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Chapter 8

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Management (MGT)
Chris Bovaird

MGTA03Summer2011 Chapter 8 Organizing the Business Enterprise What is the Organizational Structure o Organizational structure the specification of the jobs to be done within a business and how those jobs relate to one anotherThe Chain of Command o Organization charts a physical depiction of the companys structure showing employee titles and their relationship to one anothero Chain of command reporting relationships within a business the flow of decisionsmaking power in a firm The Building Blocks of Organizational Structure o The first step in developing the structure of any business involves specialization and departmentalization o Specialization determining who will do what o Departmentalization determining how people performing certain tasks can best be grouped together Specialization o Job specialization the process of identifying the specific jobs that need to be done and designating the people who will perform them o Example making a shirt involves a person cutting material for the sleeves another cutting material for the shirt body another cutting the material for the collar another assembling the shirt and another sawing on the buttonsSpecialization and Growth o In a very small organization the owner may perform all jobs o As the firm growsneed for specialization o Job specialization has its advantages jobs can be performed more efficiently jobs are easier to learn and it is easier to replace people who leave the organizationo But if specialization becomes too narrowly defined people get bored derive less satisfaction from their jobs and often lose sight of how their contributions fit into the overall organizationDepartmentalization o Departmentalization the process of grouping jobs into logical unitsoccurs after specialization oControl and coordination are narrowed and made easier and top managers can see more easily how various units are performing o Profit centre a separate company unit responsible for its own costs and profits o Departmentalization may occur along functional customer product geographic or process linesEstablishing the DecisionMaking Hierarchy o Next step after specialization and departmentalization is to establish the decision making hierarchy o Managers must define reporting relationships among positionsgoal is to structure and stabilize the organization so that the firm works together to achieve common goals o The development of the decisionmaking hierarchy involves a 3 step process o Assigning tasks determining who can make decisions and specifying how they should be made o Performing tasks implementing decisions that have been made o Distributing authority determining whether the organization is to be centralized or decentralizedAssigning Tasks o Responsibility the duty to perform an assigned task
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