11 14 13 Chapter 8 Notes Structuring Organizing for Today s Challenges Economics of scale the situation in which companies can reduce their production costs is they can purchase raw materials in bulk the average cost of goods goes down a production levels increase Henry Fayol s principles o Unity of control each worker reports to only one boss o Hierarchy of authorities all workers should know to whom they report o Division of labor functions are to be divided into areas of specialization o Subordination of individual interest to the general interest workers are to think of themselves as a coordinated team o Authority managers have the right to give orders and the power to enforce o Degree of centralization amount of decision making power in top management o Clear communication channels all workers should be able to reach others in the obedience should vary by circumstances firm quickly and easily o Order materials and people should be placed and maintained in the proper o Equity manager should treat employees and peers with respect and justice o Esprit de corps spirit of pride and loyalty should be created among people in the location firm Max Weber and organizational theory Emphasized o Job descriptions o Written rules decision guidelines and detailed records o Consistent procedures regulations and policies o Staffing and promotion based on qualifications Hierarchy system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person Chain of command the line of authority that moves from the top of a hierarchy to the lowest level Bureaucracy an organization with many layers of managers who set rules and regulations and oversee all decision Structuring Organizations Centralized authority organization structure in which decision making authority is maintained at the top level of management o Avantages Greater top management control More efficient Simpler distribution system Stronger brand corporate image o Disadvantage Less responsiveness to customers Less empowerment Lower morale away from headquarters Interorganizational conflict Decentralized an organization structure in which decision making authority is delegated to lower level managers more familiar with local conditions than headquarters management could be o Advantages Better adaptation to customer wants More empowerment of workers Faster decision making Higher morale o Disadvantages Less efficiency Complex distribution system less top management control Weakened corporate image Tall organization structure organization structure in which the pyramidal organization chart would be quite tall because of the various levels of management o Advantages Flat organization structure organization structure that has few layers of More control by top management More chances for advancement Greater specialization Closer supervision o Disadvantages Less empowerment Higher costs Delayed decision making Less responsiveness to customers management and a broad span of control o Advantages Reduced costs More responsiveness to customers Faster decision making More empowerment o Disadvantages Fewer chances for advancement Overworked managers Loss of control Less management expertise Departmentalism dividing organizational functions into spate units Advantages o Employees can develop skills in depth and progress within a department as they master more skills o The company can achieve economies of scale by centralizing all the resources it needs and locate various experts in that area o Employees can coordinate work within the function and top management can easily direct and control various departments activities Disadvantages organizations o Departments nay not communicate well o Employees may identify with their departments goals rather than the o The company s response to external changes may be slow o People may not be trained to take different managerial responsibilities rather they tend to become narrow specialties o Department member may engage in groupthink and may need input from outside to become more creative Organizational Models Line organization organization that has direct two way lines of responsibility authority and communication running from the top to the bottom of the organization with all people reporting to only one supervisor o Line personnel employees who are part of the chain of command that is responsible for achieving organizational goals o Staff personal employees who advise and assist line personnel in meeting their goals Matrix organization organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line an staff structure o Advantages flexibility encourages teamwork produces creative solutions to problems makes efficient use of organizational resources o Disadvantages costly and complex confuses employees requires good interpersonal skills to avoid communication problems may only be temporary solution to a long term problem Cross functional self managed teams groups of employees from different departments who work together on a long tem basis Self managed empowered to make decisions without management Managing Interactions Among Firms Networking using communications technology and other means to link organizations and allow them to work together on common objectives Real time present moment or the actual time in which something takes place Virtual corporation temporary networked organization made up of replaceable firms that join and leave as needed Benchmarking comparing an organizations practices processes and products Core competencies functions that the organization can do as well as or better than Digital natives young people who have grown up using the internet and social against the worlds best any other organization networking Restructuring redesigning an organization so that it can more effectively and efficiently serve its customers Inverted organization organization that has contact people at the top and the chief executive officer at the bottom of the organization chart Organizational or corporate culture widely shared values within an organization that provide unity and cooperation to achieve common goals Formal organization structure that details lines of responsibility authority and position that is the structure shown on organization charts Informal organization the system that develops spontaneously as
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