
integration to be successful:
Specialize your efforts/skills
Divide work up
Integrate/communicate
Differentiation
Vertical: Authority within an organization, the board of
directors, the chief executive officer, and hierarchical
levels.
Horizontal: Issues of departmentalization that create
functional, divisional, and matrix organizations.
The Vertical Structure
Authority – the right to decide and tell others what to do.
Formal
Based on formal position
e.g., Board of directors, Chief executive officer, Top management team
Informal
Based on expertise, experience, or personal qualities
e.g., scientists, computer-savvy employees
Hierarchy
Three broad levels of the organizational pyramid
– Top management
– Middle management
– Operational management
Span of Control
Is the number of subordinates/direct reports
Optimal span of control—a balance:
– Narrow enough to maintain control
– Broad enough to avoid over-control
Too many managers, not enough subordinates
When to Prefer a Wide Span of Control
1.
2.
3.
4.
Work is clear and unambiguous
Subordinates are skilled and have information
Manager is capable and supportive
Jobs are similar and performance measures are
comparable
5. Subordinates prefer autonomy to close supervisory
control
So…a question:
A wide span of control builds what kind of
organization?
A) flat
B) narrow
C) tall
D) bureaucratic
E) formal
Delegation
Assigning new or additional responsibilities to a
subordinate.
A fundamental feature of management at all levels
So…a question. Is this delegation?
Call Tom Burton at Nittany Office Equipment. Ask
him to give you the price list on an upgrade for our
personal computers. Ask them to give the
department a demonstration. Have people try it out
then write up a summary of their needs and the
potential applications they see for the new systems.
Then write me a report with the costs and
specifications of the upgrade for the entire
department. Oh, and be sure to ask for information
on service costs.
Responsibility and Accountability
Responsibility: A person is assigned a task.
Accountability: The expectation that he or she
will perform the task, take corrective action
when necessary, and report on status and
quality.
Common Problems
Responsibility without authority
(subordinates)
Authority without accountability
(managers)
Why Should You Delegate Work?
• Leverage your energy and talent and those of your
subordinates
• Save your time
• Develop/teach subordinates
• Give subordinates more important work
• Help them gain new skills and demonstrate their potential
• If they feel they belong/matter, they’ll put more energy and
attention into their work and contribute more.
Centralized vs. Decentralized
Centralized: Executives make most decisions,
lower levels implement them.
Decentralized: Lower level managers make
important decisions.
Horizontal Structure
Line departments: the principal activities of the firm.
(e.g, production, delivery)
Staff departments: specialized or professional support
skills (e.g., accounting, HR)
Some basic organizational structures
1. Functional: organize by functional areas
2. Divisional: product, geographic, customer
3. Matrix: two bosses
4. Network: focus on collaboration
Functional Organizations
Departments specialize in activities (e.g., production, marketing,
human resources)
Advantages
Economies of scale
Common understanding
Specialized training and in-depth skill development
Simple, clear decision-making and lines of communication
Disadvantages
“Functional chimneys”
Know little about rest of organization
Functional differentiation but not functional integration
The Functional Organization
Divisional Organization
All functions in one division. Other divisions duplicate the functions.
Act almost as separate businesses or profit centers.
Can organize by products, customers, geography.
Matrix Organization
Dual reporting relationships:
Two bosses, e.g., a functional manger and a divisional manager.
Network Organization
Independent, mostly single-function firms collaborating on a
good or service.
A web of relationships among many firms.
Flexible arrangement among designers, suppliers, producers,
distributors, and customers in which each firm is able to
pursue its own distinctive core competence
Example: construction contractor with lots of sub-contractors
Network Example: One Laptop Per Child
(OLPC)
http://one.laptop.org/map
Attractive goal
Enlist students, high-tech firms, non-profits,
government in a network organization
Why do it this way?
Why participate?
Integrating any organization’s activities
Differentiation of jobs/tasks makes integration difficult
Units, people: all inter-dependent
Standardization: Common routines and procedures
(e.g., how to do the job)
Formalization: Rules and regulations governing how
people interact (e.g. attendance, dress, behavior)
Coordination by
Plan – common goals, deadlines, objectives
Mutual adjustment – interact, accommodate,
achieve flexible coordination
Deming’s 14 points of Quality
1. Create constancy of purpose
2. Adopt the new philosophy
3. Cease dependence on mass
inspection
4. End the practice of awarding
business on price tag alone
5. Improve constantly and
forever the system of
production and service
6. Institute training and
retraining
7. Institute leadership
8. Drive out fear
9. Break down barriers among
departments
10. Eliminate slogans,
exhortations, and arbitrary
targets
11. Eliminate numerical quotas
12. Remove barriers to pride in
workmanship
13. Institute a vigorous program
of education and retraining
14. Take action to accomplish
the transformation