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Lecture

Textbook notes Ch.7-Organizing the Business Enterprise


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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CHAPTER 7: ORGANIZING THE BUSINESS ENTERPRISE
WHAT IS ORGANIZATIONAL STRUCUTRE
Organizational structure: the specification of the jobs to be done within a business and how
these jobs relate to one another
The Chain of Command
Organization chart: a physicDOGHSLFWLRQRIWKHFRPSDQ\¶VVWUXFWXUHVKRZLQJHPSOR\HHWLWOHV
and their relationship to one another
chain of command: reporting relationships within a business, the flow of decision making
power in firm
THE BUILDING BLOCKS OF ORGANIZATIONAL STRUCUTRE
1) Specialization: the process of identifying the specific jobs that need to be done and
designating the ppl who will perform them
- all organizations have one major job, which is broken down into its components (assigned to
each individual)
Specialization and growth
- job specialization is a natural part of organizational growth
- not a new idea or limited to factory work
Adv:
- individual job can be performed more efficiently
- jobs easier to learn
- easier to replace ppl who leave the organization
Disavg:
- if carried too far and jobs become too narrowly defined, ppl get bored
- derive less satisfaction from their jobs
- lose sight of how their contribution fit into the overall organization
2) Departmentalization: the process of grouping jobs into logical units
- departmentalized companies benefit from the division of activities
- control and coordination are narrowed and made easier, and top managers can see more easily
how various units are performing
- allow firm to treat a department as profit center: a separate company unit responsible for its
own costs and profits
- managers group them logically, according to some common thread or purpose
ex. Functional, customer, product, geographic, process lines (combos too)
ESTABLISHING THE DECIONS MAKING-HIERARCHY
- Managers must explicitly define reporting relationships among positions so that everyone will
know who has responsibility for various decisions and operations
- major Q: who makes which decisions
Æ answer almost never focuses on an individual or small group. Refer to decision making
hierarchy
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The development of hierarchy result from three-step process
1) assigning tasks: determining who can make decisions and specifying how they should be
made
2) performing tasks: implementing decision that have been made
3) distributing authority: determining whether the organization is to be centralized or
decentralized
Assigning Tasks
- any company must work out agreements about responsibility and authority
responsibly: the duty to perform an assigned task
authority: the power to make the decisions necessary to complete a task
Performing Tasks
- trouble occurs when appropriate levels of responsibility and authority are not clearly spelled out
in the working relationships b/w managers and subordinates
delegation: assignment of a task, a responsibility, or authority by a manger to a subordinate
accountability: liability of subordinates for accomplishing tasks assigned by managers
Æ if tasks not performed/completed properly, may be reprimanded or punished, dismissed
Fear of delegating:
- some managers have trouble delegating tasks to others
- VXERUGLQDWHVPD\QRWEHDEOHWRFRPSOHWHDWDVNFX]PDQDJHUGLGQ¶WGHOHJDWHVXIILFLHQW
authority to them
Æ dilemma: they cant do wut boss demands but boss may still hold them accountable
- effective managers surround themselves with a team of strong subordinates, then delegate
sufficient authority to those subordinate to get the job done
4 things to keep in mind when delegating
1) decide on the nature of the work to be done
2) match the job with the skills of subordinates
3) make sure the person chosen understands the objectives he or she is suppose to achieve
4) make sure subordinates have the time and training necessary to do the task
4 Indicators that managers are having trouble delegating effectively [small business]
1) feel employees can never do anything as well as they can
2) fear that something will go wrong if someone else takes over the job
3) the lack of time for long-range planning cuz they are bogged down in day to day operations
4) sense of being in the dark about industry trends and competitive products cuz of the time they
devote to day-to-day operations
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IHDUVXERUGLQDWHVGRQWUHDOly know how to do the job
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3) desire to keep as much control as possible over how things are done
4) simple lack of ability as to how effectively delegate to others
Distributing Authority
- most businesses make deicions about general patterns of authority throughout the company
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