Transcript Business Essentials, 7th Edition Ebert/Griffin

6
chapter
Organizing for the Business
Business Essentials, 7th Edition
Ebert/Griffin
Instructor Lecture PowerPoints
PowerPoint Presentation prepared by
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Carol Vollmer Pope Alverno College
What Is Organizational Structure?
• Organizational Structure
– The specification of the jobs to be done
within an organization and the ways in
which those jobs relate to one another
• Organizational Charts
– Clarify structure and show employees
where they fit into a firm’s operations
– Show the chain of command, or reporting
relationships, within a company
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FIGURE 6.1 The Organizational Chart
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Determinants of Organizational Structure
Mission
Strategy
Size
Internal Environment
External Environment
Organizational structure is usually quite fluid!
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The Building Blocks of Organizational Structure
• Specialization
– Division of work: job specialization
• Departmentalization
– Product, process, functional, customer, or geographic
• Establishment of a decision-making hierarchy
– Distributing authority:
• Delegation: assigning tasks
• Centralization: upper management retains authority
• Decentralization: lower-level managers make decisions
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Planning Departments
• Once jobs have been specialized, they need to be
grouped into logical units.
– This is called departmentalization.
– Here are some areas of departmentalization:
•
•
•
•
•
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Product departmentalization
Process departmentalization
Functional departmentalization
Customer departmentalization
Geographic departmentalization
Multi forms (combinations) of departmentalization
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FIGURE 6.2 Multiple Forms of
Departmentalization
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Establishing the Decision-Making Hierarchy
Centralized Organization
Top managers hold most
decision-making authority
Decentralized Organization
Lower-level managers hold
significant decision-making
authority
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Tall and Flat Organizations
• Flat Organizational Structure
– Common in decentralized organizations
– Fewer layers of management
– Rapid communication
– Wide spans of control
• Tall Organizational Structure
– Common in centralized organizations
– Multiple layers of management
– Slower communication
– Narrower spans of control
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Figure 6.3 Organizational Structure and
Span of Control
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The Delegation Process
• Delegation
– The process through which a manager allocates
work to subordinates
• Delegation Entails:
– Assignment of responsibility—the duty to
perform an assigned task
– Granting of authority—the power to make
decisions necessary to complete the task
– Creation of accountability—the obligation of
employees to successfully complete the task
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Why Managers Won’t Delegate
• The fear that subordinates don’t really know
how to do the job
• The desire to keep as much control as possible
over how things are done
• The fear that a subordinate might “show the
manager up” in front of others by doing a
superb job
• A simple lack of ability as to how to effectively
delegate to others
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Forms of Authority
• Line Authority
– The type of operational authority that flows up
and down the chain of command
• Staff Authority
– Authority based on special expertise and usually
involves counseling and advising line managers
• Committee and Team Authority
– Authority granted to committees or work teams
that play central roles in the firm’s daily
operations
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Figure 6.4 Line and Staff Organization
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Forms of Organizational Structure
• Functional Structure
– Form of business organization in which authority
is determined by the relationships between group
functions and activities
– Used by most small- to medium-sized firms
structured around basic business functions
(marketing, operations, finance)
– Advantages:
• Specialization and smoother internal coordination
– Disadvantages:
• Centralization, poor cross-functional coordination, and
lack of accountability
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Figure 6.5 Functional Structure
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Forms of Organizational Structure (cont’d)
• Divisional Structure
– Based on departmentalization by product, with each
division managed as a separate enterprise
– Organizations using this approach are typically
structured around several divisions—departments
that resemble separate businesses in that they
produce and market their own products
– Advantages:
• Increased product-focus and internal coordination
– Disadvantages:
• Duplication of efforts and competition between
divisions
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Figure 6.6 Divisional Structure
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Forms of Organizational Structure (cont’d)
• Matrix Structure
– Organized along two dimensions, instead of just
one, by combining, for example, functional and
divisional structures
– Advantages:
• Highly flexible, focused on a single problem, access to
resources and expertise
– Disadvantages:
• Loss of command and control, lack of accountability,
impermanent existence
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FIGURE 6.7 Matrix Organization at
Martha Stewart’s Omnimedia
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Forms of Organizational Structure (cont’d)
• International Structures
– Developed in response to the need to manufacture,
purchase, and sell in global markets
– Department, division, or geographic
• Global Structure
– Acquiring resources (including capital), producing goods
and services, engaging in research and development, and
selling products in whatever local market is appropriate,
without any consideration of national boundaries
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FIGURE 6.8 International Division Structure
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Organizational Design for the 21st Century
• Team Organization
– Relies almost exclusively on project-type teams, with little
or no underlying functional hierarchy
• Virtual Organization
– Has little or no formal structure, few permanent
employees, a very small staff, and a modest administrative
facility
• Learning Organization
– Integrates continuous improvement and employee
learning and development while transforming itself to
respond to changing demands and needs
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FIGURE 6.9 The Virtual Organization
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Informal Organization
• Informal Organization
– Everyday social interactions among employees
that transcend formal jobs and job
interrelationships
– Advantages:
• May reinforce the formal organization
– Disadvantages:
• Can reinforce office politics that put the interests of
individuals ahead of those of the firm
• May communicate distorted or inaccurate information
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Informal Organization (cont’d)
• Informal Groups
– Groups of people who decide to interact among
themselves, sometimes about business
• Organizational Grapevine
– The informal communication network that runs
throughout the organization
• Intrapreneuring
– Creating and maintaining the innovation and flexibility of a
small-business environment within the confines of a large,
bureaucratic structure
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