Economies of scale The situation in which companies can reduce their production costs if they can purchase raw materials in bulk the average cost of cid 127 Organizing a business consists of devision of labor sometimes leading to specialization setting up teams or departments to do specific tasks i e accounting production assigning responsibility and authority to people allocating resources funds to different departments assigning specific tasks establishing procedures for accomplishing the organizational objectives goods goes down as production levels increase Fayol s Principles of Organization Unity of command each worker reports to one boss of authority all workers should know to whom they report Division of labor Subordination of individual interests to the general interests workers to think of themselves as a team Authority Managers have the right to give orders Degree of centralization The amount of decision making power vested in top management is contextual Clear communication channels cid 127 Order Equity A manager should treat employees and peers with respect and justice Esprit de corps a spirit of pride and loyalty among people in the firm cid 127 Max Weber emphasized Fayol s rules in addition to Job descriptions written rules decision guidelines and detailed records Consistent procedures regulations and policies Staffing and promotion based on qualifications responsible to that person Decisions to make in structuring organizations Centralizations versus decentralization conditions than headquarters management could be see chart on pg 211 for strengths weaknesses Span of control Hierarchy A 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 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 to oversee all decisions Centralized authority An organization structure in which decision making authority is maintained at the top level of management Decentralized authority An organization structure in which decision making authority is delegated to lower level managers more familiar with local Span of control The optimal number of subordinates a manger supervises or should supervise trend reuse the number of middle managers hire more talented and better educated lower level employees Tall versus flat organization structures management Departmentalization Tall organization structure An organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of Flat organization structure An organization structure that has few layers of management and a broad span of control Departmentalization The dividing of organizational functions into separate units traditionally by function pg 214 alternatives by customers group geographic location function process or a combination hybrid of a few Organizational models organization with all people reporting to only one supervisor no specialists follow all of Fayol s traditional management rules inflexible Line and staff organizations minimize the disadvantages of simple line organizations to have Line organization An organization that has direct two way lines of responsibility authority and communication running from the top to the bottom of the Line personnel Employees who are part of the chain of command that is responsible for achieving organizational goals Staff personnel Employees who advise and assist line personnel in meeting their goals cid 127 Matrix organizations An 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 and staff structure Cross functional self managed teams Groups of employees from different departments who irk to ether on a long term basis as opposed to the temporary teams of matrix organizations Managing the interactions among firms cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 cid 127 Networking Using communications technology and other means to link organizations and allow them to work together on common objectives Transparency and Virtual organizations Networked organizations are so closely linked by the Internet that each can find out what the others are doing in real time Real time The present moment or the actual time in which something takes place Transparency occurs when a company is so open to other companies that electronic information is shared as if the companies were on results Virtual corporation A temporary networked organization made up of replaceable firms that join and leave as needed Benchmarking Comparing an organization s practices processes and products against the world s best Core competencies Those functions that the organization can do as well as or better than any other organization in the world Adapting to Change Restructuring for empowerment Digital natives Young people who have grown up using the internet and social networking Restructuring Redesigning an organization so that it can more effectively and efficiently serve its customers Inverted organization An organization that has contact people at the top and the chief executive officer at the bottom of the organization chart THE SECRET TO SUCCESSFUL ORGANIZATIONAL CHANGE IS TO FOCUS ON CUSTOMERS AND GIVE THEM WHAT THEY WANT To have the company and the employees to have the same overall goals adapt or parish cid 127 Organizational corporate culture Widely shared values within an organization that provide unity and cooperation to achieve common goals Formal organization The 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 employees meet and form cliques relationships and lines of authority outside of the formal organization the human side of an organization the grapevine learning to create the right corporate culture and work within the informal organization is a key to managerial success cid 127 cid 127 cid 127 cid 127
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