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Chapter 8 Organizing the Business Structure.docx

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 8 Organizing the Business Structure  All business have common structural and operating components  Organizational structure: specification of the jobs to be done within a business and how these jobs related to one another  They may look different, but each has all basic components Chain of Command  Organization chart: a physical depiction of the company’s structure showing employee titles and their relationship to one another  Chain of command: reporting relationships within business; the flow of decision making power in a firm Building Blocks of Organizational Structure Specialization  Job specialization: the process of identifying the specific jobs that need to be done and designating the people who will perform them  Broken into small components and each component is assigned  Specialization and growth o In small firms, one person can perform all the jobs o As firm grows, the need of specialize jobs increases o Natural part of organizational growth  More efficient, jobs are easier to learn, easier to replace people who leave the organization  If job specialization is too narrowly defined: o People get bored o Less satisfaction o Lose sight of how their contributions fit into overall organization Departmentalization  Departmentalization: process of grouping jobs into logical units  Benefit from division of activities  Control and coordination are narrowed and made easier  Top managers can more easily see how various units are performing  Profit center: separate unit responsible for its own costs and profits o By assessing such profits, we can decide expand or curtail  Group according some common thread or purpose o Functional o Customer o Product o Geographic o Process line  Entrepreneur less specialization and departmentalization Establishing the Decision-Making Hierarchy  To define the reporting relationships among positions so everyone know who has responsibility for various decisions and operations  To figure out how to structure and stabilize the organizational framework so that everyone works together to achieve a common goal Assigning Tasks  Determining who can male decision  Specifying how they should be made  Work our agreements about responsibilities and authority o Responsibility: duty to perform an assigned task o Authority: power to make the decisions necessary to complete a task  Inconsistent if one people has responsibility to do something but lack the authority to do so Performing Tasks  Implementing decisions  Troubles occurs when appropriate levels of responsibility and authority are not clearly spelled out  Delegation: assigning of a task, a responsibility or authority by manager to a subordinate o Problem when manager has not delegated sufficient authority to subordinate o Cannot do what boss demand yet boss hold them accountable o Effective managers have strong subordinates with sufficient authority delegated o 4 things when delegating  Decide nature of work  Match skills and job  Make sure people understand the objectives he supposed to achieve  Make sure time and training is enough o Indicators of trouble delegating effectively  Feelings of employee can never be as good as them  Fear that something will go wrong if someone else do the job  Lack of time for long-range planning because they are bogged down in day-to-day operations  Sense of being in the dark of industry trends and competitive products because they devote time to day-to-day operation o Learn to let go and never able to run all aspect of business o Managers characteristics of not delegating  Fear subordinates do not know how to do the job  Fear that subordinates show “show the manager up” in front of others  Desire to keep as much as control  Simple lack of ability o One manger cannot do all the jobs o If subordinate not capable, training is needed o Recognize that if subordinate performs well, it reflects favorably on manager o Manager lack such skills should receive specialized training Distributing Authority Centralized Organization  Top manager retain most decision making rights for themselves  Maintain standardization  McDonald Decentralized Organization  Lower and middle level managers are allowed to make significant decisions  More responsive to environment by breaking the company into more manageable units, and giving these units more autonomy  Reducing top heavy bureaucracies  Optimum level of decentralization o To keep pace with today eat-on-the-run style, lower level managers had to have more autonomy to make decisions so they could rush new products to market o Can cause difficulties o General Motors example  Adv: attract whatever market segment the division was pursuing  Disadv: widely different design, expensive to produce Tail and Flat Organizations  Flat organization structure: an organization with relatively few layers of management o Decentralized firms  Tall organization structure: an organization with many layers of management o Centralized firms  As company grows in size, it is both normal and necessary to become taller  Too few layers cause chaos and inefficiency  Too many layers create rigidity and bureaucracy Span of Control  The number of people managed by one manager  Wide in flat organization; narrow in tall organization (wide at bottom when tasks are simpler)  To determine wide or narrow span of control o Employee’s abilities and supervisor’s managerial skills o Similarity and simplicity of tasks and the extent they are interrelated  Lower level manager with more decision making authority, their supervisors will have less to do because some of its work transferred to subordinates  Then this manager may be able to coordinate more work from more subordinates, increasing the spa of control  Same simple task and group of interrelated tasks o Wide span of control is desirable o Because all jobs are routine, one supervisor may well control an entire assembly line o Tasks depends on each other also, so if one station stop, everything stops; therefore one manager ensure all stations receive equal attention and function equally well  Diversified and prone to change tasks o Narrow span of control
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