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Chapter 8

MGTA03 Chapter 8

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

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Chapter 8 – Organizing the Business Enterprise
What is Organization Structure?
All businesses have common structural and operating components, each with a
specific purpose
Each component needs to fulfill its purpose and fit in with others
Organizational Structure: The specification of jobs to be done within a business
and how those jobs relate to one another
Every institution must develop the most appropriate structure for its own unique
situation
The Chain of Command
Most businesses prepare organization charts (A physical depiction of the
company’s structure showing employee titles and their relationship to one
another)
Each box on the chart is a job and the line that connect them are the chain of
command, that reports the relationships within the company
Chain of Command: reporting relationships within a business, the flow odf
decision making power in a firm
The Building Blocks of Organizational Structure
There are two basic building blocks of a business organization: Specialization
and Departmentalization
Specialization
Job Specialization: The process of identifying the specific jobs that need to be
done and designating the people who will perform them
All organizations have one major job (example: make profit by selling clothes)
but this must be divided up and broken into smaller components, these
components are divided to individuals
In a small organization, the owner/one person may be responsible for every single
task, but larger businesses have job specialization
Job specialization is part of organizational growth and has advantages since jobs
can be done more efficiently, easier to learn, easier to replace people if others
leave
However, job specialization carried too far will lead to dissatisfaction with job,
and bad performance
Departmentalization
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Departmentalization: the process of grouping jobs into logical units
By dividing up jobs, the company benefits as it can have easier control and
coordination over them and managers can see how each are doing by assessing
their profits
Each department is a profit centreA separate company unit responsible for its
own costs and profits
Managers group the departments logically based on common thread or purpose
Establishing the Decision making Hierarchy
Next step is to establish the decision making hierarchy – managers need to define
the reporting relationships among positions so that everyone will know who has
responsibility for what decisions and operations
Goal to figure out the structure and stabilize the organizational framework so that
common goals an be achieved
Most organizations use multiple bases of departmentalization, like functional,
geographical and product, for example.
Who makes the decisions? There is a decision making hierarchy developed from 3
steps:
1) Assigning Tasks
The question of who is supposed to do what in an organization is complex
Company must work out the agreements and responsibilities and authority
Responsibility: The duty to perform an assigned task
Authority: The power to make the decisions necessary to complete the
tasks
Sometimes in a company, an employee can have the responsibility to
perform a task but lack the authority to perform it
2) Performing Tasks
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
If the subordinate does not perform tasks properly, there will be punishment and
maybe also dismissal
Fear of Delegating
www.notesolution.com
Some managers have trouble delegating tasks to others, so subordinates may not
be able to do a job properly because they don’t have the delegation authority to do
so, and if they do it, they might get in trouble.
An effective manager should have a strong team of subordinates that they can
depend on so that they can delegate them and get the job done well
Managers need to remember when they are delegating to:
-Decide on the nature of the job
-Match the job with the right subordinate
-Make sure the person chose understands the objective
-Make sure the subordinates have time and training to complete task
But managers of SMALL businesses may have trouble delegating because:
-They feel that employees can never do anything better than them
-They fear something will go wrong if they give the task to someone else
-They lack time to do long range planning
-They feel to be ‘in the dark’ about industry trends and competitive products
They must overcome by knowing that they can’t run every aspect of business and
need help of employees
Managers of BIG businesses may have trouble delegating also because:
-They think that the subordinates don’t know how to do the job
-They think the subordinate will prove to be better than the manager
-They want to keep control over what is done
-They lack the ability to affectively delegate
They must recognize that they cannot do everything themselves, they need to
know they are supposed to train the subordinates well, need to know that if they
do well then it’s a good thing for the manager as well, and that they need training
in delegating
3) Distributing Authority
The general pattern of authority throughout a company can be largely centralized
or decentralized
www.notesolution.com

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Description
Chapter 8 Organizing the Business Enterprise What is Organization Structure? All businesses have common structural and operating components, each with a specific purpose Each component needs to fulfill its purpose and fit in with others Organizational Structure: The specification of jobs to be done within a business and how those jobs relate to one another Every institution must develop the most appropriate structure for its own unique situation The Chain of Command Most businesses prepare organization charts (A physical depiction of the companys structure showing employee titles and their relationship to one another) Each box on the chart is a job and the line that connect them are the chain of command, that reports the relationships within the company Chain of Command: reporting relationships within a business, the flow odf decision making power in a firm The Building Blocks of Organizational Structure There are two basic building blocks of a business organization: Specialization and Departmentalization Specialization Job Specialization: The process of identifying the specific jobs that need to be done and designating the people who will perform them All organizations have one major job (example: make profit by selling clothes) but this must be divided up and broken into smaller components, these components are divided to individuals In a small organization, the ownerone person may be responsible for every single task, but larger businesses have job specialization Job specialization is part of organizational growth and has advantages since jobs can be done more efficiently, easier to learn, easier to replace people if others leave However, job specialization carried too far will lead to dissatisfaction with job, and bad performance Departmentalization www.notesolution.com
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