Chapter 6: Organizing the Business Essay

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organizational structure
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specification of the jobs to be done within an organization and the ways in which they relate to one another
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organization chart
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diagram depicting a company’s structure and showing employees where they fit into its operations
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chain of command
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reporting relationships within a company
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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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departmentalization
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process of grouping jobs into logical units
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profit center
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separate company unit responsible for its own costs and profits
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product departmentalization
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dividing an organization according to specific products or services being created
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process departmentalization
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dividing an organization according to production processes used to create a good or service
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functional departmentalization
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dividing an organization according to groups’ functions or activities
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customer departmentalization
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dividing an organization to offer products and meet needs for identifiable customer groups
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geographic departmentalization
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dividing an organization according to the areas of the country or the world served by a business
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centralized organization
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organization in which most decision-making authority is held by upper-level management
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decentralized organization
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organization in which a great deal of decision-making authority is delegated to levels of management at points below the top
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flat organizational structure
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characteristic of decentralized companies with relatively few layers of management
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tall organizational structure
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characteristic of centralized companies with multiple layers of management
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span of control
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number of people supervised by one manager
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delegation
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process through which a manager allocates work to subordinates
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responsibility
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duty to perform an assigned task
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authority
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power to make the decisions necessary to complete a task
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accountability
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obligation employees have to their manager for the successful completion of an assigned task
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line authority
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organizational structure in which authority flows in a direct chain of command from the top of the company to the bottom
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line department
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department directly linked to the production and sales of a specific product
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staff authority
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authority based on expertise that usually involves counseling and advising line managers
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staff members
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advisers and counselors who help line departments in making decisions but who do not have the authority to make final decisions
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committee and team authority
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authority granted to committees or teams involved in a firm’s daily operations
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work team
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groups of operating employees who are empowered to plan and organized their own work and to perform that work with a minimum of supervision
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functional structure
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organization structure in which authority is determined by the relationships between group functions and activities
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divisional structure
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organizational structure in which corporate divisions operate as autonomous businesses under the larger corporate umbrella
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division
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department that resembles a separate business in that it produces and markets its own products
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matrix structure
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organizational structure created by superimposing one form of structure onto another
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International Organizational Structure
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approaches to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets
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Informal Organization
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network, unrelated to the firm’s formal authority structure, of everyday social interactions among company employees
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Grapevine
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informal communication network that runs through an organization
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Intrapreneuring
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process of creating and maintaining the innovation and flexibility of a small-business environment within the confines of a large organization

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