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Chapter 7

MGTA03 Ch.7 and middle of Ch.10 Notes.docx

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Management (MGT)
Chris Bovaird

MGTA01 Chapter 7 Notes: ORGANIZING THE BUSINESS ENTERPRISE WHAT IS ORGANIZATIONAL STRUCTURE? - Organizational structure is the specification of the jobs to be done within a business and how these jobs relate to one another THE CHAIN OF COMMAND - Most business prepare organization charts (physical depiction of the company’s structure showing employee titles and their relationship to one another) that illustrate the company’s structure and show employees where they fit into the firm’s operations - The board of directors are at the top of the chain, and the district sales managers are at the bottom of the line - The CHAIN OF COMMAND job is to report the relationships within the company THE BUILDING BLOCKS OF ORGANZIATIONAL STRUCTURE - Specialization and departmentalization are the two basic building blocks of all business organizations - SPECIALIZATION: determining who will do what; in terms of job specialization, process of identifying the jobs that need to be done and the designating the people who will perform them o SPECIALIZATION AND GROWTH  Job specialization is a natural part of organizational growth; ie. One person running a company all by themselves, as opposed to having many people doing different areas of the job = better service, more successful organization  Advantage: more efficient  Disadvantage: jobs may become narrow, therefore causing employees to become bored and lose insight of their jobs and how important their role is - DEPARTMENTALIZATION: determining how people performing certain tasks can be best grouped together o after jobs are specialized they must be grouped into logical units o departmentalization allows the firm to treat a department as a profit centre- a separate unit responsible for its own costs and profits o in general, departmentalization occurs along functional, customer, product, geographic, or process lines (or combination of these) o ESTABLISHING THE DECISION-MAKING HIERARCHY  Managers must explicitly define reporting relationships among positions so that everyone will know who has responsibility for various decisions and operations  Who makes which decisions? Almost never focuses on an individual or even a small group, usually refers to the decision-making hierarchy which results from a three-step process:  Assigning tasks o Responsibility is the duty to perform an assigned task, Authority is the power to make the decisions necessary to complete the task  Performing tasks o Delegation begins when a manager assigns a task to a subordinate, Accountability falls to the subordinate who must then complete the task o When delegating, these aspects must be taken into consideration:  Decide on nature of work to be done  Match job with skills of subordinate  Subordinate has to understand the objective they must achieve  Subordinates must have had time and training to do task  Distributing authority o Most businesses must also make decisions about general patterns of authority throughout the company. This pattern may be largely centralized or decentralized o CENTRALIZED ORAGNIZATIONS are the top managers who retain most decision-making rights for themselves o DECENTRALIZED ORGANIZATIONS: much of the decision making authority is delegated to levels of management at various points below the top level  Reducing top bureaucracies is also a common goal of decentralization o TALL AND FLAT ORGANIZATIONS  With relatively fewer lawyers of management, DECENTRALIZED firms tend to have a FLAT STRUCTURE (orgnztn. w/relatively few layers of mngmnt)  Companies with CENTRALIZED authority systems typically require multiple layers of management and thus have a TALL ORGANIZATION STRUCTURE (orgnztn. w/many layers of mngmnt)  As orgnztns grow in size, become at least somewhat taller o SPAN OF CONTROL  Distribution of authority in an organization also affects the number of people who work for an individual manager  SPAN OF CONTROL is the number of people managed by one manager  Flat organizations S.O.C = usually wide  Tall organizations S.O.C. = usually narrow  Downsizing usually refers to the planned reduction in the scope of an organization’s activity. Ie. Cutting substantial numbers of managers & workers, and the number + variety of products the company produces o BASIC ORGANIZATIONAL STRUCTURES  4 forms:  THE FUNCTIONAL STRUCTURE: oldest and most commonly used structure; the various units in the organization are formed based on the functions that must be carried out to reach organizational goals. o REFER TO TABLE 7.1 PG. 121 FOR ADVANTAGES + DISADVANTAGES  THE DIVISIONAL STRUCTURE: divides the organization into several divisions, each of which operates as a semi-autonomous unit and
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