Organizing the Business Enterprise
1. The elements that influence a firm’s organizational structure.
Organizational Structure: The specification of the jobs to be done within a
business and how those jobs relate to one another. (Each firm has its own unique
A physical depiction(묘사) of the company’s structure showing employee titles and
their relationship to one another. (Refer to p111 diagram)
Chain of Command
Reporting relationships within a business; the flow of decision-making power in a firm
The first step in developing the structure (for all businesses)
- Specialization: Determining who will do what
- Departmentalization: determining how people performing certain tasks can
best be grouped together.
A. Job Specialization: The process of identifying the specific jobs that need to be
done and designating the people who will perform them.
Job Specialization becomes necessary when the firm grows.
Advantages: more efficient, easier to learn, easier to replace.
DISA: simple-bored, lose sight of contributions.
B. Departmentalization: After jobs are specialized, must be grouped.
Advantage: Division of Activities, Control/coordination easier, good view for top
managers. This allows firms to treat each department as profit centre [A separate
company unit responsible for its won costs and profits].
(Managers group jobs logically: Functional, customer, product, geographic, process
line) After specialization/departmentalization -> decision-making hierarchy (Reporting
relationships) [who makes which decisions?]
1) Assigning tasks: who can make decisions/ and the ways
Responsibility: The duty to perform an assigned task.
Authority: power to make the decisions necessary to complete a task.
2) performing tasks: implementing decisions made.
Delegation: Assignment of a task, a responsibility, or authority by a manager to a
Fear of Delegation – Because:
“Employees can’t do it as well as me”
“I haven’t got time to show them how”
“They’ll make me look bad if they do it well”
Accountability: Liability of subordinates for accomplishing tasks assigned by
3) distributing authority: choose [centralized or decentralized]
Discipline and obedience are critical
Top managers retain most decision-making rights for themselves.
Creativity and independent thinking critical
Lower-and middle-level managers are allowed to make significant decisions.
Tall and Flat organizations
Tall organizational structure
Many layers of management.