BBA-PT XXXIV Business Management Chapter 8
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What does the organizational structure of a company define?

  • The hierarchy of management and their roles
  • The relationships between different departments
  • The responsibilities of each job position
  • All of the above (correct)

    • An organization chart illustrates the company's financial performance.

    False (B)

    What is the primary role of the President or CEO in an organization?

    The President or CEO is ultimately responsible for the success of the organization, coordinating all divisions and providing direction for the firm.

    The ______ ensures that managers make decisions to maximize the firm's value.

    <p>chain of command</p> Signup and view all the answers

    Match the following terms with their definitions:

    <p>Span of control = The number of employees managed directly by each manager Organizational height = The number of layers in an organization's hierarchy Line positions = Positions responsible for making decisions Staff positions = Positions supporting line positions with specialized expertise</p> Signup and view all the answers

    What is the difference between a tall and a flat organization?

    <p>Tall organizations have fewer layers of management. (C)</p> Signup and view all the answers

    A wide span of control indicates that managers supervise a large number of employees.

    <p>True (A)</p> Signup and view all the answers

    What are the two primary types of positions in an organizational structure?

    <p>Line positions and staff positions.</p> Signup and view all the answers

    The organizational structure can vary depending on the ______, ______, and ______.

    <p>span of control, organizational height, use of line positions versus staff positions</p> Signup and view all the answers

    Which of the following is NOT a responsibility of the Board of Directors?

    <p>Monitoring the daily operations of all departments within the organization. (C)</p> Signup and view all the answers

    Which of these is NOT a factor that influences the variation in organizational structure?

    <p>Employee motivation levels (C)</p> Signup and view all the answers

    A wide span of control means that a manager has many direct reports.

    <p>True (A)</p> Signup and view all the answers

    What is the main purpose of internal control systems and processes within an organization?

    <p>To ensure that employees are carrying out their responsibilities and tasks as intended.</p> Signup and view all the answers

    In a ______ organizational structure, decision-making authority is concentrated at the top levels of management.

    <p>centralized</p> Signup and view all the answers

    Which of the following is a potential drawback of a decentralized organizational structure?

    <p>Potential for inconsistent decision-making across different divisions. (C)</p> Signup and view all the answers

    The Board of Directors is primarily responsible for the day-to-day management of the firm's operations.

    <p>False (B)</p> Signup and view all the answers

    Explain the concept of accountability in an organizational structure.

    <p>Accountability refers to the responsibility and obligation that individuals and units within an organization have for their actions and performance outcomes.</p> Signup and view all the answers

    Frequent and accurate reporting of financial data is crucial for ______ within an organization.

    <p>accountability</p> Signup and view all the answers

    Conflicts of interest can arise within the Board of Directors, potentially influencing decisions away from what is best for the shareholders.

    <p>True (A)</p> Signup and view all the answers

    Which of the following is NOT an advantage of decentralization?

    <p>Increased bureaucracy (A)</p> Signup and view all the answers

    Decentralization is often found in organizations with diverse product lines.

    <p>True (A)</p> Signup and view all the answers

    What is one way decentralization can encourage innovation?

    <p>By giving employees more autonomy and responsibility, decentralization allows for more creative problem-solving and the development of new ideas.</p> Signup and view all the answers

    Decentralization can lead to a ______ in the workload for top management.

    <p>reduction</p> Signup and view all the answers

    Match the following disadvantages of decentralization with their descriptions:

    <p>Lack of Coordination = Different units may work independently, leading to inconsistent efforts and missed opportunities. Duplication of Efforts = Similar tasks may be performed by multiple units, resulting in wasted resources. Uneven Decision Quality = Decision-making quality can vary across different units, leading to inconsistencies.</p> Signup and view all the answers

    The relationship between the organizational structure and employee input is critical to ensuring an efficient, motivated, and ______ workforce.

    <p>collaborative</p> Signup and view all the answers

    What is a common outcome of downsizing?

    <p>Flatter organizational structure (D)</p> Signup and view all the answers

    A matrix organization is an example of an informal structure.

    <p>False (B)</p> Signup and view all the answers

    Downsizing always results in improved efficiency.

    <p>False (B)</p> Signup and view all the answers

    What is the key difference between formal and informal structures within an organization?

    <p>Formal structures are defined by official roles, responsibilities, and hierarchies, while informal structures are based on personal connections and interactions.</p> Signup and view all the answers

    How can downsizing lead to decentralization?

    <p>Downsizing often involves eliminating managerial roles and delegating their responsibilities to remaining employees, which can increase autonomy and decision-making power at lower levels.</p> Signup and view all the answers

    Which of the following is NOT a benefit of an informal structure?

    <p>Guaranteed accuracy of information (D)</p> Signup and view all the answers

    Downsizing can result in an ______ in the span of control for managers.

    <p>increase</p> Signup and view all the answers

    What is Intrapreneurship?

