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Chapter 8

MGTA03 Chapter 8 Notes.docx

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Management (MGT)
Chris Bovaird

MGTA03 Introduction to Management Chapter 8—Organizing the Business Enterprise What is Organizational Structure?  organizational structure is the specification of jobs to be done within a business and how those jobs relate to one another The Chain of Command  an organizational chart is a physical depiction of the company’s structure showing employee titles and their relationship to one another  the chain of command is reporting relationships within a business, the flow of decision-making power in a firm The Building Blocks of Organizational Structure  the basic building blocks of all business organizations is specialization (determining who will do what) and departmentalization (determining how people performing certain tasks can be best grouped together) Specialization  job specialization is the process of identifying the specific jobs that need to be done and designating the people who will perform them Specialization and Growth  the advantage of job specialization is that individual jobs can be performed more efficiently, the jobs are easier to learn and it is easier to replace people who leave the organization  however the if there is too far job specialization then people get bored and derive less satisfaction from their jobs and often lose insight on how their jobs contribute to the overall organization Departmentalization  departmentalization is the process of grouping jobs into logical units  benefits of departmentalization: control and coordination are narrowed and made easier; allows the firm to treat a department as a profit centre (a separate company responsible for its own costs and profits) Establishing the Decision-Making Hierarchy  next managers must explicitly define reporting relationships so that everyone will know who has responsibility for various decisions and operations  the decision-making hierarchy is developed from a three-step process of assigning tasks, performing tasks and distributing authority Assigning Tasks  in any company individuals must work out agreements about responsibilities (the duty to perform an assigned task) and authority (the power to make the decisions necessary to complete a task) Performing Tasks  delegation is the assignment of a task, a responsibility, or authority by a manager to a subordinate  accountability is the liability of subordinates for accomplishing tasks assigned by managers  effective managers surround themselves with a team of strong subordinates, and then delegate sufficient authority to those subordinates to get the job done Distributing Authority  in centralized organizations top managers retain most decision-making rights for themselves  in decentralized organizations lower- and middle-level managers are allowed to make significant decisions; this makes a company more responsive to its environment by breaking it into more manageable units and giving those units more autonomy Tall and Flat Organizations  a flat organizational structure is an organization with relatively few layers of management, typical of decentralized firms  a tall organizational structure is an organization with many layers of management, typical of centralized firms Span of Control  the span of control is the number of people managed by one manager  when jobs are more diverse a narrow span of control is preferable but when several employees per
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