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Lecture : Organization.docx

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Dave Swanston

Organizing Organization Architecture Organization Architecture: totality of firm’s organization including formal organization structure, control systems, incentive systems, organization culture and people Organization Structure: location of decision making responsibilities in firm, the formal division of organization into subunits and establishment of integrating mechanisms to coordinate activities of subunits Controls: metrics used to measure performance of subunits and to judge how well managers are running those subunits Incentives: devices used to encourage desired employee behaviour Organizational culture: values and assumptions that are shared among employees of an organization People: employees of organization strategy used to recruit, compensate, motivate and retain those individuals, and type of people they are in terms of their skills, values, and orientation Designing Structure: Vertical Differentiation Vertical differentiation: location of decision making responsibilities within a structure Horizontal differentiation: formal division of organization into subunits Integrating Mechanisms: mechanisms for coordinating subunits Centralization and Decentralization Centralization: concentration of decision-making authority at high level in management hierarchy Decentralization: vesting decision making authority in lower level managers or other employees Arguments for Centralization • can facilitate coordination, help ensure decisions are consistent w/ organization objectives, avoid duplication of activities by various subunits within organization, concentrating power and authority in one individual or management team, centralization can give top level managers that means so bring about needed major organizational changes Arguments for Decentralization • top management can become overburdened when decision-making authority is centralized, centralization increases amt of info senior managers required to process – as a result info overload, managers might suffer constraints imposed by bounded rationality • motivational research favours decentralization – ppl more willing to give more to their jobs when they have greater degree of individual freedom and control over their work - more responsibility for jobs, will work harder and increase productivity and reduce costs • permits greater flexibility – more rapid response to environmental changes • can result in better decisions – decisions made closer to spot by individuals who have better info than managers several levels up in hierarchy. Decisions made my local marketing managers are more in tune than CEO w/ markets Autonomous Subunit: unit that has all resources and decision
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