    <p>Intrapreneurship refers to the practice of encouraging employees to take initiative and develop new ideas or solutions within an organization.</p> Signup and view all the answers

    Which organizational structure features a direct chain of command with specialized staff roles?

    <p>Line and staff organization (C)</p> Signup and view all the answers

    Which of the following is a potential disadvantage of the grapevine?

    <p>Spread of inaccurate information (D)</p> Signup and view all the answers

    Departmentalizing aims to increase inefficiency and disorganization within an organization.

    <p>False (B)</p> Signup and view all the answers

    How can informal structures encourage intrapreneurship?

    <p>Informal structures provide a platform for employees to share ideas, brainstorm, and collaborate, which can lead to innovation and the development of new solutions.</p> Signup and view all the answers

    The ______ refers to the process of dividing an organization into distinct units or departments.

    <p>Departmentalizing</p> Signup and view all the answers

    Flashcards

    Organizational Structure

    Defines job responsibilities and relationships within an organization.

    Accountability

    Responsibility for the outcomes of roles and the work performed.

    Organization Chart

    A visual representation of an organization’s structure and chain of command.

    Chain of Command

    Formal line of authority and reporting relationships in an organization.

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    Span of Control

    Number of direct reports managed by a supervisor.

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    Organizational Height

    Number of layers or levels in an organization’s hierarchy.

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    Line Positions

    Roles that have the authority to make decisions and manage operations.

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    Staff Positions

    Roles that support line positions with advisory functions.

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    Departmentalizing

    The way an organization groups its various job positions.

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    Ultimate Responsibility

    Refers to the CEO's accountability for the overall success of the firm.

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    Narrow Span of Control

    A management structure with few subordinates per manager.

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    Wide Span of Control

    A management style where a manager oversees many subordinates.

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    Board of Directors

    Executives responsible for overseeing a firm's management and activities.

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    Role of Board

    Focuses on major decisions rather than day-to-day operations.

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    Conflicts of Interest

    Situations preventing board members from acting in shareholders' best interests.

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    Accountability in Management

    An organizational need ensuring responsibility at all managerial levels.

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    Centralization

    A structure where authority is concentrated with high-level managers.

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    Decentralization

    Spreading authority among various divisions or managers.

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    Internal Control Systems

    Processes to ensure employees perform their duties correctly.

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    Frequent Reporting

    Regular updates on financial data for performance monitoring.

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    Advantages of Decentralization

    Benefits like improved decision-making, faster responses, and enhanced motivation due to autonomy.

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    Improved Decision-Making

    Decentralization leads to faster and more relevant decisions at local levels.

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    Faster Response to Changes

    Decentralized organizations can adapt quickly to local market dynamics.

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    Enhanced Motivation and Job Satisfaction

    Employees feel more valued and engaged when they are involved in decision-making.

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    Disadvantages of Decentralization

    Challenges including lack of coordination, uneven decision quality, and higher costs.

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    Duplication Efforts

    When tasks are unnecessarily repeated across different parts of an organization due to decentralization.

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    Loss of Control for Top Management

    Decreased oversight as decision-making is pushed down the hierarchy.

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    Downsizing

    The process of reducing job positions to cut expenses, often linked with decentralization.

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    Line and Staff Organization

    An organizational structure combining direct command with specialized staff support.

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    Employee Input

    The involvement of employees in decision-making and problem-solving.

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    Matrix Organization

    A structure that creates a dual authority system for employees.

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    Informal Structure

    The unspoken, social networks that influence interactions among employees.

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    Intrapreneurship

    Encouraging entrepreneurial behavior within a company by employees.

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    Benefits of Informal Structure

    Advantages include increased communication and job satisfaction.

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    Drawbacks of Grapevine

    Can spread incorrect or unfavorable information among employees.

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    Collaboration

    Employees working together towards common goals.

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    Innovation Environment

    A culture that fosters new ideas and creativity in the workplace.

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    Study Notes

    BBA-PT XXXIV Business Management

    • Course: Introduction to Business (4th edition)
    • Instructor: Milaika Capella Ras, MBA
    • Session: 4, February 3, 2024
    • Course offered at: Inter-Continental University of the Caribbean
    • Accreditation: ACBSP (Accredited)
    • Textbooks: Jeff Madura

