Business Chapter 7 Study Guide.docx

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Business Administration
BUS 201
Peter Tingling

Organizational structure • The specification of the jobs to be one within a business and how those jobs relate to one another • Determinants of organizational structure o Purpose, mission, and strategy • The chain of command o Reporting relationships within a business; the flow of decision-making power in a firm o Organization charts  A physical depiction of the company’s structure showing employee titles and their relationship to one another The building blocks of organizational structure • Job specialization o The process of identifying the specific jobs that need to be done and designating the people who will perform them o Specialization and growth • Departmentalization o The process of grouping jobs into logical units o Profit centre  A separate unit responsible for its own costs and profits o Functional Departmentalization  Departmentalization according to a group’s functions or activities o Customer departmentalization  Departmentalization according to the types of customers o Product departmentalization  Dividing an organization according to the specific product or service being created o Process department  Dividing the company according to the production process used. o Geographic Departmentalization  Divided according to the area of the country/world that they serve Establishing the decision-making hierarchy • Assigning tasks o Determining who can make decisions and specifying how they should be made o Responsibility is the duty to perform an assigned task o Authority is the power to make the decisions necessary to complete the task • Performing tasks o Implementing decisions that have been made o Delegation begins when a manager assigns a task to a subordinate o Accountability the falls to the subordinate, who must complete the task o When delegating:  Decide on the nature of the work to be done  Match the job with the skills of subordinates  Make sure the person chosen understands the objectives he or she is supposed to achieve  Make sure subordinates have the time and training necessary to do the task • Distributing authority o Determining whether the organization is to be centralized or decentralized o Centralized organization  Top management retains the right to make most decisions that need to be made o Decentralized organization  Lower and middle level managers are allowed to make significant decisions • Span of control o Refers to how many people work for any individual manager • Downsizing o The planned reduction in the scope of an organizati
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