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organizational structure

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*the specification of the jobs to be done within a business and how those jobs relate to one another* - every institution must develop the most appropriate structure for its own unique situation

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organization chart

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a physical depiction of the company's structure showing employee titles and their relationship to one another

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chain of command

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reporting relationships within a business; the flow of decision making power in a firm

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The first step in developing the structure of any business is:

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specialization and departmentalization

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specialization vs. departmentalization

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*specialization* - determining who will do what *departmentalization* - the process of grouping jobs into logical units; determining how people performing certain tasks can be best grouped together - these two tasks are the basic building blocks of all business organization

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job specialization

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the process of *identifying the specific jobs that need to be done* and *designating the people* who will perform them

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Advantages to job specialization (3)

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- individual jobs can be performed *more efficiently* - jobs are *easier to learn* - *easier to replace* people who leave the organization

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Disadvantages to job specialization

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- if it is carried out too far and jobs become too narrowly defined, people get bored; derive less satisfaction from their jobs and often lose sight of how their contributions fit into the overall organization

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profit centre

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a separate company unit responsible for its own costs and profits

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decision making hierarchy

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- managers must explicitly define reporting relationships among positions so that everyone will know who has responsibility for various decisions and operations - goal = figure out how to structure and stabilize the organizational framework so that everyone works together to achieve common goals

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3-step process of decision making hierarchy

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*1. Assigning tasks* - determining who can make decisions and specifying how they should be made *2. Performing tasks* - implementing decisions that have been made *3. Distributing authority* - determining whether the organization is to be centralized or decentralized

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responsibility vs. authority

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*responsibility* - the duty to perform an assigned task *authority* - the power to make the decisions necessary to complete a task

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delegation vs. accountability

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*delegation* - assignment of a task, a responsibility or authority by a manager to a subordinate *accountability* - liability of subordinates for accomplishing tasks assigned by managers

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4 things to keep in mind when delegating

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1. *Decide* on the nature of the work to be done 2. *Match the job* with the skills of subordinates 3. Make sure the person chosen *understands the objectives* he/she is supposed to achieve 4. Make sure subordinates have the *time and training* necessary to do the task

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centralized organization vs decentralized organization

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*centralized org.* - top managers retain most decision-making rights for themselves i.e., McDonalds *decentralized org.* - lower- and middle- are allowed to make significant decisions - purpose: make company more responsive to its environment by breaking the company into more manageable units and giving those units more autonomy

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tall vs flat organizational structure

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*tall organizational structure* - an organization with relatively few layers of management - centralized org. tend to be tall *flat organizational structure* - an org. with many layers of management - decentralized org. tend to be flat

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span of control

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*the number of people managed by one manager* - employees' abilities and the supervisor's managerial skills help determine whether span of control is wide or narrow

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downsizing

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the planned reduction in the scope of org's activity

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4 basic organizational structures

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- functional - divisional - project - international

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functional structure

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various units are included in a group based on functions that need to be performed for the organization to reach its goals

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Advantages of a Functional structure

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- focuses attn on the key activities that must be performed - expertise develops within each function - employees have clearly defined career paths - the structure is simple and easy to understand - it eliminates duplication of activities

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Disadvantages of functional structure

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- conflicts may arise among the functional areas - no single function is responsible for overall organizational performance - employees in each functional area have a narrow view of the org - decision-making is slowed because functional areas must get approval from top management for a variety of decisions - coordinating highly specialized functions may be difficult

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divisional structure

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divides the organization in division, each of which operates as a semi-autonomous unit

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Advantages of divisional structure

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- it accommodates change and expansion - increases accountability - develops expertise in the various divisions - encourages training for top management

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Disadvantages of divisional structure

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- activities may be duplicated across divisions - a lack of communication among divisions may occur - adding diverse divisions may blur the focus of the organization - company politics may affect the allocation of resources

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project organization

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an org. that uses teams of specialists to complete specific projects - can be temporary or permanent - used extensively in Canadian firms (construction etc.); also used in other kinds of tasks including military, weapons, aerospace, and health-care delivery

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organizational design for the 21st century (unique to modern times)

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- *team organization* - relies almost exclusively on project-type teams with little or no underlying functional hierarchy; allows each unit to change direction, explore new ideas, and try new methods without having to deal with a rigid bureaucratic superstructure - *virtual organization* - little or no structure; only a handful of permanent employees, a very small staff and a modest administrative facility; managers bring in temp workers, lease facilities and outsource basic support services to meet demands of situation

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formal vs informal organization

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*formal* - part that can be seen and represented in a chart *informal organization* - a network of personal interactions and relationships among employees unrelated to the firm's formal authority structure

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grapevine

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an informal communications network that carries gossip and other information throughout an organization

CHAPTER 8 – Organizing the Business Enterprise – Flashcards

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