    Chapter 8: Prepare for the Road Ahead - Organizational Structure

    • Outline of Chapter 8: Organizational structure, Accountability, Distributing authority, Other structures, Departmentalizing
    • Organizational Structure: Allocation of employees to various job tasks, firm's expenses, firm's earnings, and firm's value.
    • Organizational Structure - 1: Identifies responsibilities for each job position, relationships among these positions and how employees recognize the work performed by other positions. Illustrated using an organization chart to show the chain of command.
    • Organization Chart Example: Shows a hierarchy with the Board of Directors at the top, followed by the President, Chief Financial Officer, Vice-Presidents (Marketing and Operations), various managers, and employees (Accountants, Sales Reps, Advertising Assistants, Assembly Line Workers, Warehouse Workers).
    • Chain of Command: Key roles: President (or CEO) has ultimate responsibility for success; Attempts to coordinate all divisions and provides direction for the firm. Vice-Presidents normally oversee specific divisions and report to the president. The chain ensures that managers make decisions to maximize the firm's value rather than serving their own interests.
    • Organizational Structure - 2: Organizational structure variations among organizations depending on: Span of control: Number of employees directly managed by a manager. Narrow spans have fewer employees reporting to a manager than wide spans. Organizational height: Tall organizations have many layers while short (or flat) organizations have fewer layers. Use of line positions (established to make decisions) versus staff positions (established to support the line positions).
    • Span of Control: Number of employees managed directly by each manager. Narrow spans have fewer employees reporting, whereas wide spans have more.
    • Organizational Height: Tall organizations have many layers; short (or flat) organizations have few layers.
    • Narrow vs Wide Span of Control: Visual examples showcasing the different structures (President, Vice-President, Managers and employees).
    • Board of Directors: A set of executives responsible for monitoring the activities of the firm's president and other high-level managers.
    • Board of Directors - 2: Boards focus on major issues rather than day-to-day activities: Approve key business proposals (mergers, acquisitions). Can initiate changes in the firm (replacing CEO, restructuring). Conflicts of interest prevent board members from making decisions best for shareholders.
    • Accountability: Ensures accountability at all levels, including high-level managers, by using internal control systems and processes to ensure employees are doing their job; frequent and accurate reporting of financial data is also necessary.
    • Distribution of Authority:
      • Centralization: Most authority held by high-level managers; middle and supervisory managers do not make many decisions.
      • Decentralization: Authority spread among several divisions or managers, enabling autonomous divisions.
    • Advantages of Decentralization: Improved decision-making, faster response to changes, enhanced motivation and job satisfaction, reduced workload for top management, encouragement of innovation, better use of local expertise, development of managerial skills, improved customer service, and increased flexibility.
    • Disadvantages of Decentralization: Lack of coordination, duplication of effort, uneven decision quality, loss of control for top management, higher costs, difficulty maintaining uniformity, risk of suboptimization, challenges in accountability, potential conflicts, limited perspective at lower levels, difficulty in implementing changes, and risk of misaligned decisions.
    • Downsizing and decentralization: Companies cut expenses by eliminating job positions, which leads to flatter organizational charts with fewer managers; Resultant managerial tasks delegated to other employees (decentralization) increases manager's span of control.
    • Organizational Structures: Line organization (President, CFO, VPs, Managers, and employees); Line-and-staff organization (President, Directors, VPs, Managers, and employees); other relevant examples (Matrix).
    • Types of Organizational Structures: Line and Line-Staff Organizations. Comparison between Line and Line-Staff Organizations: Aspects (Structure, Decision-Making, Specialization, Flexibility, and Cost); Line Organization: Simple and direct chain of command, Decision-making is centralized in line managers, Limited specialization, Low flexibility, and lower costs; Line-Staff Organization: Chain of command with added staff roles, Line managers make decisions with staff input, High specialization in staff positions, High flexibility, and higher costs.
    • Structure and Employee Input: How the organization's structure impacts employee involvement; focus on decision-making, problem-solving, and overall contribution to the business. The relationship between structure and employee input is critical for efficient, motivated, and collaborative workforce.
    • Example of a matrix organization: Shows a chart with President and multiple Vice-Presidents of finance, marketing, and operations with financial managers, Salespeople, and Production Workers on a similar level; Each level of managers and workers has a representative for each function.
    • Structure and Employee Input - 2: Informal Structure: Network of relationships and communication among employees naturally; Shaped by personal connections rather than formal roles. Includes informal interactions.
    • Structure and Employee Input - 3: Intrapreneurship: Practice of fostering entrepreneurial behaviors (innovation, creativity) within the organizational structure. How employees take initiative to develop new products, processes, or solutions for the organization.
    • Connection Between Informal Structure and Intrapreneurship: Informal structure encourages informal intrapreneurship by creating an atmosphere that allows comfortable sharing of ideas and collaboration across departments, informal networks.
    • Grapevine: Informal communication network among employees: Advantages (increase job satisfaction from top to bottom); Disadvantages (incorrect or unfavorable information, affecting employee morale)
    • Departmentalizing: Process of dividing an organization into distinct units or departments responsible for specific tasks to streamline operations, improve efficiency, and ensure accountability. Examples: By function, product, geographic location, customer, process.

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    This quiz covers Chapter 8 of the Introduction to Business course, focusing on organizational structure. You'll explore key concepts such as accountability, distribution of authority, and departmentalizing within a business context. Test your understanding of how organizational charts illustrate the chain of command and employee responsibilities.

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