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Chapter 8

chapter 8 and 10 notes

9 Pages
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Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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CHAPTER 8 ORGANIZING THE BUSINESS
ENTERPRISE
organizational structure: The specifications of the jobs to be done within a business and
how those jobs relate to one another.
THE CHAIN OF COMMAND
organization chart: A physical depiction of the company’s structure showing employee
titles and their relationship to one another.
chain of command: Reporting relationships within a business; the flow of decision-
making power in a firm.
THE BUILDING BLOCKS OF ORGANIZATIONAL STRUCTURE
Specialization
job specialization: The process of identifying the specific jobs that need to be done and
designating the people who will perform them.
**specialization and growth
- ADVANTAGES: Individual jobs can be performed more efficiently, jobs are easier to learn,
easier to replace people who leave organization
- DISADVANTAGES: if jobs become too narrowly defined, people get bored, derive less
satisfaction from their jobs and lose sight about how their contributions fit into the overall
organization.
Departmentalization
departmentalization: The process of grouping jobs into logical units.
profit centre: A separate company unit responsible for its own costs and profits.
(e.g. each department is its own profit centre makes it easier to measure performance of
sectors.)
ESTABLISHING DECISION-MAKING HIERARCHY
The development of the hierarchy results from a 3-step process:
1. Assigning tasks (determining who makes decisions and specifying how they should be
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made.)
2. Performing tasks ( implementing decisions that have been made.)
3. Distributing authority (determining whether the organization is to be centralized or
decentralized.)
ASSIGNING TASKS
- Individuals must work out agreements about responsibilities and authority.
PERFORMING TASKS
- trouble occurs when appropriate levels of responsibility and authority are not clearly
spelled out.
delegation: Assignment of a task, a responsibility, or authority by a manager to a
subordinate.
accountability: Liability of subordinates for accomplishing tasks assigned by managers.
DISTRIBUTING AUTHORITY
**centralized organizations
Top managers retain most decision-making rights for themselves
- a way to maintain standardization (e.g. McDonalds)
**decentralized organizations
Lower and middle level managers are allowed to make significant decisions
- makes company more responsive to changes in the environment
TALL AND FLAT ORGANIZATIONS
flat organizational structure: An organization with relatively few layers of management.
E.g. DECENTRALIZED firms
tall organizational structure: An organization with many layers of management.
E.g. CENTRALIZED firms
SPAN OF CONTROL
span of control: The number of people managed by one manager.
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downsizing: The planned reduction in the scope of an organizations society.
( usually involves cutting large numbers of managers, and workers, reducing the number
and variety of products the company produces...This may eliminate entire layers of
management, creating a flatter corporate structure, and the remaining managers end up
with larger spans of control.)
BASIC ORGANIZATIONAL STRUCTURES
functional structure:
Various units are included in a group based on functions that need to be performed for the
organization to reach its goals.
ADVANTAGES:
- focuses on the key activities that must be performed
- expertise develops within each function
- employees have clearly defined career paths
- the structure is simple and easy to understa
- it eliminates duplication of activities
DISADVANTAGES:
- conflicts may arise among functional areas
- no single function is responsible for overall organizational performance
- employees in each functional area have a narrow view of the organization
- decision-making is slowed because functional areas must get approval from top
management for a variety of decisions
- coordinating highly-specialized functions may be difficult
divisional structure:
Divides the organization into divisions, each of which operates as a semi-autonomous unit.
ADVANTAGES:
- accommodates change and expansion
- increases accountability
- develops and expertise in various divisions
- encourages training for top management
DISADVANTAGES
- activities may be duplicated across divisions
- a lack of communication among divisions may occur
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Description
CHAPTER 8 ORGANIZING THE BUSINESS ENTERPRISE organizational structure: The specifications of the jobs to be done within a business and how those jobs relate to one another. THE CHAIN OF COMMAND organization chart: A physical depiction of the companys structure showing employee titles and their relationship to one another. chain of command: Reporting relationships within a business; the flow of decision- making power in a firm. THE BUILDING BLOCKS OF ORGANIZATIONAL STRUCTURE Specialization job specialization: The process of identifying the specific jobs that need to be done and designating the people who will perform them. **specialization and growth - ADVANTAGES: Individual jobs can be performed more efficiently, jobs are easier to learn, easier to replace people who leave organization - DISADVANTAGES: if jobs become too narrowly defined, people get bored, derive less satisfaction from their jobs and lose sight about how their contributions fit into the overall organization. Departmentalization departmentalization: The process of grouping jobs into logical units. profit centre: A separate company unit responsible for its own costs and profits. (e.g. each department is its own profit centre makes it easier to measure performance of sectors.) ESTABLISHING DECISION-MAKING HIERARCHY The development of the hierarchy results from a 3-step process: 1. Assigning tasks (determining who makes decisions and specifying how they should be www.notesolution.com
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