Business Essentials: Organizing the Business PDF

Business Essentials Twelfth Edition, Global Edition Chapter 6 Organizing the Business Copyright ©...

Business Essentials Twelfth Edition, Global Edition Chapter 6 Organizing the Business Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Introduction In this chapter we – examine factors that influence a firm’s organizational structure. – discuss the building blocks of organizational structure as well as the differences between decision making in different types of organizations. – look at a variety of organizational structures. – describe the most popular new forms of organizational design. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Learning Objectives (1 of 2) 1. Discuss the factors that influence a firm’s organizational structure. 2. Explain specialization and departmentalization as two of the building blocks of organizational structure. 3. Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Learning Objectives (2 of 2) 4. Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 5. Describe the informal organization and discuss intrapreneuring. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. What Is Organizational Structure? Organizational Structure – specification of the jobs to be done within an organization and the ways in which they relate to one another. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Organization Charts Organization Chart – diagram depicting a company’s structure and showing employees where they fit into its operations. Chain of Command – reporting relationships within a company. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. The Organization Chart Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Determinants of Organizational Structure Mission Strategy Size Internal environment External environment Copyright © 2019 Pearson Education Ltd. All Rights Reserved. The Building Blocks of Organizational Structure Specialization – determining who will do what. Departmentalization – determining how people performing certain tasks can best be grouped together. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Specialization Job Specialization – the process of identifying the specific jobs that need to be done and designating the people who will perform them. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Departmentalization (1 of 3) Departmentalization Profit Center – process of grouping – separate company unit jobs into logical units. responsible for its own – product, process, costs and profits. functional, customer, geographic. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Departmentalization (2 of 3) Functional Departmentalization – dividing an organization according to groups’ functions or activities. Product Departmentalization – dividing an organization according to specific products or services being created. Process Departmentalization – dividing an organization according to production processes used to create a good or service. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Departmentalization (3 of 3) Customer Departmentalization – dividing an organization to offer products and meet needs for identifiable customer groups. Geographic Departmentalization – dividing an organization according to the areas of the country or the world served by a business. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Multiple Forms of Departmentalization Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Distributing Authority (Decision-Making Hierarchy): Centralization and Decentralization Establishment of a Decision-Making Hierarchy – deciding who will be empowered to make which decisions and who will have authority over others. Centralized Organization – organization in which most decision-making authority is held by upper-level management. Decentralized Organization – organization in which a great deal of decision-making authority is delegated to levels of management at points below the top. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Flat and Tall Organizations (1 of 3) Flat Organizational Structure – characteristic of decentralized companies with relatively few layers of management. Tall Organizational Structure – characteristic of centralized companies with multiple layers of management. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Flat and Tall Organizations (2 of 3) Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Flat and Tall Organizations (3 of 3) Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Span of Control The distribution of authority in an organization also affects the number of people who work for any individual manager. Span of Control – number of people supervised by one manager. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. The Delegation Process Delegation – process through which a manager allocates work to subordinates. 1. Assigning responsibility - the duty to perform an assigned task. 2. Granting authority - the power to make the decisions necessary to complete the task. 3. Creating accountability - the obligation employees have for the successful completion of the task. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Learning to Delegate Effectively Table 6.1 Learning to Delegate Effectively I’m afraid to delegate because... Solution My team doesn’t know how to get the job If members of your team are exhibiting opportunities done. for improved performance, offer them the training necessary for them to become more effective at their jobs. I like controlling as many things as Recognize that trying to accomplish everything possible. yourself while your team does nothing only sets you up for burnout and failure. As you begin to relinquish control, you will come to trust your team more as you watch your team members succeed. I don’t want anyone on my team High-performing team members are a reflection of outperforming me. your success as a manager. Encourage them to excel, praise them for it, and share the success of your team with the rest of the organization. I don’t know how to delegate tasks Consider taking a management training course or effectively. reading some books on the topic of delegating effectively. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Forms of Authority (1 of 2) Line Authority – organizational structure in which authority flows in a direct chain of command from the top of the company to the bottom. Staff Authority – authority based on expertise that usually involves counseling and advising line managers. – Staff Members is advisers and counselors who help line departments in making decisions but who do not have the authority to make final decisions. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Forms of Authority (2 of 2) Committee and Team Authority – authority granted to committees or teams involved in a firm’s daily operations. – Work Team is a group of operating employees who are empowered to plan and organize their own work and to perform that work with a minimum of supervision. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Line and Staff Organization Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Basic Forms of Organizational Structure (1 of 4) Four basic forms of organizational structure reflect the general trends followed by most firms: functional, divisional, matrix, and international. Functional Structure – organization structure in which authority is determined by the relationships between group functions and activities. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Functional Structure Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Basic Forms of Organizational Structure (2 of 4) Divisional Structure – organizational structure in which corporate divisions operate as autonomous businesses under the larger corporate umbrella. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Divisional Structure Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Basic Forms of Organizational Structure (3 of 4) Matrix Structure – organizational structure created by superimposing one form of structure onto another. In some companies, the matrix organization is a temporary measure installed to complete a specific project and affecting only one part of the firm. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Matrix Structure Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Basic Forms of Organizational Structure (4 of 4) International Organizational Structures – approaches to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. International Organizational Structure Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Organizational Design for the Twenty-First Century (1 of 2) Team organization – relies almost exclusively on project-type teams, with little or no underlying functional hierarchy. Learning organization – works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Organizational Design for the Twenty-First Century (2 of 2) Virtual organization – has little or no formal structure. – has only a handful of permanent employees, a very small staff, and a modest administrative facility. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. The Virtual Organization Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Informal Organization Informal Organization – network, unrelated to the firm’s formal authority structure, of everyday social interactions among company employees. Informal groups – groups of people who decide to interact among themselves. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Organizational Grapevine Grapevine – informal communication network that runs through an organization. By maintaining open channels of communication and responding vigorously to inaccurate information, managers can minimize the damage the grapevine can cause. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Intrapreneuring Intrapreneuring – process of creating and maintaining the innovation and flexibility of a small-business environment within the confines of a large organization. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Applying What You’ve Learned (1 of 2) 1. Discuss the factors that influence a firm’s organizational structure. 2. Explain specialization and departmentalization as two of the building blocks of organizational structure. 3. Describe centralization and decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Applying What You’ve Learned (2 of 2) 4. Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. 5. Describe the informal organization and discuss intrapreneuring. Copyright © 2019 Pearson Education Ltd. All Rights Reserved. Copyright Copyright © 2019 Pearson Education Ltd. All Rights Reserved.