University of Toronto
RSM100 Test 2
2/16/2011 RSM Chapter 7 Summary
The specification of the jobs to be done within a business and how those jobs relate to one other.
Illustrates the companys structure and show employees where they fit into the firms operations.
Chain of demand
The reporting relationships within the company.
The Building blocks of Organization Structure
The process of identifying the specific jobs that need to be done and designating the people who
will perform them.
Determining who will do what
individual jobs can be performed more efficiently, the jobs are easier to learn, and it is easier to
replace people who leave the organization.
On the other hand, if job specialization is carried too far, jobs become too narrowly defined, people
get bored, derive less satisfaction.
The process of grouping jobs into logical units.
Determining how people performing certain tasks can best be grouped together.
A separate company unit responsible for its own costs and profits.
i.e by assessing profits from sales of mens clothing to decide whether to expand or curtail
promotion in that area.
Departmentalization according to functions or activities.
i.e. production department, marketing and sales, human resource.
www.notesolution.com Departmentalization according to the types of customers likely to buy a given product.
i.e. classic music department, R&B department
Dividing an organization according to the specific product or service being created
According to the area of the country or world supplied.
According to the production process used to create a good or service.
Establishing the Decision Making Hierarchy
1) Assigning tasks
determining who can make decisions and specifying how they should be made.
Authority: the power to make the decisions necessary to complete the task.
Responsibility: the duty to perform an assigned task.
2) Performing tasks
implementing decisions that have been made.
Delegation: assignment of a task, a responsibility, or authority by a manager to a
Accountability: liability of subordinates for accomplishing tasks assigned by
3) Distributing authority
determining whether the organization is to be centralized or decentralized.
Centralized organization: Top managers retain most decision-making rights for
Decentralized organization: lower-and middle-level managers are allowed to
make significant decisions.
Flat organization structure: an organization with relatively few layers of
Tall organizational structure: an organization with many layers of management.
Span of control: the number of people managed by one manager.
Downsizing: the planned reduction in the scope of an organizations activity. It
usually means cutting substantial numbers of managers and workers and
reducing the number and variety of products.
www.notesolution.com creating a flatter corporate structure.
end up with larger spans of control
3 Forms of Authority
1) Line Authority
Authority that flows up and down the chain of command.
Line department: departments directly linked to the production and sales of specific
products. (if any line department fail to complete its task, the company cannot sell
and deliver finished goods.)
2) Staff Authority
Based on technical expertise and involves advising line managers about decisions.
Including specialists in areas such as law, engineering, accounting, HR.
Staff members help line departments in making decisions but do not generally have the
authority to make final decisions
3) Committee and team authority
Authority granted to committees or work teams that play central roles in the firms
Basic organizational structures
The various units in the organization are formed based on the functions that must be carried out
to reach organizational goals.
Makes use of departmentalization by function.
Divides the organization into several divisions, each of which operates as a semi-autonomous unit
and profit center.
i.e. Division based on consumer products, industrial product, health care product.
1) the company can evaluate the performance of each division independently.
2) The firm can take actions (like selling unprofitable divisions) within minimal disruption
to its remaining business.