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Canada (158,372)
Management (802)
MGM101H5 (354)
Chapter 8

Chapter 8 Notes.docx

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University of Toronto Mississauga
Dave Swanston

Chapter 8 Notes – Organizing - Organizing Architecture; totality of firm’s organization, including formal organization structure, control systems, incentive systems, organizational culture, and people - Organization Structure; location of decision-making responsibilities in firm (centralized or decentralized); formal division of organization into subunits such as functions, product divisions, and national operations; and establishment of integrating mechanisms to coordinate the activities of subunits - Controls; metrics use to measure performance of subunits and to judge how well managers are running those subunits - Incentives; devices used to encourage desired employee behavior, closely tied to performance metrics - Organization Culture; values and assumptions that are shared by employees of organization - People; employees of organization; strategy used to recruit, compensate, motivate, and retain those individuals; and type of people they are in terms of their skills, values, and orientation - Crucial task of managers is to design organization architecture that makes sense for market in which enterprise competes, begins with designing organization structure - Designing Structure o Vertical differentiation; location of decision-making responsibilities within structure  Number of layers in hierarchy; flat or tall o Horizontal differentiation; refers to formal division of organization into subunits o Integrating mechanisms; mechanisms for coordinating subunits - Centralization; concentration of decision-making authority at high level in management hierarchy o Arguments for  Can facilitate coordination  Can help ensure decisions are consistent with organizational objectives  Avoid duplication of activities by subunits within organization  Give top level managers means to bring about needed major organizational changes - Decentralization; decision-making authority in lower-level managers o Arguments for  Top management becomes overburdened • Too much information to process  People willing to give more to their jobs when they have individual freedom and control over their work  Permits greater flexibility – rapid response to environmental changes  Can result in better decisions, decisions made by people that are experiencing the problem first hand rather than managers that are higher up but not experiencing the problem in real time  Can increase control • Autonomous subunit; unit that has all resources and decision- making power required to run its operation daily o More accountability for managers of subunits - Frequently makes sense to centralized some decisions and decentralize others o Decisions regarding firm strategy, major financial expenditures, financial objectives, legal issues are centralized at senior management level  Marketing, production, R&D may not be centralized o Purchasing and manufacturing decisions are often centralized in attempt to eliminate duplication and realize scale economies  Sales decisions tend to be more decentralized o Decentralized favored in environments with high uncertainty and rapid change  Centralization slows down decision making Tall vs. Flat Hierarchies - Tall Hierarchies; organizations with many layers of management o Disadvan
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